Business Opportunities in India
Private labels helping Metro build brand
Delhi Bureau
Date of posting: 15-11-07
      Metro AG which is operating as a cash & carry wholesaler in India has found private labels (product brand names owned by Metro) as a good way of differentiating its products from those of established brands. Metro must sell only to registered retailers such as mom & pop stores or restaurants and hotels having a sales tax registration number.

      It sells groceries and other food items under the name of “ARO” to small retailers while another label, “HoReCa” is aimed at hotels and restaurants. The success of these brands in the Indian market are understood to have prompted Metro to go in for more such brands in the food and non-food segments. Media reports said the German major is planning to introduce specific private labels both in the food and non-food segments. Specifically it is planning to start with dairy items such as milk and yoghurt.

      Metro Cash & Carry MD, Martin Dlouhy was quoted in the Indian media as saying, “there are over 12 million mom-and-pop stores in India, providing a good customer base to our private labels. Our labels in turn help our vendors to sell quality products at competitive prices. Our plan is to convert our local vendors into national vendors".

      Presently operating out of Bangalore and Hyderabad, Metro is planning to expand into Mumbai and Kolkata within the next six months and sees private labels as a key part of this expansion strategy. Despite facing opposition from those opposed to organized retailing, Metro has managed to win a good following from small retailing stores in Bangalore and the surrounding state of Karnataka.

      India’s big retailers such as Pantaloon and Reliance too have introduced private labels for scores of goods across food, clothing, personal care and dairy items and are doing very well in these. However, 100% foreign owned supermarket chains have no other option but to spread their reach via private brand names.

      A source close to Carrefour, which is planning to enter India as a wholly foreign owned unit, commented, “private labels are the way to go. It helps establish the retailer’s name across a wide range of goods and provide benefits of economies of scale to the customer”.

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