Private labels can lead to lower prices

Private labels have helped to keep consumer prices down. A new report from the Swedish Competition Authority describes this situation and reviews different brands of drinking milk, among other products.

For several years now, several retail chains have been selling goods under private labels next to manufacturer’s brands.  Private labels have increased in sales. This development has taken off faster in a number of other countries in Europe, but private labels are becoming stronger in Sweden too. Private labels were previously low-priced products with lower quality, whereas now they vary from basic products to premium quality goods.

This is made clear in the report Private labels - drinking milk as one example from the Swedish Competition Authority.

"This latest development, having more private labels, leads to new conditions for competition in the food market. The retail trade has gained a stronger position with respect to manufacturers. Private labels have led to some consumer prices dropping and greater loyalty with the supermarket chain," says Director-General Dan Sjöblom at the Swedish Competition Authority.

Drinking milk has been studied in detail in the report. When the retail trade started to sell drinking milk under private labels, the price was lower than dairies' products and in some cases it had a longer shelf-life. Through its commitment to produce milk for other actors' trademarks, a small dairy has managed to increase its production and broaden its geographical distribution.

The development of private labels in Sweden follows experiences from other markets and so far it has been positive for Swedish consumers in general terms. The Swedish Competition Authority plans to monitor the impact of this trend, which could reduce competition between supermarket chains in the long term.

Read the report, 2016:7 (in Swedish)