“The private-label grocery market is on the cusp of a super cycle,” said Simeon Gutman, food retail analyst at Morgan Stanley, during a podcast last month examining private-label’s transformative potential.
The private label reign continues. Grocers continue to invest in their ‘own brand’ strategies as consumer spending patterns indicate a willingness to transition to these offerings to make their food dollars last longer. Gutman noted how the trend’s rudiments trace back to COVID-era shifts.
In 2024, store brand sales grew $9 billion compared to the year prior.
Store brand sales ended 2024 at a record $271 billion, according to the Private Label Manufacturers Association, citing data from Circana. Refrigerated (+7.5%), general food (+4.3%) and beverages (+4%) represented some of the highest growth across all edible and nonedible private label categories, signaling growth potential in these areas in the year ahead.
“The quality, value, and innovation that store brands provide can’t be beat,” said PLMA president Peggy Davis in a statement.
Moreover, wholesaler UNFI projects private label market share to grow roughly 40% over the next six years. It listed the segment as a key trend and growth opportunity for food and beverage professionals.
Who’s Winning?
Store brands have undergone a “glow up” — no longer considered “white label,” they have eschewed the archaic qualifier, compromise, to become a value-driven grocery solution. Concurrently, consumers today, particularly younger generations, are less keen on brand loyalty. These attributes join to make private label a worthy investment strategy for CPGs looking to bulk profits, and grocers endeavoring to stay competitive.
But who are the biggest winners in today’s landscape?
In the Morgan Stanley discussion, Gutman discussed how the growth of private label groceries reflects the rise of “mega-platforms” that continue to capture an increasing share of consumers’ wallets and are innovating their assortments to meet more consumer need states.
The latest generation of offerings are diving deeper into prominent food trends, particularly related to wellness, special diets, and permissible indulgence.
This phenomenon can be observed through Walmart’s recent rollout of Bettergoods “premium private label” products, which offer plant-based alternatives, specialty sweets like macarons, and upscaled frozen items like mushroom and truffle pizza, to name a few. Additionally, Target announced at the top of the year an investment into private-label with nutrition-focused additions to its own brands portfolio, which include 250 new wellness-aligned items to its Good & Gather brand, and high-protein shakes from up&up.
Last week, Dollar General revealed plans to bolster its arsenal of more than 3,200 consumable private label products with roughly 100 new offerings under its Clover Valley brand. Additions include honey mustard, blue cheese, and Thousand Island salad dressings; apple cinnamon fruit and grain bars; and eight flavors of ice creams.
“With more than half of our customers’ baskets having at least one private brand item, we are proud to make significant investments in our private brands, bringing even more on-trend products and pantry staples to shelves,” said Emily Taylor, EVP and chief merchandising officer at Dollar General, in a statement. In FY 2023, Clover Valley alone hit $2.3 billion in sales for the discount retailer.
What’s Ahead for Private Label?
The retail giants of the world are bulking up their affordable offerings to keep shoppers in their stores, which facilitates gains across departments, even with name-brand and specialty offerings, and it’s working. Although a potentially harrowing thought for independent retailers and emerging brands, this presents an opportunity for others to follow suit.
Store brands are not going anywhere.
Recent NIQ research estimates private label market share contributed roughly 8% of overall sales growth. Moreover, these buyers are stickier: the report found that 30% of consumers would switch to buying a private label product even if it costs more, and 50% believe they are buying more of these items than ever before.
“This shift is enabling private labels to compete not just on price but also on relevance and uniqueness, transforming the role of private labels from being supplementary to becoming essential drivers of customer loyalty and market differentiation,” concludes the NIQ report.
To capitalize, retailers will have to double down on innovation, consumer feedback, and streamlining efficiencies to reduce the path to market. Today’s consumers want to be surprised by a store brand’s assortment.
Artificial intelligence can be a key part of that. At Forvis Mazars’ 2024 Food & Beverage Forum last year, Pam Ofri, director of Own Brands at Wakefern Food Corp., discussed how these technological developments are welcome in the creative process.
“AI isn’t anything new; it’s over five years old, but the ability has changed dramatically. Us at Wakefern are starting to find areas of the business to specialize it and understand it,” she said.
“We’re really integrating it now into launching so many SKUs.”
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