Growing taste for house brands

Supermarket house brands are shedding their image of being low quality and inferior.

Sales of such items have risen by 6 per cent to more than 20 per cent year on year, said supermarkets, which are expanding the variety and adding premium products such as abalone and organic food.

In a study released by market research firm Nielsen last month, nearly three in five consumers in Singapore consider house brands, in general, as good alternatives to other name brands. Only about one in two felt this way in 2010.

More also feel the quality of house-brand goods to be on a par with name-brand products, with 45 per cent of the respondents saying so, up from 28 per cent in 2010.

A spokesman for Dairy Farm Singapore, which operates Cold Storage and Giant, said: "Consumers are now more receptive towards house brands as they can have greater savings without compromising on product quality."

House-brand items are usually between 5 and 20 per cent cheaper than other labels, as supermarket chains are able to cut down on intermediary costs and advertising.

Mr Seah Kian Peng, chief executive of NTUC FairPrice, said: "We are able to lower costs and make the price point sharper so consumers benefit. We choose products which we feel have high demand."

FairPrice has more than 2,200 house-brand and private-label items, Cold Storage has more than 2,000 items and Giant has more than 1,500. Sheng Siong and Prime supermarkets have more than 400 and 137 such items, respectively.

Most of the supermarket chains run a few house brands and private labels. For instance, FairPrice has two brands called FairPrice and FairPrice Gold as well as several private labels, including Pasar and Budget. Its fresh produce and frozen meat categories are popular and make up more than 70 per cent of sales of house brands and private labels.

Over the years, premium products and better-quality staples have also been introduced under the house brand. This was in response to consumers' buying habits and needs, said a Giant spokesman.

Sheng Siong started selling abalone under its Happy Family label several years ago and FairPrice launched a Pasar Organic Label in 2008. Cold Storage has two house brands, Savour and Gourmet, which offer higher-quality products than its Essential label.

Demand for house brands has also gone up at health and beauty stores. Guardian has seen sales of its house-brand items grow between 5 and 7 per cent in the last two years. At Watsons, sales have doubled for its house-brand baby product range compared with last year.

While the image and standards of local house brands appear to be improving, they still have not caught up with those in mature markets such as Australia, Britain and the United States, said Mr Pete Gale, head of retailer services for Nielsen in the Asia-Pacific.

Packaging is one area in which house brands have fallen behind these markets, said retail expert Samuel Tan, course manager for retail management at Temasek Polytechnic.

"Generally, the product design and packaging of house brands are lacking in creativity and thus may not be attractive to shoppers," said Mr Tan.

Still, this has not put off consumers such as assistant producer Adeline Chan, 26. She buys local house-brand soya milk and dried beans from supermarkets.

"Some people might say they are inferior, but I do not notice any difference in quality compared with other brands. They are good enough for me," she said.

This article was first published on Dec 14, 2014.
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