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Own brands at the center of the dispute between supermarket and cash-and-carry chains

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Own brands at the center of the dispute between supermarket and cash-and-carry chains

Own brands are at the center of the dispute between supermarket chains and cash and carry stores in Brazil. With the potential to reduce the price passed on to consumers, products developed by food retail groups themselves have served as one of the main strategies to reduce customer evasion to the so-called cash and carry. Even though large companies such as Grupo Pão de Açúcar already have significant sales of their proprietary products, the general numbers in Brazil indicate great room for growth.

In Brazil, these brands, also known as private label, represent approximately 20% of total sales in Brazilian retailers that are pioneers in implementing the strategy. According to data from the analysis company Nielsen, in the Brazilian market as a whole, this share was just 2% in the first quarter of 2023, compared to the global average of 23%.

The main responsible for the expansion in Brazil are large chains such as Carrefour and Grupo Pão de Açúcar (GPA), which have seen the representation of their own brands in total sales double since 2018. The strategy has been central to reducing the migration of customers to wholesale stores , a modality that grew 5 times in Brazil from 2013 to 2023. With lower execution costs due to a leaner store structure, normally without services such as butchers, bakeries and produce, this model is capable of passing on lower values ​​in traditional industrialized brands to customers .

“This is one of the pillars [da estratégia de marcas próprias]: brake this exit from the client to the cash and carry. We created a brand that can offer even greater value for money than what is currently found in these competitors”, explains GPA’s Director of Exclusive Brands, Allan Gate Hock. The group focuses on creating top-of-the-shelf products to compete with more traditional labels with its Qualitá line, in line with the company’s focus on customers. premium.

Although private brands increase companies’ margins due to lower production costs — for example, marketing expenses and sales efforts are reduced — the main data that GPA has looked at is loyalty. Customers who consume Qualitá products, says Hock, go 2.4 times more often to Pão de Açúcar stores than those who buy products from other brands due to cost-benefit.

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But then, what pulls private label data down? First, the attacks themselves. Lagging behind in this strategy, the networks cash and carry According to Santander research, their own brand sales level is just 0.6%. “If you just look at retail, participation is higher,” explains Johnny Reitzfeld, CEO of the private label platform Amicci.

The platform’s CEO says that there is already a slow movement towards increasing the adoption of private labels by cash and carry — once again, to intensify the dispute with supermarkets and hypermarkets. “The wholesalers are trying to differentiate themselves in some way, because the price is no longer differentiating [em função das marcas próprias]. Now they have started butchering in stores, selling fruits and vegetables, and we have several clients with private labels in wholesale. It needs to differentiate itself in some way,” he says.

Amicci’s platform serves to connect fast-moving consumer goods retail chains — such as food, pharmacy items, pet stores and construction materials — with the industry for the development of proprietary brands. In addition, the startup also brings together packaging design service providers and regulatory experts to certify the accuracy of information contained on labels.

Antonio Sá, Johnny Reitzfeld and Danusa Tavares, founders of Amicci.

This attacks a second detractor of the general number of private label sales in Brazil: unlike markets like Spain, where three retailers can concentrate up to 60% of the market, increasing the exposure of their own brands to the public, in Brazil there is a greater level of dispersion in smaller and regional chains without the potential to develop its own brand. It was one of the gaps observed by Amicci, which also works with companies of this size. The startup observed the space for growth in the Brazilian market and is betting on connecting networks (large or small) with a greater variety of producers to find a balance between price and quality.

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“I think we have a role in this growth of private brands. This growth is also driven by technology. It ends up increasing accessibility, things become more scalable and increases access to the supplier base and processes”, explains Reitzfeld. “A retailer that was unable to ‘wear the industry’s hat’ and develop in-house, now can,” he says.

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