Solid and strong position on the market
An interview with Janusz Serafinski, Director for Retail Chains at PWC Odra S.A. Brzeg, about private label products and how the perception of them has changed over the years as well as about quality and certification.
How important for your company is private label production for Polish and foreign customers?
A growing trend connected with the intensive development of retail chains, which began after 2005, brought about the achievement of the main objective, i.e. the strengthening of Odra's position on the market, requiring continued expansion of the distribution network, mainly in modern trade, over the last five years. The company concentrated on winning new customers, extending its range of products and developing the private label sector, which became the driving force behind the development of many chains and attracted a large number of loyal customers. By achieving the set objectives connected with private label goods, the production of Odra products for this sector in 2009 grew by 26% (in a volumetric aspect) as compared to 2007. At present, the dynamics of the increase in private label production is growing proportionally to the increase in their significance in retail chains. The production of goods for this sector already constitutes a substantial portion of our sales not only on the domestic market, but also in retail chains operating beyond the borders of Poland.
What was the reason for your initial interest in the production of private label goods?
The confectionery market is growing steadily and evolving in line with the customers' needs. Despite the fact that traditional trade (constituting approximately 55% of sales at present) is still the most important channel of distribution, chains of supermarkets and hypermarkets are developing most dynamically. In the case of our company, it is connected with the necessity of expanding the private label sector range, especially in such retail chains which possess and actively develop their private label goods. Based on the research studies conducted in this area, Odra has formulated an action plan
for the development of products in this sector. The situation was very simple at the beginning; however, currently we are able to prepare a product adjusted to the needs of every customer. As a result of our operations in this area, our share of sales in modern trade has grown by 10%.
Does private label production constitute basic or marginal production activity?
We have more than 100 articles in our range at the moment. We are the leader in the production of halva and a significant player on the market of chocolate sweets, caramel drops and chocolates in Poland. Odra products are available throughout the whole of Poland, whereas the goods produced for the private label sector are prepared only for retail chains. Although the private label products constitute a large part of our sales, they are not the main area of production in our company.
What changes in the private label market in Poland and abroad have you noticed in recent years?
There is a popular saying that every product has its customer. Consumers' preferences change fairly often and are determined by such factors as the weather, mood and age. Even though we are a confectionery producer with a wide range of products, besides children aged 0 to 6, everyone is our potential customer. However, the so-called middle business market composed of people aged 20 to 40, without or with 1-2 children, receiving an average income, is the strategic market for our company and we have decided to aim our range of private label products mainly at them. The popularity of these products was growing in tandem with the increase in their quality and the intensification of the financial crisis, which led to a situation where customers started to look for cheaper substitutes with the aim of reducing expenditure. Such circumstances brought about a permanent and substantial increase in interest in private labels, and the myth of cheap low-quality products lost its relevance and slowly sank into oblivion. The perception of private label goods has changed as well; purchasing them is no longer considered a method for economic shopping, but a prudent and smart way of buying certain goods. Within the last two years, by observing consumers' behaviour and the apparent interest in the products from this sector, we have been able to say that the production and sales of private label products will continue growing.
The market for private labels will continue to develop very dynamically. Discount stores are responsible for the majority of private label sales; in our case, it is up to 90% of the entire production. Significant development of the modern trade channel, particularly in smaller cities and towns, is the reason for the constant growth of the sector. Moreover, many new customers find the diversity and attractiveness of products very appealing. On the other hand, the development of private label goods can be hindered by such factors as the continuing unfavourable perception of private labels by Polish consumers and their devotion to certain brands, as well as the increasing wealth of Polish society.
What is the difference between private label and branded products?
An private label is a line of products made for a given distributor and sold under this distributor's name and logo. They constitute a cheaper alternative to the goods of local and international exclusive brands; hence, they differ in packaging and price (on average by 20%), which is influenced by lack of costs connected with advertising.
What is the best channel for distribution of private label products?
Based on research studies, discount stores are the most effective distribution channel for private labels in Poland, which is reflected in our company’s sales results. Hypermarkets, supermarkets and traditional trade constitute other forms of distributing private label goods.
There is still a conviction lingering on in our mentality that private label products are characterised by lower quality than branded products. Is this actually true?
PWC ODRA S.A. belongs to the group of the largest confectionery producers in Poland and its share in the confectionery products market totals approximately 6% (calculated by tonnage of sold products). Implementing an Integrated Quality Management System in conformity with PN-ISO 9001 and a Food Safety System according to the requirements of PN-EN ISO 2200 and the BRC standard guarantees the highest quality and safety of our products. Therefore, PWC ODRA S.A., as a company with long-lasting traditions, cannot afford to make products with a reputation for dubious quality. Private label products are produced from the same components as branded goods, made with the use of the same machines and by the same people. The main aim of our company is to achieve a solid and strong position on the market, and to win the trust of consumers as well as establish collaboration with our business partners on beneficial terms.
Author: Maja Swiecka,
m.swiecka@foodfrompoland.pl
A growing trend connected with the intensive development of retail chains, which began after 2005, brought about the achievement of the main objective, i.e. the strengthening of Odra's position on the market, requiring continued expansion of the distribution network, mainly in modern trade, over the last five years. The company concentrated on winning new customers, extending its range of products and developing the private label sector, which became the driving force behind the development of many chains and attracted a large number of loyal customers. By achieving the set objectives connected with private label goods, the production of Odra products for this sector in 2009 grew by 26% (in a volumetric aspect) as compared to 2007. At present, the dynamics of the increase in private label production is growing proportionally to the increase in their significance in retail chains. The production of goods for this sector already constitutes a substantial portion of our sales not only on the domestic market, but also in retail chains operating beyond the borders of Poland.
What was the reason for your initial interest in the production of private label goods?
The confectionery market is growing steadily and evolving in line with the customers' needs. Despite the fact that traditional trade (constituting approximately 55% of sales at present) is still the most important channel of distribution, chains of supermarkets and hypermarkets are developing most dynamically. In the case of our company, it is connected with the necessity of expanding the private label sector range, especially in such retail chains which possess and actively develop their private label goods. Based on the research studies conducted in this area, Odra has formulated an action plan
for the development of products in this sector. The situation was very simple at the beginning; however, currently we are able to prepare a product adjusted to the needs of every customer. As a result of our operations in this area, our share of sales in modern trade has grown by 10%.
Does private label production constitute basic or marginal production activity?
We have more than 100 articles in our range at the moment. We are the leader in the production of halva and a significant player on the market of chocolate sweets, caramel drops and chocolates in Poland. Odra products are available throughout the whole of Poland, whereas the goods produced for the private label sector are prepared only for retail chains. Although the private label products constitute a large part of our sales, they are not the main area of production in our company.
What changes in the private label market in Poland and abroad have you noticed in recent years?
There is a popular saying that every product has its customer. Consumers' preferences change fairly often and are determined by such factors as the weather, mood and age. Even though we are a confectionery producer with a wide range of products, besides children aged 0 to 6, everyone is our potential customer. However, the so-called middle business market composed of people aged 20 to 40, without or with 1-2 children, receiving an average income, is the strategic market for our company and we have decided to aim our range of private label products mainly at them. The popularity of these products was growing in tandem with the increase in their quality and the intensification of the financial crisis, which led to a situation where customers started to look for cheaper substitutes with the aim of reducing expenditure. Such circumstances brought about a permanent and substantial increase in interest in private labels, and the myth of cheap low-quality products lost its relevance and slowly sank into oblivion. The perception of private label goods has changed as well; purchasing them is no longer considered a method for economic shopping, but a prudent and smart way of buying certain goods. Within the last two years, by observing consumers' behaviour and the apparent interest in the products from this sector, we have been able to say that the production and sales of private label products will continue growing.
What are your forecasts for the private label market?
The market for private labels will continue to develop very dynamically. Discount stores are responsible for the majority of private label sales; in our case, it is up to 90% of the entire production. Significant development of the modern trade channel, particularly in smaller cities and towns, is the reason for the constant growth of the sector. Moreover, many new customers find the diversity and attractiveness of products very appealing. On the other hand, the development of private label goods can be hindered by such factors as the continuing unfavourable perception of private labels by Polish consumers and their devotion to certain brands, as well as the increasing wealth of Polish society.
What is the difference between private label and branded products?
An private label is a line of products made for a given distributor and sold under this distributor's name and logo. They constitute a cheaper alternative to the goods of local and international exclusive brands; hence, they differ in packaging and price (on average by 20%), which is influenced by lack of costs connected with advertising.
What is the best channel for distribution of private label products?
Based on research studies, discount stores are the most effective distribution channel for private labels in Poland, which is reflected in our company’s sales results. Hypermarkets, supermarkets and traditional trade constitute other forms of distributing private label goods.
There is still a conviction lingering on in our mentality that private label products are characterised by lower quality than branded products. Is this actually true?
PWC ODRA S.A. belongs to the group of the largest confectionery producers in Poland and its share in the confectionery products market totals approximately 6% (calculated by tonnage of sold products). Implementing an Integrated Quality Management System in conformity with PN-ISO 9001 and a Food Safety System according to the requirements of PN-EN ISO 2200 and the BRC standard guarantees the highest quality and safety of our products. Therefore, PWC ODRA S.A., as a company with long-lasting traditions, cannot afford to make products with a reputation for dubious quality. Private label products are produced from the same components as branded goods, made with the use of the same machines and by the same people. The main aim of our company is to achieve a solid and strong position on the market, and to win the trust of consumers as well as establish collaboration with our business partners on beneficial terms.
Author: Maja Swiecka,
m.swiecka@foodfrompoland.pl