Sales of private label products are still growing, having “significantly increased” over the past year, according to new research from The Nielsen Company.
Private label foods have increased in importance for US consumers during the economic downturn, as many look to cut spending on eating out, trade down from more expensive branded foods, and as manufacturers of private label products have improved quality and choice.
Opinions vary about whether the private label boom will continue after the recession, as store brands have traditionally done well in times of economic hardship only to slump again when the economy has improved. However, during this recession, there has been a concerted effort from manufacturers to not only lower the cost of private label foods, but to target additional consumer expectations in terms of overall value.
Senior vice president of Consumer and Shopper Insights at Nielsen Todd Hale said: “When categories are sorted by store brand share, from high to low, some patterns emerge. Store brand performance and share is strongest in commodity categories. Milk, fresh eggs, sugar and substitutes and canned vegetables top the list.”
In its new report, entitled US Store Brand Development, Nielsen’s figures show that the dollar value of private label sales increased by 7.4 percent for the year up to July 11, 2009 compared to the previous 12-month period, to reach $85.9bn. Unit sales also increased by five percent compared to the previous year, the market research organization said.
Best and worst of store brands
But while basic commodities are doing particularly well, those categories that have the strongest brand presence and good marketing support, such as confectionery, gum, and beer are least likely to be feeling the influence of private label competition.
Store brand snacks and frozen pizza saw the biggest growth in terms of sales value, up 38 percent, partly due to higher unit price, but also due to higher sales volumes, which were up 22 percent for the category.
Other private label foods that have seen significantly improved share of dollar values include flour, as people have returned to cooking from scratch, and dry vegetables and grains, the report said.
In 2008, the US market for private label goods grew by 9.3 percent, compared to just 4.5 percent for branded foods, according to Mintel, with health and wellness claims including no trans fats, no saturated fats, multi-grains and antioxidants among the strongest-growing categories.
The Private Label Manufacturers Association says that in the 2001-2003 recession, private label’s unit market share climbed from 20 percent to 21.8 percent. And in the 1990-1991 recession, unit share for retailer brands moved up from 17.6 percent to 20 percent.