Private Label a cheeper alternative or not?

By Paul van der Raad

paul.van.der.raad@vpg.dk

In recent months, three consumer magazines, namely in Germany, Denmark and Norway, have conducted tests with dried dog food. The conclusions reached in these tests have resulted in a debate among all of the players involved including manufacturers, veterinarians, and retailers as well as consumers.

In this article I would like to focus on the trends occurring within private labels for pet food, as well to participate in this interesting debate which has arisen on the tests carried out by the well-known consumer magazines in various countries.

Trends

l         First of all, I will address the question what the latest trends have been during the past 12 months. I would like to start with the fact that the growth in market share of private labels is a trend or rather a market development which will involve the strong traditional top brands on the one hand, brands will become stronger and then private labels on the other hand. The brands losing market share will most likely be the local or national brands unless these brands begin to become more international top brands. However, manufacturers have to make up their minds; either they invest more in strengthening their brand or decide to manufacture for private label, something that normally requires cost leadership strategies. Even private label manufacturers are faced more and more with the choice of being a producer of low-end private labels (in other words, being the absolute cost leader) or being a producer of private labels for premium and super premium quality products. The significant difference is in the quantities and the quality of the raw materials as well the innovation in packaging.

l         If we look at trends within product categories, it may be stated that for the dog and cat category, there is an interesting development towards so-called wuper premium products. This simply involves retailers benchmarking super premium top brand products sold in specialty shops. Good examples of this include the dried dog food frand Alnutra which Is sold by Aldi or the Optimal Diet cat food sold at coop Denmark, which has proven to be very successful. This last product contains fresh neat or poultry for example, which are a very good and high quality source of protein which is not even used in many top brands.

l         Another trend responsible for the success of these private label products is the chosen types of packaging. All of the products have an attractive aluminium appearance where the bags have a zipper closure, allowing the bag to be reclosed again after each use.

l         Functional food or dried dog and cat food with neutraceuticals is the current and up-and-coming trend among pet food sold under private labels. All raw materials used in these products are high quality and boast 100% traceability, thus meeting international standards.

l         For other categories such as birds or small animals, the development of private labels is not as substantial as it is within the dog and cat categories. In looking at market developments, we must keep in mind that the bird category is declining and that for small animals is growing throughout Europe.

Consumer Magazines Pet Food Tests

One thing may be said of all three tests conducted by the consumer magazines in Norway, Denmark and Germany. Everyone has a different opinion on both the tests as well as the results, the methods used and the way the results may be interpreted. Among the dog foods tested, there were many private label products. None of the over 40 dried dog food products tested were judged as "bad", on the contrary, in general the private labels performed very well and surprised many people, a true point of recognition and breakthrough for private label products in many aspects. And some products did naturally receive less positive reviews, but this was also true of many of the top brands.

Cheaper dried dog food products, primarily private labels, are good quality and meet all of the required standards (international standards set by NRC, AAFCO or FEDIAF). The assumption underlying all three tests is that the foods were being fed to dogs which were healthy to start with .

We have to keep in mind that the tests made are all based on chemical testing. The difference in quality may easily be read from the statement included on the packaging, in other words, that the ingredients' are stated in declining ranking order of the materials used in the products. Quality differences will be observed between the different top brands, as well as between the different private labels, after all, that which has been said many times before is in fact true: better raw materials result in better products. This could either be sources of protein or fat or the type of cereals used in the recipe. This, however, may not all be found in the statement of ingredients, but instead may only be seen by looking at the dog or cat itself. To test this will require longer-term tests in kennels or even the observation of dogs and cats in private households with testing panels in which the well-being of the dogs and cats is monitored.

But at the end of the day it is up to the pet owner to decide, which product he or she wishes to feed his or her dog or cat, and how much he or she would like to spend on his or her pet. Maybe then the pet owner will be the one to answer the question: private label – a cheaper alternative or not?

PETS International Magazine ISSUE 4,2004