Inflation continues to drive private label growth

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Dive Brief:

Dive Insight:

Even as inflation cools, sales of private labels show no sign of slowing in the U.S.

Private label sales increased about 4% to a record $271 billion last year, according to a report from the Private Label Manufacturers Association. Unit sales of store brands have grown by more than 2% since 2021, while national brands decreased by nearly 7%.

“Private label will continue its growth trajectory, but the next wave of growth may come from different places,” Sally Lyons Wyatt, global executive vice president and chief adviser at Circana, said in a statement. “While value channels have recently driven private label gains, expect more grocers – both large and mid-sized – to invest more aggressively, making private labels a core growth strategy.”

Virtually all U.S. households (99.9%) purchased at least one private label grocery item in the past 12 months, per a Numerator report in December. That was followed by health and beauty (99.2%), household products (98.9%) and home and garden (97.6%).

Other surveys point out the growing trend for consumers to increase their purchasing of private label products at the food market. Some 55% of grocery shoppers bought more private brand goods in the past year, compared to 28% who did so with name brands, per a June report from the Food Industry Association’s recent Power of Private Brands report.

Price will always play a role in a consumer’s decision to choose a private label, but will cease to be the key determining factor, according to Lyons Wyatt. “Retailers will continue to tier their offerings with more margin-accretive premium products, while also leaning in on entry price-point products,” she said. “As retailers continue to build brand equity, they may rethink pricing and promotion strategies, but innovation – including with new products, localization, regionalization or unique partnerships – will continue to take center stage.”