The price gap between private label and brands did, in the main, close in the last quarter in 2012, according to the latest figures from the just-food international basket. SymphonyIRI, which compiles the data for just-food, argues the numbers support its belief that an over-use of price-based promos is dated.

World food prices are stable after falling in the last three months of 2012, according to the UN Food Organisation’s recent announcement. 

This quarter’s SymphonyIRI barometer compiled exclusively for just-food on the cost of an average food basket in Europe and the US shows that, despite the commodity cost of food remaining flat, prices in some countries continue to rise, even if only marginally.

Only in Greece, Italy and Spain are prices coming down. Even here, in Europe’s most constricted economices, we can see the more expensive national brands are responding most to the pressure to keep prices low by reducing the price of their products with promotions and other strategies. In Greece for example, the price of a basket filled with national brands fell by just under one euro from EUR27.33 to EUR26.39. Conversely, private-label brands put their prices up. The basket in Greece for private-label brands increased 79 cents from EUR15.80 to EUR16.59. 

The rising price of a basket filled with private-label brands in every country in our barometer (except the US) reflects the confidence that retailers feel, as shoppers all over the world start to value private-label foods almost as much as they do for national brands. This has been driven partly by an increased focus by retailers on branding of their own ranges, but also by the fact that savvy shoppers, who are balancing the total cost of their shopping baskets, are more comfortable buying private label products. In fact, many private labels are now brands in their own right and those that promote the use of local ingredients are finding favour with shoppers concerned about the provenance of their food. 

Of course, shoppers in Greece are already loyal buyers of private-label products and where hard discounters are developing actively their presence. 

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Hard discounters are also a force in Germany, but here we are seeing prices for the cost of a food basket filled with private label rising at the same pace as national brands. Retailers in Germany are not closing the price gap between national brands and private label as fast as the rest of the countries analysed in this barometer. Shoppers in Germany do adopt a more functional approach to food choices whereas in other European countries (France, Italy, Spain, Greece for example) food choices are an important part of the culture and lifestyle. 

It is also interesting to note those countries more severely impacted by the economic climate are seeking solace in their food, buying luxury items as a way to forget about their troubles and experience moments of pleasure in their day.

So although price remains important, shoppers are changing their purchase behaviour in all of the countries we analyse for this barometer. Provenance and quality were becoming more important to shoppers even before the recent horsemeat scandal and this is only likely to increase further now. Shoppers across Europe had already told us they intend to buy less ready meals and cook more for example so it’s no surprise to see sales of frozen ready meals have been showing signs of decline for a while.

Retailers and brands need to pay attention to these changes in shopper behaviour before they embark on new price wars. Shoppers may find it easier to compare prices of products in the same category more easily online – and many do so regularly – but it is the overall quality and value of their basket that continues to be the key driver for the choice of place to shop in most countries. Many retailers are already responding to the more discerning shopper by launching initiatives that focus on quality local food from local suppliers – Waitrose in the UK and Coop in Italy for example. 

What consumers are prepared to pay for food depends on how they value quality and more shoppers are telling us they care about the provenance of their food. We expect to see a renewed interest in branding that emphasises quality, provenance and overall value from manufacturers and retailers. Over-use of price-based promotions is a dated strategy that may not be relevant to the majority of shoppers over the coming years as they continue to change the mix of national brand and private label to suit their budgets and lifestyle.