More and more private labels at Coop and Migros – brand manufacturers fear lack of space on their shelves – business

It's a fight by inches. Whether it's Lindt chocolate balls, Kambly-Guetzli or Emmi yogurts, brand name manufacturers are facing fierce competition to feature on local retailers' shelves. There the place is physically limited. According to a new study by Promarca, the association of manufacturers of Swiss brand products, the fight is getting tougher. The products of own brand, manufactured by the dealer or manufactured by himself, are guilty of offering customers a cheaper alternative to the original, without advertising for the big. The disadvantage: Private labels are rarely popular. The advantage: the dealer can also attract price sensitive customers, launch their own innovations and earn more money.

The study is based on a survey of 84 Promarca members. These include renowned Swiss companies such as Rivella, Zweifel and Ricola, as well as international companies such as Coca-Cola, Unilever and Procter & Gamble. Together they generate a turnover of 12 billion francs. When asked what were currently the biggest challenges in the Swiss market, the response "moving with other brands" placed the strongest and even mounted on the podium with 32% of the entries – behind concentration in the retail sector (60%) and price pressure (40%).

For Anastasia Li, general manager of Promarca, it is clear: "The fact that the fight against the deletion worries more and more manufacturers is in particular the expression of Coop's new strategy." The Basler Genossenschaftsriese is by far the main sales channel for brand name manufacturers. Those who fail to join the Coop shelf have virtually no chance of asserting themselves nationwide. Coop also has its own brands such as "Betty Bossi", "Naturaline" or "Jamadu". However, their share in recent years was only 50%. But this value increases. Today, it is 55%. And when presenting annual figures in February, Philipp Wyss, Vice President of Coop, told the newspaper that the goal was 60%.

This expansion makes life difficult for many manufacturers. "Because Coop has already been delivered practically today if we want to launch a new product," says a member of a well-known food manufacturer. "We often say in the negotiations: But without Coop, this can not work. "The remaining resellers like Spar, Aldi, Lidl or Volg are too small for a resounding success.

A consequence of Dutti's strategy

At Migros, manufacturers and customers are used to the fact that branded products are an exception. The Zurich cooperative copies originals that are always successful and seldom give them a place on the shelves. The dominance of private labels at Migros is historically justified. The founder of the company, Gottlieb Duttweiler, was a prize-cruncher. He did not want to present customers with overpriced products from the branded products industry, which Migros had initially boycotted. Migros has started to manufacture its own products.

Migros is a little open in recent years. In 2010, she launched Thomy, Coca-Cola and Nescafé products. In 2008, she replaced the Mivella brand with the original Rivella. And more recently, Emmi's "Caffè Latte" has proved its worth. But for the kiss are still only big brands. Its own brands, such as iconic Ice Tea, Mirador spice or Candida toothpaste, and M-budget products still generate 80% of sales, according to a Migros spokesperson. In terms of volume, according to experts, they will probably represent 90% of the range of products.

Migros does not comment on its future strategy. Only: "Own brands have always been part of our DNA and will remain so." In fact, their own brands are much better known than those of Coop.

Warning signs for Nestlé et Cie.

The fact that private labels are becoming more and more important is confirmed by Nordel Cavadini, retailer of consulting firm Oliver Wyman. "Retailers are even increasingly trying to turn private labels into authentic brands and promote them on social networks." For example, Mibelle, a subsidiary of Migros in the cosmetics sector, has launched a new line of beauty products with a German influencer. Migros itself has evoked in the corresponding press release the extension of its own range of brands, even if it is a private label.

Cavadini emphasizes another aspect: the credibility of a brand. The consulting firm conducted a representative consumer survey after domestic and foreign retailers threw out their last known brand items in their assortment as part of price negotiations. For example, Coop withdrew several Nestlé products in Switzerland. "According to our investigation, in the event of a product boycott, consumers would be more likely to side with retailers and believe that they were fighting for lower prices."

This is a warning sign for manufacturers, says Cavadini. As a result, their position is further weakened in price negotiations with dominant wholesalers. Because: According to Andrea Graber, Deputy Director of the Competition Commission, Migros and Coop form a virtual duopoly. "Both continue to claim a significant market share in the traditional food trade." The entry into the market of German discounters Aldi and Lidl there are about ten years and commercial tourism would have revived the competition, without fundamentally changing the situation.