Stores’ own-label products capture greater wallet share
Overall dollar sales of own-brand consumer packaged goods in the US were up by 10.1 percent to $80.3bn for the year ended September 2008. Meanwhile unit sales grew by only 0.4 percent over the year, which would suggest that private label growth is driven more by higher unit pricing than shoppers switching away from traditional brands.
However, Tom Pirovano, director of Nielsen’s industry insights, said in the report called Private Label: What’s really driving private label growth?: “Recent months show growth in private label units, indicating that shoppers are beginning to switch in favor of the savings offered by store brands.”
He added: “Private label offerings have evolved from the cheap alternative to national brands into distinctive, high-quality products with a unique value proposition that retailers strategically deploy to enhance the image of their store. With prices on the rise, retailers are leveraging private label to entice picky consumers and shore up sales.”
Store brands with the “natural” label increased by 11 percent over the year and other popular health and wellness claims, including no trans fats, no saturated fats, multi-grains and antioxidants, also saw double digit growth.
The “natural” category also outsold organic by almost five-to-one margin but organic private labels have kept pace with traditional brands.
Pirovano said: “A continued emphasis on health and wellness suggests that consumers will open the door to private label goods with a nutrition or vitality slant.
“While switching behavior from national brands to private label is not a trend, shoppers are spending up within the private label categories. The public has caught on to private label’s value, and the future forecast calls for private label to capture an even larger share of mind and wallet.”
Globally, Nielsen found that the fastest-growing private label categories in the 38 countries studied were eggs and energy/sport drinks at 19 percent each; ready-to-drink beverages at 15 percent; probiotic drinks at 13 percent; frozen fruit, milk/cream/substitutes and baby/infant formula all at 12 percent; dairy/substitute drinks and pasta/noodles at 11 percent; and capping the list were cooking fats/oils at 10 percent.
Keeping up with national brands
Private label food and beverage products have been available in retail stores for decades. Typically, they are regarded as cheaper, lower quality food staples such as pasta, rice and tea bags. However, now consumers are demanding the highest quality for their money.
The Private Label Manufacturers Association (PLMA) said recently that private label is emerging as an innovating force, using ingredients that are on-trend with the modern consumer without waiting for national brands to introduce them first.
It said that future growth depended on keeping up with the best ingredients, flavors and fragrances so that retailers can offer consumers the most innovative and creative products possible.
Some of the most important ingredients and product claims were organics, high fiber, low salt, trans fat free, and gluten free.
Convenience stores
Nielsen research also showed that private label products are growing faster in convenience stores compared to other stores. It said that six out of the top-selling product categories in convenience stores, such as carbonated beverages, snacks and candy, are significantly underdeveloped in private label, representing opportunities for convenience store retailers.
Pirovano said: “Now more than ever is the perfect time for convenience store operators to expand their private label offerings. Although store brands generally deliver higher margins, private label products can also convey a value image that many shoppers are looking for during times of economic uncertainty."
