According to a new consumer insight report published by Datamonitor titled  The Impact of Private Labels on FMCG Companies in India   private labels are increasingly posing threat for FMCG companies in India
This report  based on a consumer survey  reveals that while the adoption of private labels began with its value proposition  consumers perceive these store brands are offering quality at par with other national brands
 The increased scale of operations of retailers is shifting the bargaining power from FMCG companies to retailers  The growing adoption of private labels can compel FMCG companies to reassess their trade margins or relationship with retailers   explains Vaibhav Khera  Director  India Consumer Markets Research at Datamonitor
Indian retailers are laying a strong emphasis on the growth of their private label brands which is bringing in greater margins and is helping them gain greater bargaining power with FMCG companies  Retailers  which started launching their private labels as a value alternative to national brands are now mirroring these national brands with respect to product packaging and claims and are offering these products at a lower price  Retailers are also launching products with tiered pricing to cater to a wider set of audience while holding on to their store positioning
The adoption of private label brands has been rapid in the household care segment  and the increased satisfaction level of consumers buying products in this segment has helped in building retailers  credibility  Datamonitor expects that a customer satisfied with a private label brand in a low involvement category such as household care will have a greater propensity of trial in other categories such as food and beverages and personal care
To highlight this threat  Datamonitor has analysed several product categories on the basis of their private label penetration and attractiveness where attractiveness is defined with respect to category involvement  brand loyalty  and price sensitivity  and through this Datamonitor has highlighted the product categories which are current and potential threat to FMCG companies in the near future
The report analyses survey results and insights on consumer shopping behaviour and preferences while making purchase decisions  It also reveals the strategies which FMCG companies can adopt to avoid competition from private labels and highlights the consumer dynamics which will be relevant for FMCG companies in framing their product strategy
Though private labels are increasingly gaining a strong foothold in the organized retail segment  FMCG companies can avoid this competition by investing in innovation and product differentiation  Vaibhav believes that  FMCG companies should play on their strengths and monetize opportunities emerging due changing consumer behaviour 
Notes for Editors
The report ‘The Impact of Private Labels on FMCG Companies in India   explores the changing consumer attitudes and shopping behavior in India with the launch of private label FMCG brands  and outlines focus areas for FMCG companies in terms of product development and positioning
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Datamonitor is a premium business information company specializing in industry analysis  We help our clients  5000 of the world s leading companies  to address complex strategic issues  Through our proprietary databases and wealth of expertise  we provide clients with unbiased expert analysis and in-depth forecasts for six industry sectors  Automotive  Consumer Markets  Energy  Financial Services  Healthcare  Technology  Datamonitor maintains its headquarters in London and has regional offices globally  See www datamonitor com for further details