I’ve become rather pessimistic about branded food manufacturers (not just Unilever). Because of all the private-label brands, margins and the potential for price increases are under relatively heavy pressure. I believe the winners in times of inflation and (in some cases, perceived) loss of purchasing power are more likely to be the big discount chains.
Still, good luck—maybe the breakup will actually make a difference. 👍
Still, good luck—maybe the breakup will actually make a difference. 👍
•
44
•
@NichtRelevant Absolutely—the topic of private labels is old hat and resurfaces during every period of inflation, but in my opinion, that’s too sweeping a generalization.
Brand power: Private labels mainly displace weak B-brands. For strong brands (Dove, Hellmann’s, etc.), brand loyalty remains high. When money is tight, consumers might switch to store brands for rice, milk, or toilet paper, but they remain loyal to their favorite brands longer when it comes to specific tastes or beauty products. The current restructuring is therefore focusing even more on top brands. In a few years, we’ll probably be buying a little here and there again 🤓
Unilever’s latest figures show the opposite: +5.5% volume growth in Q2; Unilever is growing through volume, not just price increases. So customers aren’t exactly fleeing in droves. And the operating margin in Q2 proves that Unilever is growing strongly despite private labels and has pricing power.
Regional differences: In Germany and Central Europe, private-label penetration is extremely high (often over 30–40%). Globally, however—especially in the growth markets of Asia and Latin America—private labels play a much smaller role. FMCG giants like Unilever generate a huge portion of their business precisely in these emerging markets.
My take: Don’t just look at German supermarkets; look at the global markets. Private labels are a lasting hurdle for mid-tier companies, but they are not a structural death sentence for global market leaders with strong top brands.
Brand power: Private labels mainly displace weak B-brands. For strong brands (Dove, Hellmann’s, etc.), brand loyalty remains high. When money is tight, consumers might switch to store brands for rice, milk, or toilet paper, but they remain loyal to their favorite brands longer when it comes to specific tastes or beauty products. The current restructuring is therefore focusing even more on top brands. In a few years, we’ll probably be buying a little here and there again 🤓
Unilever’s latest figures show the opposite: +5.5% volume growth in Q2; Unilever is growing through volume, not just price increases. So customers aren’t exactly fleeing in droves. And the operating margin in Q2 proves that Unilever is growing strongly despite private labels and has pricing power.
Regional differences: In Germany and Central Europe, private-label penetration is extremely high (often over 30–40%). Globally, however—especially in the growth markets of Asia and Latin America—private labels play a much smaller role. FMCG giants like Unilever generate a huge portion of their business precisely in these emerging markets.
My take: Don’t just look at German supermarkets; look at the global markets. Private labels are a lasting hurdle for mid-tier companies, but they are not a structural death sentence for global market leaders with strong top brands.
•
11
•@finanzperpetuum That's one way of looking at it. I suppose people (in this case, me) tend to focus heavily on the local market and less on the EM.
I hope you bought more before today's rally!! 😉
I hope you bought more before today's rally!! 😉
••