For the Love of Own Label
How own label, not brand, holds the key to our Industry future
An ugly whiff of snobbery has always surrounded the world of own label food in the UK, either borne out of a perception that brands can attract a higher level of intellect into their teams (propagated by brands themselves I’d imagine) or a belief that the business capabilities required to run a branded business are more sophisticated than those required to run an own label food manufacturer or maybe a bit of both. Whatever the form it takes or the motivation, this snobbery is misplaced, anachronistic and in many ways risks devaluing the opportunity our Industry has to attract much needed young talent into food manufacturing at such a critical time for our Industry.
“We are at a fork in the road…we must bring true variety-agricultural, commercial, ideological and nutritional-into food and farming…Only then can we get ourselves and our planet into shape for the future.”
According to a recent report in The Grocer (31st May 25) Own label food in the UK currently represents circa 48% of retailer volume vs branded products at 52% ( I don’t think that ratio has changed much over the last 30 years or so), but the key point to take from the latest data is that own label food is growing at over 3 times the rate of brand, having realised value growth of 3.3% in the past year vs brand growth of just 0.7%.
The most brand-comparative area of own label food, the Premium own label tier has seen value sales surge a massive 13.4% with Tesco’s Finest range seeing value sales rise 15% to £2.5bn - if Finest was included in The Grocer’s annual Biggest Brands report it would be top of the ranking ahead of the likes of Cadburys, Coke and Walkers.
Like a lot of young grads I too was attracted to well-known brands when I joined Whitbread in the early 90’s. I honed my sales and marketing skills selling Heineken and Stella to independent off licences across the country but it was while at Dairy Crest working with brands like Cathedral City, Clover and Yoplait that I was asked by my inspirational boss, Peter Thornton, to take on responsibility for own label sales in M&S.
“There is something very empowering about being the lead in an own label relationship with a large retailer that managing marketing-led activity based budgets for a brand never really matches.”
From staying in my fixed lane of overseeing the annual brand promotion plan I was now driving consumer-led, category innovation at the very heart of one of the UK’ s most exciting retailers. Using the formal training from my brand background I built an entrepreneurial approach to managing own label that triangulated sales, marketing and innovation allowing me and my team to approach retailer relationships with a growth vision for their category and a positive drive to help deliver on it.
Since launching Visionise in early 2012 I have worked with a cross section of large household brands, small challenger brands and large own label super manufacturers. From my experience the key management approach that separates brand from own label still seems to be driven by marketing.
Brands invest significantly more than own label into their marketing and the consumer insight that underpins it. They build large brand marketing teams with impactful budgets which steer the direction of the business but can sometimes lead to a myopic view on categories and consumer needs, especially when the brand is growing.
“The very best own label manufacturers I have worked with have an entrepreneurial outlook and tend to be led by progressives who empower their teams to create and apply their own v targeted-highly commercial marketing solutions designed to drive sales in their customers.”
The 5 areas where I see smart own label manufacturers having an advantage vs their brand peers are:
Innovation - the development teams in own label food (particularly in chilled categories) have a high degree of product launch experience validated by retail data as well as live competitive analysis, they have the flexibility and pace to succeed or fail fast and are increasingly attuned to the evolving nature of consumer needs. Yes, brands spearhead innovation but are hampered by guideline constraints, excessive risk mitigation gateways and a singularity of purpose that often restricts flexibility. In all our recent research Zillennials (consumers in their 20’s) keep flagging their love of M&S own label food and citing their innovation as the most exciting and accessible in the market.
Intimacy - the deepest and most empathetic customer relationships sit within the large own label customer teams. The trust that builds up, especially now in a world of longer contracts, creates a business intimacy where medium and long terms strategic clarity co-exists with highly reactive tactical pivoting.
“I was once selected to support an international beer brand with their customer strategy as the CEO realised that my own label expertise was more relevant to gaining customer intimacy than my brand focused competitors.”
Technical - the technical teams working in own label have to deal with significant regulatory and customer specific expectations and particularly in terms of ESG initiatives, own label manufacturers are helping retailers deliver increasingly ambitious net zero goals .The chilled own label technical teams have some of the most proficient and experienced food technologists in the world.
Integration - it’s essential for own label food manufacturers to have a fully integrated supply chain so that they can manage any constrictions to availability that might arise. Multi-level cross functional alliances are fostered to ensure the supplier is in lock step with their customer’s expectations, rather than seeing this customer-centricity as a potential weakness (as some brands continue to do) it is a guaranteed enabler of repeated value.
Entrepreneurship - this is the true super power of progressive own label teams - their ability to engineer increased margins, target innovations towards the right customers and categories, switch on volume at peak periods with little notice, fast track launches, build unique supplier partnerships and harness collaborations to drive sales all within a framework of sophisticated customer engagement.
Whilst branded businesses buy more consumer research than own label manufacturers it can sometimes lead to a tunnel vision that propagates the brand narrative they wish their customers to embrace. I am reminded of a time I was asked to facilitate a co-creation initiative with Tesco and one of their largest brand suppliers (UK Top 20) - the first morning was spent watching the brand present reams of data and insight designed to justify their commercial goal of category inflation, none of the data looked beyond the short term and none of it built on a position of neutrality around category growth and none of it was well received by Tesco. We managed to create a powerful shared category vision in the end but it wasn’t as easy as it could have been.
The big brands continue to power on and increased consolidation is giving them scale to survive the challenging headwinds. Challenger brands are beginning to struggle to remain relevant and to scale up beyond their early stage funding - the own label manufacturers that leverage their strengths and adapt their own sophisticated marketing solutions are now best placed to maximise value by supporting the major retailers’ continued growth, particularly in these straitened economic times and perhaps also are the best placed to deliver on the global existential challenge to our Industry that Henry Dimbleby continues to articulate so forcefully.
At Visionise we have been successfully creating impactful commercial marketing solutions for own label clients for over 13 years-get in touch if you want to set up a call to discuss how we can help your business.