A “price war” is likely to kick off on supermarket shelves in the first half of next year, analytics firm IRI predicts, as small and medium sized FMCG brands are increasingly squeezed by private labels amid the pressures of inflation.
The “squeezed middle” is already losing volume and value, IRI finds. In the year-to-date (YTD) to May 2022, medium-sized manufacturers had a 25.4% share of food sales, down from 26.1% in the second half of 2021. Similarly, small brands saw their share of food sales decline from 14.1% to 13.8%.
Meanwhile, supermarkets’ private labels increased their share of food sales from 35.8% in H2 2021 to 37% over the YTD to May. Inflation has risen even further since then, and consumer concerns about the cost of living over the winter months is likely to drive an increasingly rapid move towards cheaper private label goods.
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