Acofar: the first private label in Spain
In 1947, when practically no one in Spain had ever heard of private labels, pharmacists joined together into distribution cooperatives to create the very first product under their own brand: Querubín balm.
It represented the beginning of own brands in Spain, which in the pharmacy sector today are bound together under the Acofar brand. These days, offering more than 6,000 items and with more than 22 million euros in turnover, Acofarma continues to offer pharmacists the advantages of being the leading, and first ever, private label to exist in our country.
Origins of the private label, or own brand
Own brands (OBs), also called white labels or private labels, are brands that belong to the retail chain. Their origin can be traced back to the late 19th century in the USA, when some grocers started to package their own products (tea, coffee, etc.) that they sold in bulk under the names of their shops. Throughout the first half of the 20th century, brand manufacturers gained ground through advertising campaigns broadcast over new media channels, such as the TV, and through international expansion. In the second half of the century retail establishments, first in North America and later on in Europe, began to increase in size and the major chains began to appear whose negotiating power exceeded that of the brands. It was during this time when own private labels re-emerged and first began to arrive in Spain.
Fundamental purpose. For decades, manufacturers have invested massive sums of money in advertising to create their brands and win over consumers. This has allowed them to impose their own rules of the game over with their distributors and customers, with substantial profits. It is not uncommon for 20% of the price of a brand name product to represent its advertising. Own brands make it possible for these rules to be reversed, giving the retail establishments the negotiating power, such that the margin is divided between the manufacturer and the retailer, which in turn cuts prices for the consumer.
Development and types of OBs. The origins of OBs can be found in low-priced product lines that usually offered essential items wrapped in white packaging featuring only the name of the product and the retailer, which gave rise to name of white label products.
OBs have developed gradually and there now exist two models:
• The same product as the brand name but at a cheaper price (me-too brands).
• The same price as the brand name but of superior quality (premium brands).
Advantages to the consumer are obvious, as the differences in price in the first instance tend to be quite significant.
The quality of OB products is guaranteed as in many circumstances these products are made by the same manufacturers as the brand name products and abide by the same health legislation. Multiple consumer associations have performed surveys that guarantee the quality of these brands, and some OBs have even received awards within their categories due to their unique flavours or formats.
OBs are here to stay. Studies carried out at the London Business School have shown that private labels are not a phenomenon unique to times of crisis. More than 50 years of monitoring has shown that for these brands, though they may sell better during times of economic recession, their presence holds steady in the following years as consumers have tried them and had positive experiences with them.
The current situation and future of OBs
We find ourselves facing a future marked by rational consumption in which consumers are already global and carefully consider how to spend their resources. This is the explanation for the massive success of own brands: they offer something that is in short supply these days, the honesty of the right products at the right price.
In Spain, in 2015, own brands represented 34% of the value of purchases made in the mass retail channel.
Growth in the pharmacy channel has continued at a dizzying pace and currently makes up 18% of total turnover. According to IMS, Acofarma is the leader in pharmacy brands with a market share of close to 50% by value.
With regard to units sold, the Acofar brand is the market leader in bath gels, second in pregnancy tests, and holds the third spot in sterile dressings, disinfectants and thermometers.
Even without aspiring to the pharmacy brand reaching mass retail levels, the pharmacy own brand has a bright future ahead. The significant changes that consumers have experienced over the past decade have opened up a broad array of opportunities for private labels in the pharmacy channel, encouraged by the fact that they have managed to do away with any negative preconceptions that might have existed towards their generic “white-label” predecessors.
Acofar's contribution to pharmacy
Our products are exclusively sold in pharmacies. As a non-profit cooperative, our own by-laws prevent products from being sold through outside channels.
Pharmaceutical quality guarantee
Our products are created by pharmacists according to pharmaceutical standards. Acofarma holds multiple accreditations such as the CE Certification for healthcare products from the DGFPS, and GDP and GMP-II accreditation for the production of active ingredients.
- An OB offers highly significant differential prices in comparison to brand names due to the absence of investment in advertising.
- Higher rotation: allows access to or continuity in the purchase of products that are not essential during times of crisis.
- OB consumer profile: no longer exclusive to less advantaged sections of society, but rather has a large market share among housewives with children and high incomes.
- Consumers have learned to manage their currently limited resources.
- Management by pharmacy category: the private label is a key tool.