The major supermarket chains introduced house brands in the 1970s but these were initially sold on price. They were often seen as low quality and unlikely to offer serious competition to branded products. However, by 2010, house brands had reached 24.5 per cent of sales in Coles, with more than 3800 own-brand lines.
Australia was relatively slow to embrace house brands or “own brands” compared to Britain. Tesco, the leading UK chain, is named for its original home brand of tea and by the mid-2000s at least 50% per cent of its range was own brand. Sainsbury’s, one of the UK’s largest chains, began offering own-brand products to its customers as early as 1882, the first being butter. During the 1950s and ’60s Sainsbury’s was the leader in own-brand products ranging from biscuits and cornflakes to soft drinks and frozen foods.
In 2010, a survey by advertising agency Grey Worldwide found that 40 per cent of shoppers were buying house brands more than they used to, while close to two-thirds thought these brands were just as good as the familiar national brands.
That year, researchers at Nielsen found that house brands represented 24.5 per cent of supermarket sales in the September quarter of 2010, up from 23.2 per cent in the last quarter of 2009. The figures represented a huge leap since 2005 when house brands made up just 12 per cent of grocery sales by dollar value and 19 per cent by volume. By 2018 the figure stood at 26 per cent.
Coles and Woolworths continue to increase the range of products with their own brands, spurred by the success of Aldi where around 90 percent of products are own brand. Coles managing director said in 2018 that the company’s aim is to have 40 per cent of its range as private label by 2023. These private labels may, however, include so-called “phantom brands” where the retailer’s name does not appear anywhere on the packaging.
The rise of house brands is a significant challenge to food manufacturers who have invested heavily in building brand loyalty to their products over decades. Some industry figures warn that the price pressures brought to bear on the companies producing house brands for the major chains could be a serious threat to manufacturing in Australia.