The difficulties faced by brand manufacturers due to the emergence of private label brands from distributors, which already account for 48% of spending in the Spanish shopping basket, have revolutionized the way the former manage and exploit their own brand.
“When managing multiple brands within the same company, they must be given hierarchy according to their significance,” explains Juan Viñas, Marketing advisor at Jvst Grow.
Until recently, this brand architecture seemed very clear. For example, Pepsico acted as a house of brands for Lay’s and Alvalle, among others; in the same way that Pascual grouped brands such as Bezoya or Bifrutas, or Casa Tarradellas acted as a branded house for all its products, regardless of category (fuet, espetec, bacon, pizza, etc.).
However, the emergence of private label brands has blurred the hierarchy and provided new nuances; especially in the case of Mercadona, the leader in Spanish distribution, which prides itself on hiring top-tier manufacturers to produce its private label products.
In fact, the chain chaired by Juan Roig, like other retailers, operates as a house of brands for its various private label brands: Hacendado, Deliplus, Bosque Verde, etc.
But not only that. The Valencia-based chain has managed to make manufacturer brands act as endorsers of its private label brand. For example, Viñas points out, Casa Tarradellas sells espetec under its own brand, the Original, outside of Mercadona, while in Mercadona it sells espetec under the Hacendado brand, Extra edition, and yet the brand of the Catalan manufacturer appears on the back label. “A manufacturer brand endorses a private label brand,” emphasizes Viñas.
The same happens in the case of snacks and potato chips from Munchos and Hacendado, which feature the Pepsico brand on the back (and recently, they are even offered in Lay’s boxes).
An exception to this model is Pascual, which has recently begun manufacturing private label brands for Mercadona in vegetable drinks, cocoa shakes, and coffee-flavored soy milk, but has chosen not to lend its brand: the label of these products only shows Gelasa Alimentación S.L., a subsidiary of Pascual. The manufacturer based in Aranda de Duero prefers, for the moment, not to act as an endorser.
Source: Financial Food