The economic downturn has seen private label, already more prevalent in Europe than in the US, make greater strides across almost every market in the region. SymphonyIRI's Rod Street, pointing to the just-food international basket, launched today, says the price difference between own label and brand is 50% in some markets. Brand owners must act quickly, Street says, to work out where and how to defend their share.

As economic gloom settles across most of Europe, shoppers are reaching a threshold on their ability to absorb the burden of price increases in many aspects of their expenditure, not just their weekly grocery bill. Value has become ever more important.

But price is not the only measure of value. Quality, flavour, durability and ease of use are also being assessed by conscientious shoppers. The new international basket provided exclusively to by SymphonyIRI this month identifies and then tracks 14 items from an average shopping basket. The data provides a quarterly tracker of price changes and relativities in a selection of own-label and branded products across seven of the key countries in the EU and an indication of how much FMCG product is being sold on promotion. Over time we will be able to see how the economic environment impacts shopper behaviour across Europe. This month's data illustrates the shifting power balance that recession is driving between retailers' own-label ranges and national brands in Europe. 

It's not just recessionary pressures that are driving shoppers to buy more own label. Some of the Continent's leading retailers are raising their own-label game – think of Carrefour or Asda's recent revamp or the continued growth and push from Mercadona or Aldi. They are innovating with more fresh, ethical or tailored products, clever pricing and new branding and assortment strategies and leveraging their control of shelf space to drive profile. 

Consumers now perceive private-label brands to be 'real' brands in their own right. Our most recent report Retail Private Label Brands in Europe highlights that in FMCG as a whole, shoppers in Europe buy nearly as many private-label brands as they do national brands. They consider many private label products to be as good as national brands, and in some countries, better. The value share of private-label goods has increased in every country, except in the United Kingdom, and is now an average of 30% across the region. National levels vary from as much as 49.2% of all FMCG products sold in the United Kingdom to 16.1% in Italy. This compares to around 18.5% in the USA. 

Our typical European shopping basket illustrates one of the principle reasons why. The own-label variant of our basket costs at least 28% less than one filled with national brands and in Germany and Spain, where discount retailers like Aldi, Lidl and Mercadona have a strong presence and impact, the price difference between own label and national brands is around 50%: half the cost of buying the branded equivalents.

The risk of own label varies both by category (foods are much more vulnerable than health and beauty products) and strategy. Aggressive branded players fight with considerable success, using innovation, alternative channel strategies, bold communications, effective promotions and pricing to bolster differentiation. Own-label penetration remains lower in categories where the consumer has a strong and sustained relationship with brands. Shoppers still seem to prefer to buy national brands where they offer good value. 

Nonetheless, monitoring the price gap in your category is critical as the price challenge is considerable at the moment and it strongly shapes the behaviour of shoppers in most categories. Prices in our random basket have increased in every country (and by as much as 8% in the Netherlands) except Greece where, faced with some of the highest prices in Europe, shoppers have been squeezed to their limits. As a result brands are being forced to reduce their prices to meet sales targets. In Greece though, they are not alone in facing cost and price pressure. The price gap between own label and national brands has also decreased reflecting the impact of the squeeze on retailers and their own-label suppliers.

As retailer own-label products continue to raise their game, national brands need to put in place solid plans on where and how to defend their share of shopper, especially in the face of retailers who are fighting their own competitive battle and see own label as a strategic weapon to capture shopper attention and loyalty.

Retailers will need to continue to enrich the breadth and depth of their own ranges at a pace to grow their share of trade. Finding an edge will demand looking ever more closely at the needs of individual categories and shoppers, if they are to succeed. 

I doubt that 2012 will be any easier.