Almost one quarter of that, EUR3 billion to EUR3.5 billion goes towards premium products, a segment on the rise in the past year ended mid-2015. This was a time of economy and consumer spending rebound so Romanians shifted from medium priced to premium products, according to market research company GfK data.
GfK data show that two market segments grew in July 1, 2014-June 30, 2015, premium products and private labels. The two ‘ate’ into the market share of the products targeting average income customers (mainstream brands). The latter is the segment with the highest share of the FMCG market, 37% at the end of the first half of 2015. Its market share is down 2%, equally divided between premium and private label products.
“There are several reasons that can explain this trend. First of all, the economy is growing and so is consumer spending, Romanians are confident in the future so they are going for more expensive products,” says a modern retail top executive.
Then there was the food VAT cut from 24% to 9% as of June 1, which made some consumers shift to other product categories, he added. While some did shift to other product categories, others chose to buy more expensive products in the same category, which they previously could not afford.
“As for private labels, this market is still underdeveloped, with a growth potential,” the executive said.
Romania is still lagging far behind other markets in the region or the West when it comes to private labels, which account for more than one third of the market there. They accounted for 14% of the market in mid-year, up from 13% a year ago. Private labels have grown to 20% of the food market, but have been unable to do so on segments like beverages and home care products, where their market share stands at less than 10%.
(English version by Loredana Fratila-Cristescu)