Up until 1998, the market for own-label products was continuing to experience steady growth. Since that time, although the market has continued to develop in terms of certain products and categories, the sector as a whole has seen a slowdown in growth; by 1999, the major supermarket retailers achieved an average own-label penetration of 50.3 percent - representing a 0.4 percent decrease on the previous year. This report examines the size and structure of the own-label market in the UK, including an overview of the most important product categories, and assesses the prospects for the industry over the next few years.

The principal reason for the slowdown in the market has been the reticence of some leading retail chains to grow their own-label activities aggressively. Throughout the 1980s and much of the 1990s, retailers had seen their own labels as a way of increasing margins in a tough operating environment. However, more recently, they have become concerned that carrying too wide a range of own-label products is detrimental to overall performance by restricting consumer choice. With many feeling that the market has peaked, retailers' attention has instead shifted to segments such as household and cleaning products and premium ready meals, which are regarded as being under-exploited.

The manufacture of own-label products has traditionally been a highly competitive industry and this has increased further with the growing power of the major retail chains. Even producers such as Mars, which in the past had been highly critical of own-label products and vowed not to become involved, have been forced to enter the industry.

As part of this report, Market Assessment commissioned exclusive market research establishing consumer attitudes to the own-label sector. The research identified that attitudes to own-label products were fashioned largely by product cost. In commodity-type categories, such as bread, penetration tended to be constant across social and demographic groups. In higher-value categories, penetration was much less homogenous.