Wholesale grocery company Metcash is planning to focus on bargain hunting consumers by expanding the number of products in its Signature house brand range, banking on growing demand for home-cooked meals.
The group will release more than 260 products in its Signature brand this month, followed by another 240 over the next three months, which will replace several of its no-name products already available.
The company will also continue to expand its Black & Gold brand by adding to the 1000 products already available. The brand is currently achieving 12% growth, and sells at up to a 50% discount to similar grocery products.
Chief executive Andrew Reitzer says the emphasis on home brands has been increased as the economy has stalled.
“We have a two-pronged approach to house brands. The first is the cheap generic brand which is the Black & Gold product, and secondly, what we’re finding in the market is that more and more consumers are looking for a mid-way point between a popular brand and a no-name product,” he says.
“Black & Gold is good for those looking for a house brand, but the Signature brand is driven by consumer demand where people don’t necessarily want generic products.”
Reitzer says it is clear that consumers are looking for more value in their purchases, and Metcash is determined to cash in.
“If you look at our growth in Black & Gold, it’s 12% and our normal growth is somewhere around 8% or 9%. In these times when we do run promotions, when we sell promoted product, we’re selling more of it. When an item is on promotion now consumers are taking four instead of two.”
The company says private label brands should make up between 13% and 14% of total sales. It has confirmed its profit guidance of $222.8 million.
“I don’t think there are too many companies that can confirm guidance they set 12 or 13 months ago, and we’re in a good enough position to do that,” Reitzer says.
Metcash is one of few companies on the Australian sharemarket whose share price has actually remained steady over the last 12 months.
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