Private label growth slows as brands bounce back

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Private label Brand Private label manufacturers association

Branded foods could be about to make a comeback as private label growth shrunk to 3.2 percent in the four weeks to February 20, and brands saw a 2.4 percent rise, according to a Credit Suisse report.

Private label, or store brand, growth has widely been seen as a result of recession, but although some private label foods are simply cheaper imitations of familiar brands, there is now a greater range of store brand products on offer, with many more focused on delivering quality as well as value. This has given rise to speculation that private label products could endure well beyond economic recovery.

The report from Credit Suisse analyst Robert Moskow, cited in the Wall Street Journal, ​said that although store brand sales had risen 3.2 percent in February, the increase was down on a four percent sales rise for the January period, and a six percent increase in July last year. Meanwhile, the 2.4 percent gain for branded foods compares to a 0.2 percent drop for the four weeks ended January 23.

It has previously been seen that private label foods sell well during times of recession, with unit market share climbing from 20 percent to 21.8 percent in the 2001-2003 recession, according to the Private Label Manufacturers Association. And in the 1990-1991 recession, unit share for store brands moved up from 17.6 percent to 20 percent. Unit share currently stands at about 22.8 percent for private label foods.

However, unlike other recessionary periods, store brands have been striving not only to keep up with, but also to surpass, their branded rivals in terms of innovation, bringing a new focus on ingredients for health and wellness in particular. Private label products 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, according to market research organization Mintel.

Makers of brand-name foods have been increasingly using promotional campaigns, including coupons, on-shelf messaging and discounts, in an effort to woo consumers back to their old favorites.

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