Eric Salama, director of strategy of WPP Group, London, said marketers aren't doing enough to differentiate their brands from retailers' fast-growing private-label products.
"It's not the death of package-goods brands but the neglect of manufacturers' brands and the birth of retailer brands," Mr. Salama said.
Aside from package goods, he said, new brands are flourishing in categories like computers, clothes and airlines.
In the U.K., half of the sales of supermarket giants J. Sainsbury and Tesco come from their private-label brands. And French supermarket group Casino, with 20% of its sales from private label, is improving existing products and adding new ones in an effort to increase that share to 30% to 40% of sales, said Pierre Cohen-Tanugi, president of ECCLA, Paris, a Euro RSCG-owned sales promotion agency working with Casino.
Mr. Salama said research by WPP's Henley Centre, a London economic forecasting consultancy, found that in product categories like cereals, where ad spending by marketers is high, penetration by private-label retailers is low. In research comparing marketers and retailers, 45% of consumers questioned in the Netherlands believed Dutch retailer Albert Heijn cares more about consumers than Nestle does.
"To consumers, these retailers are becoming brands," he said, adding that marketers need to be more value-and service-oriented, innovative and advertise more.
Some companies like Nestle are starting to take steps to improve relationships with consumers. In France, Nestle has set up centers full of Nestle baby products at highway rest areas where motorists can stop to care for their children, Mr. Salama said. And Nestle is piloting in the U.K. a relationship marketing program to build a database of consumers interested in Italian cuisine.
Keith Bantick, chairman of Promotional Campaigns Worldwide, London, said although clients increasingly demand international capability from their sales promotions agencies, it's still harder to do pan-European sales promotion than advertising.
"[That's] because there is more brand pressure to run transnational advertising for a brand, and there is more budget pressure as well because of the economies of production and media buying," he said.
Mr. Bantick said Unilever and Mars Inc., for example, both do brand management for advertising on a pan-European basis but sales promotion is run locally.
Managers in each nation may also block running sales promotions not developed locally. Mr. Bantick said when Ford introduced its Mondeo car in Europe last year, Promotional Campaigns put together a pan-European sales promotion program.
"We sent someone to each European office [of Ford], and it was refused by all the managements except two," he said. "We lost a lot of money on it. Although clients are prepared to accept pan-European advertising, we're going to have to work hard to get them to develop pan-European promotions."