Private FMCG Labels Imitate Incumbent Peers, To Advertise Not To Flatter, Jefferies Says

Private labels are increasingly walking the fine line between imitation and competition as they expand across the Indian fast-moving consumer goods market, according to a note issued by Jefferies on Thursday. 

Market visits by Jefferies found that private-label products are now placed prominently on store shelves alongside national brands, with retailers strategically offering discounts to attract price-conscious consumers.

These products often sell at 15-50% lower prices than their branded counterparts, with packaging designed to resemble leading brands in an effort to influence purchasing decisions, the brokerage said.

The rise of modern retail and e-commerce has accelerated the growth of private-label products—those sold under a retailer’s own brand and typically exclusive to their stores—creating a competitive push against well-established FMCG brands.

While private labelling initially gained traction in the apparel and fashion segment with Trent’s Westside promoting its in-house brands like Luna Blu, Studio West, and Bombay Paisley, and Zudio doing the same with Lov, Nuon, and Utsa, Jefferies has found a similar trend taking hold in the FMCG space. 

Retailers are leveraging private labels to tap into existing supply chains, benefit from attractive margins, and bypass heavy brand-building costs while capitalising on consumer preferences. 

Unlike traditional FMCG players, who negotiate for shelf space and dictate trade margins, retailers with private labels gain stronger bargaining power over pricing and product placement. Star Bazar and D-Mart are leading the push, while Reliance is expanding beyond private labels through acquisitions, according to Jefferies.

For instance, Marico’s Parachute coconut oil, sold at a maximum retail price of Rs 111, faces competition from D-Mart’s Coco Nourish (Rs 95), Star Bazar’s Skye (Rs 81), and JioMart’s Get Real (Rs 96), it added. Similar trends are visible across categories like body soaps, cooking oil, flour, tea, packaged water, noodles, and snacks, where private labels offer cheaper alternatives.

Consumer adoption follows a pattern, with home care products gaining traction first, followed by staples, packaged foods, and finally personal care, the brokerage noted. 

While private labels offer higher margins and greater control over supply chains, their aggressive expansion comes with risks. According to Jefferies, a rapid scale-up could create conflicts of interest with established FMCG brands, potentially straining relationships between retailers and suppliers.

Ensuring consistent product quality also remains a challenge, as does building consumer trust—since private labels typically invest less in branding and marketing than traditional FMCG giants, it further said.