New IBISWorld research suggests that Woolworths' decision not to stock many of Coca-Cola Amatil's products under the iconic Mount Franklin brand from next month signals a distinct shift in supermarket strategy away from big brands and towards private-label products in an increasingly competitive industry.

Closely following Woolworths' decision not to stock Coca-Cola Amatil's highly-anticipated new product, Coke No Sugar, the decision by the nation's largest grocer to remove Mount Franklin products will be seen by many as another significant development in the fast-paced supermarkets and grocery stores industry, which currently generates more than $105 billion annually and employs more than 330,000 Australians nationwide.

"The move is seen as a way for the supermarket chain to boost the performance of its private-label products, particularly as demand for bottled water is growing strongly at the expense of sugary and sweetener-laden carbonated beverages," said Nathan Cloutman, IBISWorld Senior Industry Analyst.

"Private-label products account for approximately 25% of total sales in the supermarkets and grocery stores industry. Woolworths is increasingly looking to expand its private-label product range, including phantom brands. This trend follows a strategy that has been strongly pursued by ALDI, to drive consumers in-store through low private-label prices."

Woolworths’ move to promote its private-label products is similar to what is occurring in the UK grocery market, where private-label products are expected to account for 40% of total sales, according to IBISWorld.

"It is expected that Woolworths and Coles will increasingly expand their private-label ranges, to boost their competitiveness against ALDI. Brands, such as Coca-Cola Amatil, are likely to increasingly innovate to keep their products on supermarket shelves. Areas of innovation include expanding the range of premium products and offering healthier alternatives."

The recent announcement suggested that Woolworths will remove several Mount Franklin products, but retain the 20-pack and six-pack varieties, and single-serve portions in its stores.

Conversely, in New Zealand’s supermarkets, grocery stores and convenience stores industry, which generates revenue of NZD$18.7 billion and employs some 53,000 New Zealanders, big brands are enjoying strong growth and continue to generate over 85% of total sales, according to IBISWorld.

The New Zealand supermarkets industry is approximately equivalent to 17% of the Australian industry when converted to Australian dollars.