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A new report from Rabobank’s Food and Agribusiness Research and Advisory Group says the move to privatize the sale and distribution of spirits in the state of Washington could be a major opportunity for private label products.
The report says the initiative will bring a “seismic shift in the route to market,” with prices expected to rise about 20 percent and consumers moving down to “lower-priced products, and potentially trade out of the category.”
That, Rabobank says, gives wholesalers a chance to expand their offerings as supply chains try to minimize the sticker shock of the price increase. But the biggest winner, the report says, could be retailers.
“Retailers in particular will likely see strong gains in their private label brands as consumers will be seeking relief at the cash register, and private label will likely offer attractive pricing,” the report says. “The entire value chain will be pressured to keep prices as low as possible in order to minimize sticker shock. This will keep margins below optimal levels for all players, though it still represents a net incremental gain for wholesalers and retailers.”