Brands strike back: Spanish consumers and private label

Five months ago, Spain’s largest supermarket operator made the biggest splash in the country’s retailing history by eliminating 900 branded products from its shelves. The chain, Mercadona, owns the most popular private label in Spain, Hacendado.

Currently, the share of market for branded products in primary retail categories is more than 50 percent. The question is whether Spaniards’ bonds with brands are strong enough to avoid a shift toward a private-label-led retail model (as is the case in Germany).

Now Ipsos has issued a qualitative and quantitative study of Mercadona’s customers, finding that 40 percent are against the change and 30 percent are in favor of it. Another 30 percent are unsure. Overall, 55 percent said they are unhappy about having less choice, while 40 percent said they will shop elsewhere if they don’t find their usual branded products on the shelves. Sixty percent said there are some branded products they could not go without.

Meanwhile, a consumer movement, (“I want to choose”), has been created to defend the presence of brands in retail stores. And Pascual, the leading milk brand, is airing a TV ad explaining that private labels’ cheaper prices are the result of a real quality compromise.

It’s too soon to know if the Ipsos research reveals a solid sign of private label resistance, but it seems clear that in spite of the downturn, brand value is still healthy in Spain.

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