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Affluent households driving private label growth, says Nielsen

By Caroline Scott-Thomas , 10-May-2010

Growth in private label is approaching 20 percent of dollar value in the US, according to market research organization the Nielsen Company – and it is being driven by the most affluent households.

There has been some disagreement among analysts about whether sales of store brand, or private label, products would continue after the economy begins to recover. However, the Nielsen Company suggests that not only are private label goods holding their own, but there has also been a fundamental shift in the demographic most likely to purchase private label goods, with those households earning over $100,000 a year representing the fastest growing segment of private label sales.

In an interview for the Private Label Manufacturers Association, senior vice president for the Nielsen Company Todd Hale said: “More affluent households have been driving trip growth to retailers while low income consumers, middle income households have had to pull back in a much stronger way.”

Hale said that this was because more affluent households tended to be better educated, had seen their financial situations worsen and were more likely to be looking for ways to save money.

“I’m often quoted as saying that poor people need low prices but rich people love low prices,” he said.

Store brands advanced to a 17.3 percent share of dollars and a 21.9 percent share of units by March 2010, Nielsen said, up 2.1 and1.9 points respectively from 2007.

However, the organization added that branded products still rule the grocery store, accounting for 82.7 percent of dollar sales and 78.1 percent of unit sales.

According to Mintel, private label sales account for more than $81bn in the US, with health and wellness claims including no trans fats, no saturated fats, multi-grains and antioxidants among the strongest-growing categories. The market researcher claims that this is a result of store-brand food manufacturers attempting to surpass their branded rivals in terms of innovation.