Metcash is boosting its effort in the controversial private labels market with a revival of its No Frills brand, with the company to distribute the brand to 365 stores as supermarket-owned foods continue to dominate shelf space.
The move comes as both Coles and Woolworths have been expanding their private label ranges, with recent research from IBISWorld showing private labels would make up 33% of total supermarket sales.
Metcash acquired the No Frills brand in 2011 as part of the company’s $215 million purchase of NSW supermarket chain Franklins. The beloved Black and Gold brand will be repositioned as a middle-of-the-range option, the company has said.
IBISWorld senior analyst Naren Sivasailam told SmartCompany in July last year private labels accounted for a quarter of all supermarket sales up around 8% from 2008.
“It all precipitated given the global financial crisis and consumers were looking for value, supplemented with Coles and Woolworths ramping up their private labels offerings.
“I think the rise is a combination of consumers looking for value and supermarkets looking tapping into that,” Sivasailam says.
With 61 products in the range, The Australian reported No Frills sales are expected to double to $40 million this year.
Sivasailam says private labels are important because they help maintain product diversity in the supermarkets. “There’s nothing better for consumers than more choice, as to if this is the best for supermarkets this is yet to be seen,” he says.
The revival of No Frills comes as the Australian Competition and Consumer Commission objected yesterday to the acquisition of baby food brand Rafferty’s Garden by Heinz.
In the ACCC statement chairman Rod Sims said the acquisition would remove market competition.
Rafferty’s Garden, owned by private equity firm Anacacia capital, currently holds more than 25% of the wet food sales market and also makes dry foods.
“The ACCC’s preliminary view is that the proposed acquisition would result in the combination of the two largest suppliers of wet and dry infant food in Australia and would remove Rafferty’s Garden as one of Heinz’s closest and most vigorous and effective competitors in the wet and dry infant food markets.
Rafferty’s Garden, owned by private equity firm Anacacia Capital, currently holds more than 25% of the wet food sales market and also makes dry foods.
Despite new players in the baby food market, the ACCC is taking submissions until February 28, 2013, regarding the acquisition and a decision will be made on March 21.