The growth in the share of the grocery market taken by own label over the past two decades has been steady and continuous, with an average increase in the share taken increasing by just under 1 percent a year since 1977. This growth in own label has been in common with other fast moving consumer goods (FMCG) markets and accelerated particularly during the latter part of the 1980s.

The inexorable growth in own label has provoked many leading branded manufacturers to hit back with extensive promotion of their brands and defence of their brand characteristics. This has been typified by the battles between manufacturers like Nestlé and supermarket chains over such issues as 'copycat' products, with Nestlé's Gold Blend in particular being the subject of a 'copycat' own label version produced by Tesco. Nestlé argued that the packaging too closely resembled their own Gold Blend premium product and so could confuse consumers at worst, or give the impression that the own label product was in effect of the same quality. Regardless of the actual quality of the own label version, this was seen by the manufacturer to be an abuse of the retailers' position.

The growth in own label, which has been steady over the last twenty years, has actually accelerated in the last six years, with growth of 8 percent over this period from 31 percent in 1990 to 39 percent in 1996. Fears have been expressed that if the penetration of own label continues at its current rate, in twenty years time there will be little consumer choice with just a range of mid-range, own label products with branded products few and far between. It is argued that this will reduce consumer choice and leave the grocery multiples in a powerful monopoly situation which in the long run will not benefit the consumer.

However, the grocery multiples themselves do not anticipate that the share taken by own label will rise from its current 39 percent to much above the 50 percent mark, and indeed most would not wish to push this figure much higher. There are some market sectors where it is not cost effective for retailers to enter the market due to economies of scale. Many net would simply not find it economical to produce and package certain products. In some sectors too, there is a strong independent trade which acts to prevent domination by own label. Customer loyalty to brands in some sectors is also very high, and the multiples would risk alienating their customers by pushing own label too heavily. There is a general consensus of opinion in the industry as a whole that 50 percent is the optimum upper level for penetration of own label without there being adverse effects on consumer choice and also for retailers' market shares.

The issue of own label expansion has caused some of the leading branded manufacturers to band together to defend their brands. In March 1994, the British Producers and Brand Owners Group (BDPOG) was set up, including members such as Nestlé, Unilever, Mars, Guinness, Procter & Gamble and Grand Metropolitan. The group was set up in response to concerns about retailers' capitalising on their own brands' substantial main media advertising campaigns, and also because of the problem of 'copycat' packaging of own label products.

The BDPOG attempted to force amendments to the Trade Marks Bill of April 1994 to address these issues but failed in this aim. However, the campaign did at least raise the awareness of these issues, with consumer television programmes highlighting the issue of copycat brands in particular. Whilst brand manufacturers may argue that retailers are capitalising on their investment into products and packaging and that copycat brands are confusing for the consumer, the retailers refute these complaints. They would argue that their products offer fair competition with similar quality products offered at a slightly lower price than the branded alternative and that consumers are not as easily duped as the manufacturers would like to make out.

The controversy surrounding copycat brands has come about partly due to a shift in policy by the grocery multiples themselves towards their own brand ranges. There has been a substantial change in the nature of own label since the 1980s, when many own label products were simply low cost alternatives to the higher priced premium brands, and own label is now much more sophisticated and a market in its own right. Own label products are no longer perceived as necessarily being inferior to the branded versions and retailers have also started to segment their own brand lines into budget ranges through to premium own label products which may be only slightly cheaper than branded products, but offer the retailer greater profit margins and offer the consumer comparable quality to branded goods at a cost saving.

In the past, own label merely mirrored the new product development by the manufacturers, whereas today it is as likely that the own labels will be the innovators in terms of developing new products, flavours etc.

Sales of own label products were given a boost by the recession which followed the boom of the 1980s. Consumers were looking to cut back on essential as well as discretionary expenditure and so own label was an easy way of cutting grocery bills without necessarily depriving themselves of regularly used goods. At the same time as consumers have been looking to save money, however, they are also increasingly concerned with getting value for money and are more demanding than at any time in the past. Consumers are still prepared to pay more for branded products, but these products must have demonstrable benefits in order to convince the discerning consumer to part with an additional price premium over an own label alternative.

The success of own label, therefore, depends not only on price differentials but also on the additional choice in terms of range and quality of goods that own label offers. However, this success has been at the expense of some secondary and tertiary brands who have been squeezed out by the leading brands on the one hand, and own label on the other. Most grocery multiples stock their own label and usually only the top two or three brands in any particular sector. This therefore makes it very difficult for the secondary brands to make inroads into the market, especially if the grocery multiples do not stock their products, creating a 'catch 22' situation for these brands. The growth in own label has also virtually killed off the tertiary brands i.e. cheap, minor brands selling at substantially lower prices than premium brands, and so in many market sectors there has been a trend towards increasing concentration in the market place.

Another feature of the own label sector in recent years has been the increase in consumer confidence in the quality of own label products. MAPS own research from NOP in 1994 showed that well over a half of consumers considered that own brands were as high quality as branded products and offered good value for money, with only 2 percent strongly disagreeing with this statement. This has allowed retailers to develop more sophisticated own label strategies, with own label variants of popular product lines often competing head on with market leading brands. Good examples of these include Sainsbury's Classic Cola which competes directly with Coca Cola and was the subject of one of the early complaints by manufacturers about copycat branding, with Sainsbury's using similar lettering and colouring on their cola cans to Coca Cola. Tesco's 'Unbelievable' margarine product was also accused of aping the Van den Bergh Food's 'I Can't Believe It's Not Butter' but nevertheless competes with this product in the margarines and spreads sector.

The budget end of the market in most grocery sectors has been strongly affected by the growth in the discount multiples such as Netto and Lidl who sell mainly on price but he quality of their products is also very high. Whilst they have cut prices by offering cheap brands, this has stimulated the leading grocery multiples to launch their own budget ranges aimed at the same type of consumer, thus virtually wiping out the presence of tertiary brands in their stores.