Where the brands have no names

As the supermarket wars intensify, our consumption of private-label products is going through the roof.

The stigma associated with ''home-brand'' goods a decade ago is gone, along with the ugly black-and-white packaging in many instances.

In the year to June 2008, private-label brands accounted for 13.5 per cent of total supermarket sales but that number is forecast to surge to 33 per cent by 2017-18, according to a new report by IBISWorld.

There are two reasons for our growing love affair with the supermarkets' own brands. First there is the new post-GFC frugality adopted by Australian consumers.

''I think initially it was driven by a surge towards seeking economy in grocery purchasing,'' a senior analyst for IBISWorld, Naren Sivasailam, says. That meant penny-pinching ''consumers were quite willing to experiment'', he says.

And then there are the concerted efforts by the two major supermarkets to broaden the range of products on the market and to improve their appeal.

''Packaging certainly has something to do with it too,'' Sivasailam says. ''It is the first point of sending a message to the consumer and says a lot about your position in the market.''

Coles now has five home brands across a group of staples, ranging from the very cheap to a gourmet brand - Coles Smart Buy, Coles Brand, Coles Green Choice, Coles Organic and Coles Finest. Woolworths also has an organic brand - Macro - and the Select, Fresh and Homebrand labels.

QUALITY ASSURANCE

There are certain types of products we are happier to buy from the supermarkets' private-label ranges at the expense of a well-known brand. These include dry goods and basic necessities such as bread and milk, IBISWorld reports.

Unsurprisingly, these are the areas in which the big supermarkets are more aggressive in their price contest and also ones where they often offer a diverse range of private-label options.

For example, you can buy a two-kilogram pack of Coles Smart Buy Rice Long Grain for $3.24 and also a two-kilogram pack of Coles Brand Rice Long Grain for $4.30 before you get to the more expensive leading brand of SunRice.

Woolworths is the same. You can buy a loaf of Homebrand White Bread Sandwich Slice for $1, which is less than half the price of a Woolworths Fresh White Bread Sandwich Slice with Hi Fibre loaf at $2.49.

In the IBISWorld study, products for which a private-label brand was not popular were chocolate, confectionary, soft drinks, cosmetics and sanitary products.

MORE TO COME

Despite the massive growth in private-label brands during the past decade, Australia still lags behind the rest of the world, Sivasailam says.

In Britain, private-label brands account for 50 per cent of sales at Tesco, the country's largest department store, and the European average is a little more than 30 per cent. But it's unlikely our shopping trolleys will ever entirely be filled with home-brand goods. IBISWorld expect total sales to level out at about the 33 per cent mark in Australia as consumers reach saturation. ''It will certainly plateau in the next five years,'' Sivasailam says.

Consumer associations and those representing suppliers are also concerned by the growth. ''Coca-Cola and Fosters have come out talking about the might of supermarkets in the last six months,'' Sivasailam says.

SUPERMARKET TEST

THE big supermarkets are using their home brands to compete at the low end with the cut-price stores such as Aldi and warehouse Costco. The increased range of private-label products now on the market is probably in part a result of these new entrants in the grocery industry.

But what's the result to the end consumer? To discover the price difference we looked at a fairly staple basket of groceries on the online stores of Woolworths, Coles and Aldi. Some websites require a location so we gave an inner-city Sydney suburb. Prices are as at Wednesday.

As the totals at the top of the page show, there is a significant price gap between well-known brands and their private-label equivalents. The home-brand basket at Coles is 38 per cent cheaper than the big-name brand basket and it is 35 per cent cheaper at Woolworths.

The Aldi basket is still cheaper overall, but the goods we chose from Aldi are from the limited list of product prices shown online.

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