BBB Foods Inc: Growth Potential & Private Label Penetration
Industry Expert Mexico Discount Retailing
inpractise.com/articles/bbb-foods-inc-growth-potential-and-private-label-penetration
Industry Expert Mexico Discount Retailing
Interview Transcript
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So, it's 25% cheaper for the private brand compared to the national brand.
Yes, it depends on the product. For cleaning products, you can achieve 35% to 40% savings. However, with food, it's really difficult to achieve that. Currently, 50% of the whole assortment is private label, and 50% is national brand.
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What sort of gross margins do they typically have incrementally compared to the group average? Are we talking about five points higher than the group average or narrower?
No, it's a maximum of 5% average. You want to sell much more, right? If the price is set attractively, you sell more, and your margin is also on your volume. That's why you don't aim to earn 10% on the private label. Sometimes, yes, it can be up to 30%, but not in all categories. For example, in milk, if the brand is at 11%, your private label might be at 15% or 16%. But if you sell washing powder, it can be up to 10% higher on the margin than the commercial brand. It depends on the category and the market. Sometimes you want to increase quality instead of just reducing the price and having a larger margin.
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