A recent article published by FoodNavigator-USA provides a deeper dive into retail market data and suggests that most of the growth is coming from premium private label. They reached out to our very own, Matt Sargent, Senior Vice President of Retail to share his insights on the future of private label and the game changers in the industry.
Elaine Watson at FoodNavigator-USA notes, “while private label’s dollar share of the US CPG market has hovered stubbornly around 18% in recent years, things started to change in 2017, according to new data from Nielsen, which says store brands have experienced a ‘complete reversal in growth trajectory compared to manufacturer branded items’.”
Nielsen’s latest Total Consumer Report shared findings that store brands began to outspace national brands in 2017, and by the last quarter of the year, they were “posting dollar growth of more than three times the rate of branded products.”
Through industry research and observation, Magid has found there are three major supply side drivers of premium private label success:
- Boosting profitability–private labels are allowing retailers to offer choice (assortment) while controlling costs.
- Differentiation–given increased digitalization and transparency, private label is one of the last best ways for retailers to differentiate themselves.
- Driving traffic–all retailers are struggling to drive traffic, and having something unique is one of the best ways to address this challenge.
The recent growth in private label is supply driven versus market driven. The 2008 recession drove growth through the low end of private label via demand for more affordable products. The current growth is driven by the need for retailers to address the three issues listed above. This is likely to lead to a greater sustained level of private label penetration potentially approaching the high levels of private label seen in Europe.