Views on impacts of private-label growth

In the Packaging World/Contract Packaging survey, the assertion by 31% of the CPG respondents (see Fig. 4) that retailers sometimes block packaging innovation may owe in part to a perception held by some package-creation teams that retailer acceptance of innovation correlates with private-label penetration in some categories. One view held in marketing circles is that some categories reward innovative packaging more than others. This usually occurs when one or two national brands dominate a high-volume product category—such as soup or soft drinks—and bring in shoppers. Prevailing thought is that retailers believe in the need to follow the leader to keep sales high.

This perception also holds that retailers are more likely to place cost savings over innovation in categories lacking a dominant national brand. In pet food and elsewhere in the store, private-label products have gained more of a foothold with packaging that showcases much improved printing and graphics, but often includes stock packaging components to keep costs low. That appears to be the lead that national brands must follow in some categories.

“Retailers see some categories as not value-driven on the part of the national brands, so they feel they can be much bolder in seeking prices concessions from the big brands, and in questioning any innovation that would drive up price,” observes, Anne Bieler, senior associate at Packaging & Technology Integrated Solutions.

Despite those concerns, the overall view about the impact of private-label growth on packaging development was positive in the survey (see Fig. 3). Own brands are seen as jump-starting some product categories and providing opportunities to lift competing brands. And many respondents held the view that packaging suppliers and contract packaging service providers have plenty of valuable, untapped ideas sitting on their shelves for the benefit of all.

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