Last year’s high inflation was a shock for consumers. Despite the German government’s countermeasures to cushion the financial impact of the war in Ukraine with the electricity and gas price brakes, consumer sentiment weakened. We saw the psychological effects reflected in consumer price sensitivity. When people went shopping, their top priority was saving money, which led to a boost to private label products. Shoppers also opted more for retailers’ own brands for dairy products and cheese, which are important categories for DMK. That shift didn’t only apply to lower price segments, but also to premium and organic products. While prices for private label goods rose significantly in percent-age terms compared to branded products, private label goods saw minimal growth in sales and significant increases in turnover. In contrast, manufacturers’ brands, or products positioned by the company towards shoppers, are losing volume, despite significantly more sales promotions.

Perception of private label goods has changed, and they are now seen as an acceptable alternative, while brands are basically seen as more replaceable. But private label goods are not necessarily going to rescue the situation as shoppers still find manufacturer brands appealing, seeing them as objects of desire. Consumers, hungry for ways to escape everyday stress and the anxieties of daily life, are still buying branded goods. But more than ever, brands need to prove themselves and show they offer additional value. They also need to have a clear and reliable profile. Brands that lack these features quickly come under pressure.

*FMCG means fast-moving consumer goods, which are products that are sold quickly and cost less.

One successful example is MILRAM’s sliced cheese segment. Its brand identity was standardized in 2022 following a design relaunch of cheese varieties only available from MILRAM. These factors, plus ongoing investment in communication about the brand, helped MILRAM maintain its position as the clear market leader for sliced cheese in 2023. When it comes to sustainability, market researchers see a slight decline for brands. In contrast to other trends such as health, consumers are basically not really ready to pay more for sustainable products. Nonetheless, private labels are growing. Sales in the overall dairy and cheese market increased by over 10 % last year, but private label goods grew by 14 %. That growth comes although the prices of private label goods increased significantly more in percentage terms. Overall, consumers are likely to keep focusing on price, say market observers. Shoppers are unsettled by crises and wars as well as persistently high inflation, and all this is hampering an improvement in consumer sentiment. That means people are likely to continue to pay increased attention to special offers in 2024. All in all, further boosting the consumption of branded products will likely to be among this year’s key challenges.