Eli Greenblat
Sydney Morning Herald

An industry report on private-label foods has underlined the growth and earnings potential the category represents to the nation's leading supermarkets, Coles and Woolworths. Nearly a third of trolleys are expected to be filled with private-label items by 2015.

While a popular range of foods has already helped propel the category to account for 23 per cent of Australia's $70 billion grocery market, a similar trend in liquor is also tipped to take off soon as the supermarket chains release a growing portfolio of own-label wines, beers and spirits.

A report from IBISWorld said private labels accounted for 20 per cent of annual grocery sales at Coles and Woolworths, with the country's discount supermarkets, including the price-conscious German group Aldi, grabbing 3 per cent of the domestic market.

IBISWorld's general manager, Robert Bryant, said growth in private-label groceries had outperformed traditional branded groceries consistently, and private labels had captured the lion's share of the market in some sectors.

"In certain sectors, such as dairy, private-label growth has been dramatic, with private-label milk sales rising from 25 per cent of supermarket milk sales in 1999 to a massive 52 per cent last year," Mr Bryant said.

During the global financial crisis Woolworths reported that its private-label products had booked sales growth at nearly double the rate of branded foods as shoppers sought value. In the latest quarter growth had retreated somewhat.

But IBISWorld believes the trajectory is still up and the current market share of 23 per cent is set to climb above 30 per cent in the next five years. This would still be below the rates experienced overseas. In Britain and the US private-label products make up 40 per cent of sales.

Private-label foods typically generate fatter margins for supermarkets than branded foods, hence the eagerness of Coles, Woolworths and others to stack their shelves with them.

Woolworths and Coles have also pushed into the liquor market, offering a growing range of private-label wines and beers.

"Liquor represents the next big growth opportunity for private labels in Australia,'' Mr Bryant said.

''IBISWorld forecasts private labels will account for more than 10 per cent of the Australian wine market by 2013 and sales of private label beers in this country will double over the next three years."

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