The proportion of own brand products is set to rise in Australia, as the nation's two largest supermarket chains push ahead with plans to introduce new, more up-market, private label ranges.

Coles will have three private label ranges - budget, mid-range and premium - while Woolworth's new private label groceries are pitched as being equivalent to branded market leaders.

The new private label varieties will cover a broader range of products and have a more visible identity than existing house brand products, which often have a low price and correspondingly cheap image. Previously, private label in Australia was largely synonymous with high-volume low-price staples, such as sugar, birdseed, butter, flour and vegetable oil.

Consumer group Choice magazine has said that these changes will probably result in savings for shoppers at the cost of choice, as smaller brands are squeezed from the market place.

"The top one or two market-leading brands will remain on the shelves, but smaller brands may be squeezed off to make way for private labels," said Choice spokesperson Lisa Tait.

The introduction of private label products to the Australian marketplace is expected to increase supermarket profit margins and up consumer awareness of retailer identity.

Tait said that there was some concern among consumers that private label products would be sourced from overseas rather than local producers. However, the industry has said that retailers are only likely to turn to overseas suppliers in the production of budget private label goods.

"As well, 'buying Australian' for the supposed good of the economy is a simplistic way of looking at a complex situation," Tait continued. "Other local and international factors are likely to have a stronger influence on the economy than how we fill our supermarket trolleys."