While India's retail industry continues to scale new heights each year, the private-label area in the fast-moving consumer goods (FMCG) arena has shown incredible consistency and potential.

In fact, Nielsen estimates that India's private-label market will grow fivefold to reach the USD half billion mark by 2015. With a projection like that, India's private-label sector is better poised than its counterparts in other emerging economies. It also highlights shifting attitudes and perceptions with respect to brand loyalty.

Food Dominates India's Private-Label Market

The food category alone accounts for 76 percent of the total sales in private label, and within this, some areas are making bigger waves than others. Packaged grocery, for example, has a particularly dominant position, as it pulls in a whopping 53 percent of total sales.



While segments within the foods category like packaged rice, packaged atta and pure ghee have garnered the highest value sales, a few private-label segments are generating sales that are stronger than their modern trade equivalents.



In the non-food category, household cleaners hold the top position, accounting for nearly half (48%) of the private-label sales. Personal care, fabric care and the general category are other segments which contribute significantly to non-food.

What's Driving the Change?

To identify what drives the private-label market, it's crucial to understand the characteristics of the modern shopper. With growing levels of disposable income, shoppers are far more open to experimentation than ever before. With the rise of modern trade, the perceptions about grocery shopping have changed. Rather than viewing shopping as a chore, more and more Indians are finding it to be a more pleasurable experience.

The format has also triggered the transformation of the shopping experience from being a necessity to becoming a sensorial experience with less dependence on planning and a fixed list of brands. Interestingly, we find that consumers sometimes choose private labels in certain categories because of the assurance they get from knowing that they can interact directly with the retailer during their shopping trip.

Not all categories have achieved private-label success

In spite of the robust growth in the private-label market, certain categories have yet to make successful inroads. For example, baby care and baby foods products have been less successful. Retailers can help overcome the challenges that certain product categories face by enhancing in-store awareness, increasing visibility and providing value for money options.

As private labels gain traction, national brands need to focus more on differentiating their products to prevent shoppers from switching. Considering the steady growth rate of private labels through modern trade, it looks as though India's fast-moving consumer goods market will continue to diversify with increasing levels of private label and national brand products on offer.

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