The FMCG industry is witnessing an intense battle between private labels and national brands. With changing consumer preferences, rising inflation, and the growing influence of modern trade and e-commerce, private labels (store-owned brands) are gaining traction. At the same time, established national brands continue to dominate through strong brand equity and mass marketing.
So, who is winning this battle? In this blog, we will explore the differences between private labels and national brands, their advantages and challenges, and how technology, including Sales Force Automation (SFA), is shaping this competition.
Understanding Private Labels and National Brands
Private labels, also known as store brands or retailer brands, are products developed and sold exclusively by a retailer. Examples include Amazon Basics, Tesco’s Finest, and Walmart’s Great Value. These products are usually priced lower than national brands, offering consumers a cost-effective alternative.
National brands, on the other hand, are well-known products manufactured by established FMCG companies and sold across various retail stores. Examples include Nestlé, Unilever, P&G, and Coca-Cola. These brands invest heavily in marketing and have a strong consumer following.
Why Are Private Labels Gaining Popularity?
Affordability and Value for Money
Private labels typically offer similar quality at a lower price than national brands. As consumers become more price-conscious, especially during economic downturns, they are more willing to try private label products.Retailer Control and Higher Margins
Retailers have full control over private label pricing, marketing, and placement, allowing them to maximize profit margins. Since they eliminate the middleman, private labels are more profitable for retailers compared to national brands.Changing Consumer Perceptions
Earlier, private labels were seen as cheap, low-quality alternatives. However, improved quality and innovative product offerings have changed consumer perceptions, making them a preferred choice in many categories.E-commerce and Direct-to-Consumer Growth
Online marketplaces like Amazon and Flipkart are pushing private labels aggressively, leveraging customer data to launch high-demand products. This has intensified the competition with national brands.
How National Brands Continue to Dominate
Strong Brand Loyalty
National brands have been around for decades, building trust and loyalty among consumers. Many buyers prefer sticking to familiar brands rather than experimenting with unknown private labels.Mass Marketing and Advertising
FMCG giants invest heavily in TV, digital, and influencer marketing, keeping their products top of mind for consumers. Private labels, with limited marketing budgets, often struggle to match this reach.Wider Distribution Network
Unlike private labels restricted to specific retailers, national brands are available in supermarkets, convenience stores, e-commerce platforms, and even local kirana stores. This extensive reach gives them an advantage in volume sales.Product Innovation and R&D
National brands continuously invest in research and innovation, introducing new product variants, healthier alternatives, and sustainable packaging. This helps them stay ahead of private labels, which often replicate existing products rather than lead innovation.
Key FMCG Categories Where Private Labels Are Winning
Grocery Staples: Private labels in categories like rice, pulses, and spices are doing well due to minimal brand differentiation.
Personal Care: Many retailers have introduced premium private-label shampoos, skincare, and grooming products, challenging big brands.
Household Cleaning: Private label detergents, disinfectants, and tissues offer similar quality at lower prices.
Snacks & Beverages: While national brands still dominate, private-label chips, biscuits, and juices are slowly capturing market share.
Role of Technology and SFA in This Competition
Technology, especially Sales Force Automation (SFA), plays a crucial role in how both private labels and national brands operate.
For National Brands: SFA tools help companies track retailer performance, manage promotions, and analyze market demand in real time. This enables better distribution strategies to counter private-label competition.
For Private Labels: Retailers use SFA and analytics to monitor customer preferences, optimize inventory, and ensure their products are well-stocked and promoted at the right time.
Who’s Winning?
The answer depends on the category and market segment. In grocery and essential categories, private labels are making significant inroads, while in premium and high-trust categories, national brands continue to dominate. However, as technology, e-commerce, and changing consumer behavior reshape the FMCG landscape, the competition will only intensify.
Both private labels and national brands must adapt, innovate, and leverage digital tools like SFA to stay ahead in this evolving market.