How important for your company is production for the Private Label sector for Polish and foreign recipients?

-  Apart from the production and distribution of own chocolate products of the brands Terravita, Cocoacara, Alpinella, we also produce for the Private Label sector both for the Polish market and abroad, for clients such as Makro, Real, Auchan, Kaufland, Eko and Polomarket. Production for the Private Label sector is a significant source of income for us. Basing on the available data, we can say that we control about 15% of the Polish Private Label market in the category of chocolate bars. When it comes to Eurovita’s sales structure, own brands constitute over 10% of the value.

What caused you to gain interest in the production of own brands?

-  Eurovita has been one of the biggest players on the Polish market of chocolate bars for many years. Our chocolate brands Terravita, Cocoacara and Alpinella are well-known not only in Poland, but also abroad. As a company we have great experience in their production. Therefore, chain stores started to send inquiries and propose to take part in tenders on their own. That is how it all started. Over the past few years there has been a noticeable growing interest and significance of Private Label products, so this is a huge sales potential. For example, in 2002, the sales value of Private Label in Poland constituted only 5%, whereas in 2008 these shares amounted to over three times more. When simultaneously analysing the situation on foreign markets, nothing seems to indicate that this situation is about to slow down in the years to come.

Is the production for Private Label your basic production activity, or is it rather marginal?

-  The basis of our business activity is the production and distribution of Terravita, Cocoacara and Alpinella chocolate products. They constitute the majority of the production. Private Label is rather a significant supplementation of our activity. Thanks to many years of experience as a Polish producer of the most important own brands and to available production capacity, we are able to effectively compete on this market by continuously winning tenders. This ensures us of the high quality of our services in this scope.

What changes have you observed on the Private Label market in Poland and abroad over the past few years?

- On the Polish market, a positive change is transferring the emphasis on price to quality. Currently, Private Label products are no longer products, where the low price is obtained at the cost of quality, but definitely these products are more often of good quality for relatively low prices. The development of the Private Label market in the direction of high quality products has caused, that various price levels are begun to be introduced on the Private Label shelf. Therefore, brands such as Real Quality or Fine Food have appeared, where not only the price is to be a distinguishing mark for the consumer.

In your opinion, what are the forecasts for the Private Label market?

- The growth tendency on the market of Private Label has been steady for years. In Poland, this market has grown several times in the years, and there are no symptoms of this trend slowing down. The fact that the Private Label market is developing in the direction of high quality goods for low prices, causes these perspectives to be promising. In the near future, an additional development motor may be the difficult economy situation in the world. More and more consumers searching for cheaper products will be reaching for these own brands of chain stores. Therefore, I believe that the Private Label market is still at the development stage.

What is the difference between Private Label products and brand name products?

- The similarity of own brand products to brand name products is based above all on the form that has been generally accepted in a given category (for example 100 g bar of chocolate). In remaining areas, differences can be mostly found. The primary difference concerns the strategy of a given brand. The most important value of own brand products is the low price, maintained and even emphasised, while the product declares high quality. Further differences are packaging. The graphic side usually has nothing to do with the original brand packaging, and the collective packaging is often much larger. Of course the distribution method differs, as most often own brand products are the property of given chains and are available only within their limits, while the distribution of original products is much wider. Also the recipe of the product itself, in the process of creation it undergoes diverse modifications. The great differences are also distinguishable in outlay for the promotion of a given brand. Strong original brands most often require greater outlay for promotion. Thanks to saving on promotion, own brands can be offered at much lower prices.

What is the best channel of distribution for Private Label products?

- The natural and most frequently occurring channel for own brands are large chain stores. Thanks to their scale of activity, it is easier for large chain stores to order and effectively sell large parts of products. Aside from this, chain stores, very often competing between one another in prices, search for cheap products, which will attract clients to the supermarket. Own brands ensure the realisation of this aim.

There is an opinion, that Private Label products are worse in quality than brand name ones – is this really the case?

- This question was practically answered before, when we talked about current trends on this market. When we talk about Private Label, we need to realise, that the client determines the primary parameters of the products, which will be sold. The parameters depend on the strategy that the client takes in creating his own brand. It is sometimes the case, that when a strategy is only set for low price, the quality of the product can differ from the original product. Of course, everything in compliance with the obliging standards and regulations. The consumer is beginning to be more and more demanding, even when we talk about products of first price. This regularity is noticed by almost all Private Label owners, that is why, in order to maintain one’s brand on the market, often products are offered that are comparable, and what is interesting, sometimes even at a better position than original products.

Thank you for the interview.
Agnieszka Najda