Daily Research News Online no. 2078 - Brands and Private Label in Hong Kong

Brands and Private Label in Hong Kong

December 23 2002

Consumers in Hong Kong are becoming less loyal to individual brands and will increasingly take advantage of special offers and promotions in their grocery buying according to the combined results of a telephone survey and consumer panel data recently released by TNS.

And while the growth of private label brands overall may be slower than could be expected, consumers are positively disposed to private labels and they have taken a firm hold in specific product categories.

In the 2002 survey findings, 14 per cent of Hong Kong consumers say that they always buy the same brand, compared to 18 per cent in 2001. At the same time, over the same period, the number of consumers who say they often take advantage of special offers has risen from 20 per cent in 2001 to 27 per cent in 2002.

In this competitive environment, consumers are not only becoming more price-conscious, their usage of private label products has also increased from 79 per cent in 2001 to 88 per cent in 2002. These purchases (in 2002) were mainly from supermarkets (78 per cent), but also from personal care stores (46 per cent) and convenience stores (29 per cent).

49 per cent of respondents also indicate that they are likely to buy private label brands in the future, although this figure does not show any increase from 2001. Basic necessities such as paper tissues (68 per cent) and packaged water (62 per cent) are the most popular private label products that respondents have bought. Household cleaning products (45 per cent) and kitchen products (45 per cent) are also shown to be common purchases.

72 per cent of respondents said that they bought private label products due to the relatively cheaper price, with 18 per cent mentioning acceptable quality and 14 per cent trying private labels to gain a comparison with branded products. However, 27 per cent of respondents who have never bought any private label products claimed that a lack of confidence in their quality is still the primary barrier towards purchasing them.

These findings are supported by data from TNS Consumer Panel which shows that the household penetration of private label products has been increasing throughout the year. However, over the same period the total value of private label products as a percentage of total FMCG spend had not increased to any significant degree.

The major supermarkets have not been able to translate this increased consciousness of private label brands and consumer willingness to bargain hunt into increased sales of their own private label ranges.

Duncan Tyrrell, Account Manager at TNS Hong Kong, said 'From an international perspective private label brands have become hugely important in recent years, however they have been slow to develop in Hong Kong. Consumers are aware of private label brands but adoption seems to be limited to specific categories, such as paper tissues and packaged water, for the time being. The Consumer Panel data indicates that as soon as a private label becomes successful in a certain category, the branded products start a counter offensive to keep the private labels at bay, as we have seen with categories such as toilet rolls, facial tissues and cooking oil.'

He added 'Hong Kong consumers prefer to bargain hunt among existing branded products, even if they are less loyal to individual brands. However if the market follows the trends we have seen in other international markets, increased market share for private labels can be expected in the future.'

TNS CATIbus interviewed a representative sample of 1,000 Hong Kong residents aged 15 to 64, by telephone, between November 11 and November 22. The same study was previously conducted at the same time in 2001.

TNS Consumer Panel is a permanent and representative sample of 1,000 Hong Kong households, which continuously measures purchase behaviours of the market, brands, consumers and outlets., based on real time purchases.