Demand for private food labels rises

With food and beverage retailing cornering almost 50 per cent of the organised retail market in India, retailers are waking up to new opportunities in the processed food sector.

RPG Group's FoodWorld was among the first to seize the opportunity and launched its range of jams and sauces in 2002 under the FoodWorld brand. (FoodWorld was a joint venture with Dairy Farm International which has now been dissolved, the new stores would have the Spencer's branding).

At present the company plans to expand it's processed food portfolio which along with generic foods like pulses and staples contributes to anywhere between 20 - 33 per cent of sales, says K Radhakrishnan, vice president, Merchandising, Spencers.

Pantaloon Retail's Food Bazaar too has introduced products like tea, pickles, noodles and jams under the 'Fresh and Pure' and 'Tasty Bite' brands.

Damodar Mall, president, food business division, Pantaloon Retail says "it is important for a retailer to own brands as it operates in markets not targeted by the mainline brands."

Food Bazaar is currently engaged in relaunching their spices and tea brands and looking at further expanding their range of products.

Analysts say private labels will increasingly become more prominent in India the way it has become in the west.

Globally private labels account for about 50 per cent of the sales for retailers like Tesco and Sainsbury's.

BS Nagesh, COO and MD, Shoppers' Stop too agrees that it is inevitable for a food retailer to have his own label and that they too would have a comprehensive range of products under their own label.

Internationally, private labels account for almost 50 per cent of the sales for retailers like Tesco and Sainsbury's.

Just how fast private labels are catching up among consumers can be judged by the fact that at Spencer's, Rs 7 crore out of their Rs 350 crore revenue comes only from their private lables.

"Both consumers and retailers would prefer private labels as they are priced lower than the existing brands, and at the same time the margins for the retailer are higher," explains Radhakrishnan.