Private-label products hold high potential

The development of private-label products, also known as “phantom brands” that are made by a manufacturer and sold under a retailer’s brand name, is considered an irresistible trend despite a small proportion in Vietnamese retail market.

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A research by Kantar Worldpanel Vietnam shows that private-label products account for only 0.6% of total commodities at supermarkets in Vietnam compared to 50% in France, said Nguyen Huy Hoang, commercial director of the company.

However, the domestic rate is not too low compared to that in other Asian countries with 1.2% on average. The Republic of Korea and Malaysia are among countries with high rates of 2.7% and 2.2% respectively while the Philippines, Indonesia and China have a very low rate of 0.2%.

Hoang attributed the low rate of private-label products in Vietnam to the limited number of modern distribution channels, currently accounting for only 13%.

The research by Kantar Worldpanel also reveals that 38% of Vietnamese consumers choose private-label products due to the strong confidence in retailers. 

Some common products are detergents and toilet paper while packaged food, milk and beverage products do not sell well.

According to Kantar Worldpanel, Vietnamese enterprises should attend to private-label goods and develop their own brands in the context of strong competition.

Cao Tien Vi, general director of Saigon Paper Corporation, told the Daily that the company accepts to manufacture products under supermarkets’ brands to fully utilize the company’s production lines, equipment and manpower, thereby earning more revenue.

Manufacturers need to invest in attractive packaging with limited cost and create new products as Vinamit, Saigon Food, VinaCacao and Lix have implemented successfully.

Retailers prefer medium and small manufacturers as a way to help these manufacturers get more experience in designing packaging, meeting customers’ demand and boosting production.

Many retailers not only provide products of domestic manufacturers but also cooperate with foreign enterprises to offer more private-label commodities.

Meanwhile, many foreign retailers such as Lotte Mart and MM Mega Market have had private-label products manufactured by enterprises in Vietnam for export to other markets.

Saigon Times

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