Private label cosmetics cut into manufacturers' market

By Ahmed Elamin and Jess Halliday

- Last updated on GMT

Related tags Private label Marketing

Private label cosmetics are growing at a rapid pace, increasing
their share of the global marketplace and eating into the market
share of brands according to ACNielsen.

More and more retailers are selling their proprietary private label cosmetics in competition with the manufacturers of nationally or globally branded products. Branded products command a premium price for manufacturers compared to those produced for private label retailers. An ACNielsen global study conducted in May 2005 across 38 markets found that cosmetics represent the fastest growing private label sector, at a rate of 23 percent based on product sales. In terms of overall market share, however, they are at the bottom of the pile with just 2 percent. Personal care has a 5 percent share, but is growing considerably more slowly - at just 3 percent. Sixty-eight percent of consumers questioned as part of the survey either slightly or strongly agreed with the statement that "Private label brands are a good alternative to other brands." Private label goods make up 17 per cent of total value sales for the 12 months ending the first quarter of 2005, up from the 15 per cent level found in a similar ACNielsen study in 2003. The figures include both non-food and food branded products and track growth rates over the time periods. In terms of overall growth, the demand for private label products grew at five per cent over the period, compared to two per cent of manufacturer brands. In more than two-thirds of the markets studied, private label sales by value grew faster than their manufacturer brand counterparts, the market researcher found. In Europe private labels are growing their market share faster than in any other region. Private label value sales, which includes non-food categories, have a 23 per cent share across 17 markets and a growth rate of four per cent. Switzerland tops the world, with private label sales now holding 45 per cent of the market, followed by Germany with 30 per cent, the UK with 28 per cent, Spain with 26 per cent and Belgium with 25 per cent. Private label increased their growth rate faster in emerging markets, made up of Croatia, Czech Republic, Hungary, Slovakia and South Africa. Private label demand grew by 11 per cent in those countries over the study period, although this was achieved from a much smaller base. The findings are based on data collected from 14 product areas containing 80 categories in 38 markets. "Just how far retailers can grow private labels will be the centre of much industry debate." ACNielsen stated. "Whether worldwide shares will reach those of Switzerland, or even if high share markets like Switzerland have reached their peak, is yet to be seen." External links to companies or organisations mentioned in thisstory: ACNeilsen

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