Indian retailers appear to be adopting private food labels at a faster pace than China. Retail reforms in India are likely to give this the impetus is needs, a report by Rabo International said.
Private label products indicate all merchandise sold under a retailer’s brand. Its growth is correlated to the outlook for modern retail market penetration.
For Tata Group-owned Star Bazaar, over 30 per cent of its total food sale comes from in-house brands. Similarly, Future Group, which runs Big Bazaar and Food Bazaar, enjoys 25-30 per cent revenue shares from private-label brands.
Rabo International’s Head (Food and Agribusiness), Asitava Sen, said: “While it took 50 years for Europe to achieve 28 per cent market penetration of private food labels in retail, Rabobank expects India and China to reach the same level in just 15 to 20 years.”
The report also adds that modern food retailing in India will reach 15 per cent market share by 2020, and achieve 26 per cent by 2025. By then, private label market share in modern retail will be about 10.5 per cent, and reach 25 per cent by 2030.
“Today, private label in India’s modern food retailers account for about 4.5 per cent across all categories. However, in staples such as rice and wheat flour, it can be as high as 30 to 50 per cent, due to the high price sensitivity and low brand recognition,” Sen said.