Indonesians consider 'private label' as good as big brands

The Jakarta Post, Jakarta

As basic needs prices go up, Erwina Susanti has started to buy groceries based on price, rather than brand, selecting those products whose quality matches well-known brands.

Cheaper products are now being offered by supermarkets and hypermarkets through their own brands, called private label, as an alternative for consumers.

"I'm a regular buyer of private label products," said the 40- year-old housewife. "They are cheaper. By buying those products, I significantly reduce my monthly spending."

University lecturer Ista started to use private label products 10 years ago. However, she acknowledged that not all private label products were worth purchasing.

"I do buy private label for sugar, tissues and cooking oil. But for personal hygiene products, like shampoo and toothpaste, I still prefer famous brands," she said.

Both Erwina and Ista represent 62 percent of Indonesians who agree that private labels are an alternative to big brands, according to a global survey by marketing research firm ACNielsen.

The survey, the Global Private Label Consumer Study, was conducted simultaneously worldwide from April 11 to May 10. The survey asked 510 Indonesian respondents -- out of about 21,000 respondents in 38 countries -- their perception of private label.

The survey found that 66 percent of Indonesian consumers consider private label to be worth the money, considering they are of a similar quality to those of big brands. Some 56 percent said private label products had good packaging.

However, only 15 percent consumers said they bought all categories of private label products.

"Consumers may be happy with the quality of private label when it comes to dog food, towels, sugar and flour, but are less convinced if they're considering, say shampoo, baby food or their favorite pasta sauce," said Yongky Surya Susilo, ACNielsen Indonesia retailer and business development director, in a statement made available to The Jakarta Post.

The majority of consumers agreed that private label products were aimed at people on a tight budget, while only 13 percent thought the other way around, the survey said.

It also found that a high percentage of customers are familiar with private label and only 27 percent were not aware of it.

"The awareness and acceptance of private label in Asia and other developing markets will in part go hand in hand with the growth of modern trade in these countries," said Farquhar Stirling, Managing Director of ACNielsen for Southeast Asia, referring to the growing habit of Indonesians and other Asians to shop at supermarkets and hypermarkets.

ACNielsen data shows that at present, 50 categories of private label products are sold across the nation.

Yongki said the domestic market for private label products would continue growing if retailers promoted their products more often.

"Part of this (the lack of awareness of consumers) could be attributed to the lack of awareness of retailers' brands in developing markets. In Malaysia and Taiwan, for example, nearly half of respondents said they did not know enough about private label products and wanted to try them," he said.

"Our survey showed the longer consumers are exposed to private label, they have a better opinion about them," he added. (006)