Shoprite’s R11bn in-house brands boom

Shoprite added a hefty R11bn to annual sales from in-house brands over the past three years. This has implications for established branded consumer goods makers such as Tiger Brands and AVI.

In the 2024 annual report released on Monday October 14, Shoprite said its private label sales rose 12.8% this year, contributing 21.3% to its R200bn-plus supermarket sales, excluding liquor.

Here’s an extract from the 2024 annual report:

This year, we expanded our private label range by adding five new brands, bringing the total across all categories to 169. Our private label sales increased 12.8%, contributing 21.3% to RSA supermarket sales (excluding Liquor), up from 12.0% six years ago.

Over the last three years we have seen a significant increase in the value of our private label brands: three years ago, we had 184 private label brands worth more than R20.9 billion in revenue annually; currently we have 169 brands that are now worth R32.3 billion, highlighting how these brands are becoming more of a national brand in their own right.

Our new Checkers private label products – such as our Simple Truth and Forage & Feast ranges – are positioned for our more affluent consumers. The shopping baskets of Checkers customers buying private label brands are typically larger than our average customers, with our Forage & Feast customers generally having baskets 3.5 times bigger than the average Checkers customer.

We have seen very encouraging uptake this year in our premium private label range, developed to meet growing consumer demand for affordable, accessible and healthier, and more sustainably produced food and grocery products.

  • Checkers’ premium private label range, Forage & Feast, is building momentum, achieving 16.4% sales growth this year. Since its launch in November 2020, Forage & Feast has expanded to include several hundred products across 34 different categories, establishing itself as the benchmark for premium supermarket food products. Endorsed by South Africa’s first Michelin star chef, Jan Hendrik van der Westhuizen, the range is responsibly sourced from the best suppliers and artisans, and focuses on quality food, seasonality, taste and convenience.
  • This year, our Simple Truth private label range of wellness foods and bio-degradable, naturally derived cleaning products delivered sales growth of 18.2%.
  • Our Lovies baby brand grew sales by 34.1%, reflecting the impact of our consumer engagement efforts highlighting the benefits of leading quality at better value.
  • Shoprite’s Homegrown private label range offers products that are 100% South African, with 10% of the range sourced from SMMEs that are already suppliers to the Group. This year, sales in the range were up 187%. To date, the Group has procured R9 million and created 36 jobs by collaborating with SMMEs on this programme.
  • Our 36 HealthFirst private label pharmacy products have shown a steady average volume growth month on month since their launch. As a home brand not directly associated with a specific corporate identity, HealthFirst is being absorbed into the independent pharmacy market as a market competitive private label brand, bringing sought-after quality and profitability to this market segment.

Coming annual figures for financial 2024 year are expected to be even higher as consumer preferences keep evolving. In quarter two 2024, consumer spend on fast-moving consumer goods (FMCG) reached R181bn, up 4.8% year on year, according to the NIQ Retail Spend Barometer.

Growth rates of FMCG categories fell, but appetite for private labels remains strong, reflecting consumer desires for affordability and quality in an unstable economy.

This underlines a retail-sector shift. Private labels are now seen as high-quality, value-driven options, directly challenging Tiger Brands, AVI and RCL Foods, consumer goods stalwarts that have relied on the brand legacy of pantry stables.

According to the NIQ State of the Retail Nation analysis for quarter three 2023, private label products have become vital to SA’s retail sector, which generated annual sales of R631bn. In 2023, these products accounted for more than R89bn or 24.3% of total basket value sales.

Source: ShopriteHoldings, BusinessLive.co.za