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About half of Israelis (47 percent) believe the quality of the supermarket chains' in-house labels is as good as competing brands - 14 percent even believe in-house brands are better quality, according to a survey Market Watch conducted for Haaretz in October.

Market Watch CEO Avinoam Brog said the results surprised him. "Consumers think the in-house brand is better despite the massive sums the big companies invest in making their products distinctive and of better quality."

Brog said quality is only one consideration in making a purchase - the other is price, and in that area the in-house brands also have the advantage of being an average of 15 percent cheaper than similar products.

Even so, said Brog, another important consideration is related to image and status and here the in-house brands have a problem. "Anyone buying an in-house product is regarded as someone who buys cheap, and even though Israeli society considers it more legitimate than in the past to shop on economic considerations, there is still the matter of the influence the brand purchased has on the buyer's status."

The survey found that SuperPharm's in-house brand, Life, is the leading brand for consumer awareness - 59 percent of those polled recognized it. Supersol's in-house brand, Super Class, took second place, with 48-percent consumer recognition.

Consumers are less aware of Blue Square's in-house brand, Leader Price (26 percent had heard of it) and only 19 percent had heard of Clubmarket's Premiere Club. 500 Hebrew-speaking adults over the age of 18 from among the Jewish population were interviewed for the survey, which has a maximum standard deviation of 4.3 percent.

To a great extent the survey's results reflect the ages of the brands. The most recognized brand, Life, is also the oldest and was introduced to store shelves eight years ago. Super Class is a bit younger and was launched in 1998. Leader Price was introduced in 2001 and Premiere Club, the weakest brand in customer awareness, was launched in February 2003.

Brog does not believe, however, that Life's success stems only from its age advantage. He said Life is the only in-house brand whose marketers view it as a brand in every sense of the word and who dedicate resources to advertising it.

Sources at SuperPharm warmly accept this distinction. Marketing vice president Yair Asael says the chain invested 4 percent of Life's sales revenues in marketing the brand in 2003. "Life is a brand in every way, in its quality, its components and its image," he says, adding that an in-store survey found that Life products are considered part of the shopping experience at the chain.

No sales gap

The gap between consumer awareness of Super Class (48 percent) and Leader Price (26 percent), is not reflected in the relative sales of the two brands. Super Class products account for 10 percent of sales at Supersol, while Leader Price products attracts about 9 percent of Blue Square's sales. Brog explains this difference in the age of brands.

The survey also found that Life leads in the consumer purchases category. About 33 percent of those surveyed said they "had heard of and purchased" Life products (56 percent of those who were aware of the brand), compared to 29 percent who purchased Super Class products (60 percent of those who are aware of the brand).

Only 13 percent of those surveyed had both heard of and purchased Leader Price products (50 percent of those who are aware of the brand), and about 6 percent said they had heard of and purchased Premiere Club products (32 percent of those who are aware of the brand).

Leader Price has about 650 products in 40 categories and accounted for 9 percent of Blue Squares annual sales, which totaled NIS 5.6 billion in 2002.

Super Class has some 1,300 products in dozens of categories and accounted for 10 percent of Supersol's sales, which totaled NIS 6.5 billion in 2002. Premiere Club has about 450 products in a few dozens of categories and its sales accounted for 5 percent of Clubmarket's sales, which totaled NIS 3 billion in 2002.

Clubmarket CEO Yacov Ginzburg says he is satisfied with the level of awareness of the Premier Club label, considering how long it has been on the shelves - just eight months. "This a noteworthy achievement considering the level of awareness achieved by the competing brands, which have been on the market for a few years, and the market shares of the chains," says Ginzburg. He said the chain's goal is for its in-store brand to account for 15 percent of sales by the end of 2004.

Life products accounted for 6 percent of sales at SuperPharm, which totaled some NIS 2 billion in 2002. Asael says that discounting the cosmetics and prescription drugs departments, which together account for some 50 percent of the chain's sales, the market penetration of Life products is much higher at about 12 percent.

Asael notes that SuperPharm is planning to expand its in-store brand to include more non-prescription drugs, which currently account for 34 percent of sales in their categories. There are also plans to enter the medical devices field, with products such as blood pressure monitors, inhalation devices, vaporizers and humidifiers under the Life label.

Supersol is also planning to expand its in-house brand. "A brand is a strategic tool, and its importance will only increase," says Supersol CEO Effy Rosenhaus.

The strengthening of an in-house brand is a strategic goal for all the store chains, as it enables them to offer consumers less expensive products without lowering profit margins. Competing suppliers are liable to pay a heavy price for this.