Price increases boost own label

Grocer,  August 23, 2008  

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Uncle Ben's claims the top slot in the TNS rice and noodle brand Top 10 for the 52 weeks to May 18, followed by Batchelors and Tesco.

These top three positions are all unchanged from last year, but Sainsbury's and Asda--in fifth and sixth place respectively--have lost ground, while Morrisons has profited, moving up to number seven.

When it comes to dry rice, own label accounts for 72% of the market by volume and 52% by value, according to Tilda.

Price increases are boosting this side of the market, adds Tesco rice buyer Steve Ewels. "Own label is currently growing just behind the overall market in volume sales," he explains. "But, with increases in prices over the past year, value sales are ahead."

Between them, own-label and Tilda are the key growth drivers behind the significant value growth in basmati, says Ewels, adding that there has been "some strong growth from own-label ready-to-heat rice".

However, brands have made the greater part of the running in the ready-to-heat sector. Tilda and Uncle Ben's have run heavy TV and promotional campaigns, while the launch of Veetee's tray-based Dine In range last June added to growth.

In-store promotional activity has been reduced with multibuys less common in recent months as a result of worsening availability issues.

Taking a look at the global situation, availability may not be set to improve any time soon. "The world's population has been increasing but rice production over the past decade has remained relatively static," says Tony O'Connor, chief operating officer at Veetee.

Tesco's Ewels points out that the chain has a "constant dialogue" with branded and own-label suppliers regarding availability.

"Worldwide demand for rice, especially basmati, continues to exceed supply as the market feels the effect of global warming, oil price rises and the attraction for farmers of growing other crops for biofuels," he says.

"Our commitment is to secure a constant supply of great-quality basmati while delivering the Tesco value consumers have come to expect and we have plans in place with our suppliers to manage this issue."

Building up the own-label side of the ethnic foods fixture will be a central focus for Tesco next year, says Ewels. "Our key challenge will be to manage ranging space in the light of a range of opportunities to support the ethnic diversity of the UK," he says.

Speciality rice, for instance, is sharing strong growth (see right). But, as with all trends in the market, how it goes will all boil down to availability.

COPYRIGHT 2008 William Reed Ltd.
COPYRIGHT 2008 Gale, Cengage Learning