Market Opportunities in German private label grocery retail
Popular private label product segments include frozen and refrigerated foods, soft drinks, alcohol, confectionery, snacks, dairy, sausages and deli meats. While low prices alone have historically defined the German private label market, changing consumer expectations have shifted private label retailers’ focus to providing unique, premium products at a reasonable price.
Each of the major German grocery retailers - Aldi, Lidl, Edeka, and Rewe - have dedicated private label product lines. Each retailer’s strategy differs somewhat, with discount grocers (e.g., Aldi, Lidl) dealing almost exclusively in private label products and with traditional supermarkets (e.g., Edeka, Rewe) adopting premium private label lines to complement their existing assortments of private label and brand-name products.
Germany’s grocery retail market is mature, saturated, and highly price-competitive, and is dominated by a handful of key players. On average, German consumers spend $348 per month on groceries, amounting to about $4,100 per year. In 2018, grocery retail sales reached an estimated $273.5 bn., making Germany the largest European market for food and grocery products.
Private label products account for 45% of grocery sales in Germany, compared to just 18.5% in the United States. In some German market segments - frozen foods, pet food, and refrigerated foods, for instance - the market share for private label products exceeds 50%. Other popular private label products include soft drinks, alcohol, snacks, cheese, sausage and deli meat, and confectionery products. Between now and 2021, the private label grocery market in Europe is expected to expand by a compound annual growth rate (CAGR) of 7%, compared to a 2.1% overall growth rate for European food sales.
German and European consumers generally have a favorable view of private label products. In a 2018 report by Nielsen, European consumers’ views of private label grocery products were more positive than the global average. With private label product lines continuing to grow in Germany, US businesses have potential opportunities to supply ingredients or foods under private label arrangements with German retailers. US companies interested in supplying the German private label grocery market should first develop relationships with key retail contacts at the major German grocery chains.