Supermarket ‘yellow pack’ was once ridiculed. Now Irish consumers love own brand. Here’s why it makes sense

The government has finally cracked down on the scourge of shrinkflation. From July retailers will have to carry warnings on products that have been reduced in size without any commensurate price cut.

“The practice of shrinkflation is a scam,” the minister for finance said bluntly. “We are putting an end to it.”

The government also wants the public to help it police rogue traders and has urged those “who have doubts about the price per unit of measurement displayed on the shelves” to alert the authorities through a dedicated consumer app.

Now, Pricewatch must apologise to you if you thought it was the Irish Government that was finally taking on those unscrupulous producers and retailers who have been sneakily shrinking everything from chocolate bars to toilet paper while keeping prices high in order to minimise their costs and maximise their profits during an enduring cost-of-living crisis.

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But that is just not our way. When it comes to holding meetings of interested parties with no consequence other than an earnest press release from a junior minister, we are not to be found wanting, but real action? What do you think we are? French?

Because it is in fact the French government that has followed the bullish lead of supermarket giant Carrefour, which has been waging a war on shrinkflation for months. Carrefour has been alerting shoppers to the practice through threats of delistings and the artful positioning of bright orange signs in front of bottles and cans of Pepsi, bags of Lays crisps and other products that are now smaller than they once were.

Its campaign has struck a chord with the French public and that chord has prompted the Macron government to join the chorus of disapproval. As part of its policy of delivering better value to consumers in France, the new rules mean shops will have to prominently advertise the fact that their products have shrunk for two months after the changes.

France is also urging the other EU member states to impose similar rules and name and shame the shrinkers.

[ Shrinkflation: ‘I don’t know how it hasn’t caused French-style rioting’ ]

Although the Irish and French retail worlds are quite different and the approaches adopted by ministers when dealing with retailers wildly so, there are many similarities between here and there.

Our rates of grocery inflation have been virtually identical over recent years, soaring to more than 16 per cent before falling back to less than 4 per cent. And, of course, many of the multinational companies that have enraged the French sell into Ireland too and have similarly increased their prices while simultaneously increasing their profit margins. And like France, Ireland is falling in love with own-brand.

And retailers love that. They are at the mercy of the likes of Nestlé, Procter & Gamble and Danone on pricing and sizing when selling the big name brands, whereas they have considerably more control in the private label space.

And retailers close to home have been directing shoppers towards the products that bear their name with considerable gusto of late. The own-brand offerings are getting more and more prominent shelf space and the best deals and the quality on offer has been improving.

And it has worked. According to the most recent figures from Kantar WorldPanel, sales of private-label products have been performing strongly in Ireland over the past two years, growing ahead of the total market at 5.5 per cent year on year with a value share of 48 per cent, as the amounts shoppers spend on such products have climbed by more than €80 million year on year.

Premium own-label ranges have performed even better, with shoppers spending an additional €172 million on these lines, a 12.3 per cent increase compared with this time last year.

When I look at the attitudes and behaviours of shoppers in their 30s, who are either struggling to pay rent or they’re trying to save up money to get a deposit for a house, they are completely brand agnostic

—  Gerard O’Neill, chairman of research company Amárach

In the years leading up to the great economic unpleasantness of 2008, Irish shoppers displayed a loyalty to brands that our thriftier cousins in Europe might have found confusing. While own-brand was booming in Germany two decades ago, with such products making up well over 50 per cent of the average shopping basket, we were turning our noses up at it. In 2004 far less than 10 per cent of our shopping was sold under private labels.

We had good reason for our fear and loathing of own-brand. In the economically depressed early 1980s, Quinnsworth introduced Ireland to own-brand in a big way. And for reasons best known to itself, it decided to make the products sold under its own name look as ugly as possible. Everything was adorned in ugly bright-yellow packaging.

Often the only thing worse than the packaging were the contents. The quality was poor, which is why the term “yellow-pack” quickly became pejorative, and a euphemism for jobs, products and lifestyles people looked down their noses at.

In short, own-brand did not fly off the shelves, and even when yellow-pack died off, we mistrusted products unless we had seen them advertised on TV.

But then the German discounters came to town and everything changed. When Aldi opened the doors to its shop on Parnell Street, Dublin, in 1999, there were queues out the door, with shoppers drawn more by the novelty than the low prices, and there were some very low prices indeed.

A half a dozen eggs cost 39p compared with more than 70p elsewhere. Chocolate biscuits, priced at more than £1 in other supermarkets, cost 69p in Aldi, while a white sliced pan cost 35p compared with 60p elsewhere.

If people were surprised to see random TVs, CD players and blowtorches in the middle aisle, they didn’t let on and happily tossed the tech into trolleys along with the knock-off Hunky Dorys.

“Aldi begins assault on the Irish market,” was the headline in the Examiner on that first day. “Discount supermarket to slash shopping bills,” promised the Irish Independent.

For its part, The Irish Times went with “Low prices and high standards add up to divine shopping at Aldi”. A piece written by Denis Staunton highlighted a recent survey in a German newspaper which found most Germans preferred Aldi to religion. He wrote that if the German experience was anything to go by Aldi “could soon achieve cult status among Irish consumers”.

[ November 1999: Low prices and high standards add up to divine shopping at Aldi ]

He wasn’t wrong, but the use of the word “soon” turned out to be a bit optimistic.

Both Aldi and Lidl struggled to get a toehold in Ireland for years, with shoppers and potential suppliers reluctant to buy into the discounter model. But then the crash happened, the money we thought we had disappeared and the quality of the products they sold improved, largely due to the relationships they had with small Irish producers.

Now we love own-brand.

“For such a long time, ‘yellow-pack’ was a term of abuse,” says Gerard O’Neill, chairman of research company Amárach. “It still is, but both Lidl and Aldi totally changed how we perceive own-brand products, and gave us the confidence to switch.”

Switching was the smart move: one of the retail trade’s biggest secrets is that most own-brand products are made by well-known-brands and are virtually identical, except for the price.

“There has been a shift in status around own-brand, and a lot of that is to do with the discounters,” says O’Neill. “It used to be perceived as low status, and I think we just let go of that. Certainly consumers under the age of 40 don’t care about brands or products in the same way older consumers who were kind of brought up on them do, and there’s been a kind of a shift in cultural values around own-brand.”

He points out that the cost-of-living crisis has helped that move to own-brand options, which can see the cost of the weekly shop fall by as much as 30 per cent

“But the discounters have completely normalised own-brand shopping to an extraordinary degrees, and we have just caught up with the rest of Europe,” says O’Neill.

“When I look at the attitudes and behaviours of shoppers in their 30s, who are either struggling to pay rent or they’re trying to save up money to get a deposit for a house, they are completely brand agnostic.”

Retail analyst and TU Dublin academic Damian O’Reilly agrees and says that over the past two years there has been a spike in own-brand sales.

“People are more willing to what we call repertoire shop – that is basically shopping around different categories in different stores so they might have bought detergent in one store and alcohol in a different shop and consider the prices before they go shopping.”

He says retailers spotted the trend early and increased their ranges of own-brand products and devoted more prominent shelf space to them.

And, he notes, retailers have more control of the pricing of own-brand products and can do more to keep them more competitive in order to attract new customers and put pressure on better-known producers.

He points out that while we are at 48 per cent in terms of value, we could have a way to travel yet. “The UK is over 60 per cent own-brand, and I can see that happening here,” says O’Reilly.