Last week, the Deputy Minister of Agriculture spoke to the news portal Wiadomoscihandlowe.pl Stefan Krajewski he said that the ministry is working on changes regarding private labels in discount stores. One option on the table is introduction of a percentage limit on the share of own brands in the stores' offer.
According to the deputy head of the ministry, it would have this reduce inequalities in cooperation between external suppliers and store chains. As Krajewski explained, Polish food industry plants lose out on this cooperation because they have to submit to commercial operators, even if it is not beneficial for them.
The deputy minister added that the ministry “is already working on specific solutions in this area.”
Current solutions are flawed
President of the Polish Chamber of Commerce In an interview with us, Maciej Ptaszyński emphasizes that appropriate solutions already exist in the Polish legal system, although they are flawed.
– The Act on Combating Unfair Competition states that the introduction of private label products by discount stores in amounts exceeding 20%. turnover is an act of unfair competition – points out Ptaszyński.
– However, the problem with this act is that acts of unfair competition defined in this act may be prosecuted on the basis of a civil action – he explains and adds that the Polish Chamber of Commerce was not invited by the Ministry of Agriculture to consult and work on this project.
What are “own brands”?
Products from the so-called own brands are sold by most popular chain stores and discount stores in Poland. These are often goods from the same producers as standard products, but in different packaging with the store's logo. Thanks to prior production contracting and the lack of need for marketing and advertising activities on the manufacturer's part, the price of such a product can – and often is – lower than in the case of a standard equivalent.
As LIDL informs, for example, own brands constitute an “important part of the offer” in this chain, and private label items are available in every product group.
Polish producers and “own brands”
“It is worth emphasizing that Polish suppliers make a significant contribution to building our own brands and largely help us create them. These are both large and smaller enterprises,” the Lidl press office informs us.
Lidl points out that development of a range of products under its own brand supports local entrepreneurship and local food processing.
“Thanks to their own brands, Polish suppliers can reach customers throughout Poland and can also export goods to many European countries. In 2022 alone, as many as 286 Polish producers exported their products under Lidl's own brands to 28 foreign markets. The value of this export amounted to over PLN 5.4 billion,” the network argues.
However, he does not agree with the Lidl chain's arguments Polish Chamber of Commerce. According to PIH, the discount policy contributes to deepening asymmetry in the market.
– Relatively small range of products in discount stores, around 3,000. items, with a huge turnover amounting to tens of billions of zlotys, mean that the discount store's demand for each statistical own-brand product reaches up to several hundred million zlotys a year – Ptaszyński explains to us.
In his opinion, this phenomenon leads to a situation in which many producers decide to open dedicated production lines only for discount stores, which may ultimately make them economically dependent on these chains.
– Simultaneously price pressure The pressure exerted on these producers by discount stores causes many of them to try to compensate for their margins by selling products to smaller chains at much higher prices – points out the president of PIH.
According to the report “CPS GfK. Private Brands 2023”, own brands will be in 2025, responsible for as much as 25%. all expenditures of Polish households on fast moving consumer goods (FMCG – fast moving consumer goods).
As added in the report, the private label market in the Polish fast-moving consumer goods industry, e.g. food, is worth PLN 48 billion.
