How brands can fight back against retail’s phantom labels

Phantom brands, the cheeky stepchild of own-label brands, are coming for FMCG category leaders.Private-label product strategies have long been a pillar for major Australian retailers. As of 2024, goods manufactured by a third party but sold under a retailer’s brand name commanded 36 per cent of Australia’s consumer packaged goods sales, market research firm Circana reported. And there’s little sign of that proportion falling.In recent years, we’ve also seen the rise of pseudo or phantom brands, retailer-owned brands that are not obviously linked to the master brand. These phantom brands are changing the game in many categories and putting established FMCG brands at risk.To understand the impact of these pseudo-brands on the FMCG landscape, first, we need to take a stroll down the aisles of retailers gone by.The history of Australia’s private-label brandsRoll back to the end of the last millennium, and private-label brands – in Australia, at least – typically inhabited the bottom shelf. They offered a low-price, entry-level option in a wide variety of categories.Think lo-fi packaging that was uninspiring and boringly generic. Defunct Victorian supermarket brand Safeway cornered the boringly generic market with its Home Brand label, recognisable by its simple white, red and black packaging.With retailers competing for consumer preference, better value options across a wide range of categories allowed shoppers to meet more of their needs in a single store, with the choice to spend more in more exciting categories.Over time, private-label brands evolved to follow packaging cues established by the leaders in the category. Instead of every product under the home-brand banner looking the same, offerings were designed to appear more at home beside their big-brand counterparts.The next iteration of own-brands was a ‘good, better, best’ tiered system, offering shoppers a diverse range of products. For example, Coles has its no frills ‘Simply’ range, the tried-and-tested Coles brand and the fancy Coles ‘Finest’ range, which runs the gamut from Belgian Chocolate to pure Canadian maple syrup.Enter the phantomWhile not entirely responsible, Aldi played a major role in the arrival of phantom or pseudo-home brands on Australian shores.Opening its first Aussie outlet back in 2001, the German grocery retailer brought with it a laundry list of new and unusual brands that turned out to be made by Aldi. From cleaning product brand Di-San to biscuit brand Belmont and many, many more, the supermarket chain had better value positioning in mind from the get-go.With less predictable branding and pack formats, or even product concepts, these phantom brands provide the appearance of choice on shelf and spare the retailer from having to split the takings.It’s no wonder Coles and Woolworths have followed suit, introducing their own phantom brands. Among others, Coles has Daley St Coffee, skincare range KOi and Italian pasta brand Cucina Matese. Meanwhile, Woolies is tapping the multibillion-dollar pet-care market with its Smitten range and keeping us clean with personal care brand, Balnea Body Company.When it comes to packaging, these phantom brands typically pick up design cues from others succeeding in the category. Aldi is a master of walking a fine line with its product ‘dupes’ that look and sound like the products you know. Think Hedafen, a Nurofen knock off or Bramwells Choc Hazelnut Spread, which looks strikingly similar to Nutella, down to the white lid, and red-and-black font.Backed by dataRetailers such as Coles and Woolies have a major competitive advantage in data. Visibility of shopper behaviour across the store and brand performance within categories is unparalleled.Use of data has gone beyond deleting products that are under-performing. Supermarkets’ modus operandi is now to be a fast follower. Identify the products, price points, formats and brands that are succeeding, then develop and launch phantom brands that tap this demand.When you combine this data fluency with the competitive context of the category and pressure on margins, the risk for brand owners is clear. As stable, successful brands settle into sweet spots, there’s very little to stop a retailer from launching something similar and turning brands into victims of their own success.Brands fight backIt pays to be mindful of how big retailers operate and get clear about your competitive advantage.To ensure your brand isn’t muscled out by a phantom brand, double down on what made you a success in the first place.For some, it’s being the hot new brand that supermarkets have to stock to maintain their customer pulling power. This means taking more risks with original ideas that shoppers will go out of their way for. It’s a well-trodden path for new brands aiming to scale fast and move from niche or specialty distribution to the majors. These are the brands that target the underserved niche, tap emerging trends or market segments, and trial new products or formats.Earned media, viral content and influencer marketing can help brands build a cult status that no ‘own brand’ can compete with. Think Chotto Motto Chilli Oil. Produced by Melbourne restaurant Chotto Motto as a way to diversify the business’s revenue streams during Victoria’s notorious Covid-19 lockdowns, it quickly gained awareness, leaping from the restaurant’s website to supermarket shelves.Remember, the retailer’s approach to phantom brands is to be the fast follower, not the innovation leader. Viral sensations will have a short shelf life unless they stay on the ball.Take the example of pistachio spread, Pistachio Papi, which landed in Woolworths in June 2025. It was a viral sensation that started life as a direct-to-consumer product; by leveraging social media, the brand became a must-have item for shoppers. Later that year, Coles launched its own pistachio spread at the exact same price point.The lesson is clear. Once you’ve scaled up into playing a major role in a category, you need to keep it fresh.Flex your creative brand musclesSo far, retailers aren’t willing to put much marketing investment into their phantom brands, at least not outside their own proprietary channels – which, to be fair, is an increasingly powerful lever to pull.For big brands, investing in great advertising, promotions and pack design that is highly recognisable, but also challenges what people expect from you, has the power to drive buzz and demand. If you’re a brand with well-established, distinctive brand assets, then flex them. Play with your brand to bring intrigue, irony or the surprise factor.Heinz is a classic example. Known for its iconic keystone label, the brand’s tomato-red colour and even the shape of its bottle are unquestionably Heinz. Whether we’re talking Heinz ketchup, soup or beans, it only takes a glance to recognise the brand. Aldi’s dupes don’t hold a candle to Heinz.Another creative strategy big brands can employ is faster new rhythms. Think limited editions, left-field brand collabs or seasonal specials. For bigger brands and niche brands alike, this is critical to maintaining must-range status. Bringing energy helps grow the category as a whole and drive overall shopper engagement in the store environment.Japan’s Kit-Kat is a world leader at this, with a whimsical array of flavours keeping consumers coming back for more. Locally, Messina’s collaboration with the Aussie classic, the Tim Tam, was a drop that generated so much buzz and FOMO, we’re still talking about it eight years later.These are tactics highly suited to the modern digital marketing environment, in particular, social-media platforms.As a manufacturer, your ability to trial short-run products is better than that of slower-moving retailers or contract manufacturers. This is a capability that brand owners should be investing in to protect their ranging and reinforce the ability to hold pricing.If all else fails, sleep with the enemyIf you can’t beat them, join them. Consider contract manufacturing for private-label brands while continuing to offer exclusives with your own brand.Being a highly valued contract-manufacturing partner means building an understanding of what the retailer aims to achieve in the category. Bring your capability to the table and help the retailer be more agile and entrepreneurial. It will give you a front-row seat to spot and capture growth opportunities as they emerge.Right now, retailers are operating phantom brands via a low-risk follower model, but the tide continues to shift. There is risk for independent FMCG brands, but there is also opportunity. To realise those opportunities, it will take creativity – at the product, brand and marketing level – built on robust and realistic business models.About the authors: Michael Callan is creative director at Principals and Naomi Landau Eglick is director of consumer brands. Principals is a Sydney-based brand and design consultancy specialising in retail, FMCG packaging, and brand strategy.This story was featured in the April edition of Inside FMCG.