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Premium Private Label On Canada's Horizon

August 15, 2012
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A Euromonitor International analysis last month of the private label landscape in Canada found that premium and super-premium lines are expanding rapidly in the country and are expected to continue to blossom for the next two to three years.

The report, A Touch of Class: Private Label Packaged Food Raising Its Game In Canada, was done by Senior Canada Analyst Svetlana Uduslivaia. She said a combination of economic factors and the arrival of Target would play big roles in the growth story.

"Looking ahead, and especially within the next two to three years, at least two factors will support the further development of high-quality, super-premium private label packaged foods," the report says. "These are, firstly, the slow pace of economic recovery, high levels of household debt, and the resultant more cautious attitude towards spending by many Canadians. And secondly, the expected opening of Target stores in Canada, which feature a strong private label portfolio and are likely to put further pressure on existing retailers seeking to maintain and grow customer traffic, as well as grow profit margins in view of upcoming price battles."

The report says retailers such as Walmart Canada are seeing more high-income shoppers at their stores to save money because of the economic pressures at home, and that trend is expected to last at least the next two to three years.

"However, these consumers are still seeking out higher-quality products," it says. "As such, the further development of super-premium private label ranges and in-store merchandising strategies can help to better attract the attention of this increasing consumer group, looking for small luxuries at an affordable price."

The addition of Target to the Canadian landscape will force all retailers to raise their game, it says.

"With its strong private label portfolio, including premium-positioned foods, (Target) will put further pressure on retailers to maintain/grow consumer traffic and seek competitive advantage and profits," it says. "While the extent of the impact Target's entry will have on Canadian grocery retailing and fast moving consumer goods is still subject to debate, the initial response to Target's pop-up shop in Toronto has been highly positive."

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