Understanding Private Label Purchase in Breakfast Cereals and Snacks

Abstract

The Indian retail industry was estimated at USD 520 Billion in 2013 and projected to grow at a rate of 13% and will have a market size of USD 950 billion by 2018 (E&Y, 2014). Retail sector has become competitive with the emergence of organized retail players. Currently retailers are focusing on developing their own brands or private labels to enhance customer loyalty, to add diversity and for better margins. According to Nielsen, India’s private label market is expected to grow to USD 500 million. The sale of private labels increased by 22% during 2012-13. Categories like packaged foods, refined edible oils, breakfast cereals, ketchups and sauces account for 75% of total sales of private labels. Breakfast cereal market in India was pegged at USD 157 million in 2013 and expected to have a double digit growth over next five years. Indian snack market is valued at 2.1 billion USD in 2014. This makes this segment attractive to launch their private labels. A pilot study was conducted among shoppers of Cochin and Mysore to understand their preference for private labels with respect to Breakfast cereals and snack categories. Categorical Principal component analysis will be used to look into the extent to which consumer factors, store factors and price have relationship among themselves and the influence it has on purchase.