While no-name or "own-brand" products have claimed 31% of U.K. grocery sales, according to Datamonitor, and 21% in Canada, according to A.C. Nielsen, they're comparatively weaker in less developed markets such as Argentina and India, where the lack or recent introduction of huge supermarket chains limit distribution clout. And private labels have barely made a dent in Hong Kong, where high disposable income has fostered high-price brand loyalty.
But private label's influence is beginning to be felt in South Africa, Japan and other countries, where established brands are rushing to defend their territory against lookalikes, and in some areas, they're expected ultimately to command as much as half of total grocery sales.
Because of the high stakes involved, the soft drink business has proved perhaps the fiercest battleground for private label marketers.
Coca-Cola Co., for example, has resorted to tactical ad campaigns in the U.K. and South Africa against encroachers, which normally spend little on advertising themselves to maintain their low-price appeal.
Leery of losing its grip on 75% of South African soft-drink sales, the company ran an aggressive TV, print and outdoor campaign from McCann-Erickson, Johannesburg, with some ads headlined, "Just because it says cola doesn't mean it's Coke."
Coca-Cola is spending $4 million on a similar TV campaign in the U.K., created by Bartle Bogle Hegarty, London, and aimed squarely at chains like J. Sainsbury, whose house brands hold 12.2% of the cola market and 60% of all cola sales in their stores. Coca-Cola's U.K. share, in fact, has fallen below half of the $1 billion U.K. cola market for the first time, according to market research company AGB.
Coke's share dropped to 42.2% in November (the most recent figures available), from 54.6% the month before, due to the onslaught of Cott-produced supermarket cola brands.
Sainsbury, in fact, now allocates 48% of its total shelf space to private-label products, and rival Tesco an even higher 51%, according to Datamonitor, a U.K. researcher.
In Japan, supermarket chain Daiei Inc. has only recently launched its assault on Coke's 90% stranglehold on the cola market. The chain last June introduced the bluntly named Savings cola in 865 outlets, adorned with red and white packaging, that sells for about one-third the cost of Coke, at 39 cents versus $1.07 a can.
Coke hasn't resorted to a combatative ad campaign here and seemingly refuses to acknowledge the threat. Miyabi Katanaga, a spokeswoman for Coca-Cola Japan, scoffs that "there's nothing new" about products like Daiei's Savings cola, and claims supermarket chains represent just 3% of the company's business.
"Clearly, we are accustomed to competition and we have successfully competed against a wide range of different products-including private labels-for over three decades," she said.
Other companies have responded to copycat packaging, especially in markets where weak trademark laws give the company little local recourse.
Last March, Kraft General Foods' Argentine unit sued French marketer Bongrain for marketing Pennsylvania brand cream cheese in a package nearly identical to that of Kraft's Philadelphia brand. Bongrain later relented, changing the brand name to Santa Rosa but leaving the copycat packaging intact.
Die-hard loyalists aren't fooled.
"My mother has tried to get me to drink American Cola and Classic Cola, but they don't match up," said Garth Foote, 17, a Johannesburg student. "Only Coke tastes like Coke; the others are similar, but just not the same."
"Usually I buy the popular brands," said Wanda Lee, a 24-year-old Hong Kong secretary. Tempted by private-label products, Ms. Lee still won't bite. "Even if the price was half, I'm not sure I'd buy it."
Such brand loyalty is the major reason why private label hasn't taken off in Asia. Campbell Soup Asia, for example, claims a 60%-plus share of the Hong Kong soup market and believes the presence of fewer brands in each category has made multinationals more prominent, a spokesman in Hong Kong said.
In other markets cultural customs have stopped the incursion of private label. Well-to-do Indians, for example, send servants to purchase most household goods, and they tend to patronize small corner groceries which do not have the clout to create their own house brands.
Moreover, the economy is a telling factor in private label domiance. Historically, the rise and fall of private-label products have reflected booms and busts in the economy; cash-strapped consumers are often willing to trade down to cheaper products, but many reverse themselves and buy pricier goods as better times return.
Therefore, private label sales are highest in countries either still in recession or climbing out of it, like the U.K.
"Consumers are undoubtedly value-driven at the moment," said Tim Potter, a food analyst for Smith New Court, a London brokerage firm.
"While the country's economy may be coming out of the recession, consumers still have not got rid of their [buying] habits."
That might be changing in developed markets, however, as retailers view them as part of a long-term strategy to wield more power against brand-name manufacturers.M
Mir Maqbool Alam Khan, Elena Bowes, Laurie Freeman, Mike Galetto, Andrew Geddes and Cathy van Zyl contributed to this story.