Private-label brands continue growing, even as inflation cools and pressure from name brand food and beverage manufacturers intensifies, according to data analytics company Circana.
The private-label challenge to national brands is playing out differently in markets across the globe, though, as US, Australian and European markets face distinct challenges and opportunities, according to Circana’s expert panel in the recent webinar “Private Label: Category Transformation or Competitive Disruption?”
“Private Label is benefiting not just from consumer pressure, but from changing expectations around quality, innovation and engagement,” according to Sally Lyons Wyatt, Circana global EVP and chief advisor. “Together, these dynamics are elevating private label from an alternative choice to a more central, trusted option in the global retail landscape.”
Store brands have surpassed being a niche strategy and have “reached meaningful scale across every major global region,” she said.
And it’s no longer just price pressure that’s motivating shoppers. Private label has reached nearly a quarter of all unit sales in the US, making the category a $300 billion business, according to Circana data. Meanwhile, Europe is at roughly half of all unit sales and Australia at about 40%.
“Private label continues to gain share, even as inflation moderates and competitive pressure from brands intensifies,” Lyons Wyatt said. “This scale gives retailers confidence to invest in innovation, quality, pricing strategy and experience signaling a structural shift.”
Evolving retail landscape
While the private-label landscape is evolving, it’s doing so differently in different regions across the globe, according to Lyons Wyatt.
Europe has the strongest private-label presence, and its growth is driven by “range expansion, tiered architectures and deeper penetration across everyday categories,” she said.
Momentum is more incremental in the US, driven by new launches and selective expansion playing a bigger role. Australia’s growth in private label is most notable in its expansion beyond food into merchandise, Lyons Wyatt explained.
“Retailers are making more targeted investments in assortment, pricing and innovation based on where private label can be most effectively reached in each market,” she said. “This reinforces that private-label growth today is strategic, localized and actively managed, rather than simply a byproduct of a broader economic condition.”
Private-label growth in the US is driven by club and mass merchandise channels like Costco and Walmart, respectively, while channels like Trader Joe’s and Aldi are growing the private-label segment through product innovation and consumer loyalty.
“In Europe, supermarkets are the core engine, with nearly half of food and beverage value coming from private label, underscoring how embedded it is in everyday grocery shopping,” she said.
Strategic pricing versus promotions
Retailers are competing through price, but at different levels depending on the region, according to Dan Bone, insights director at Circana’s regional arm, IRI Asia Pacific.
He noted that US private-label food and beverage price per volume is 28% lower than name brand competitors. In Europe, that drops to 22%, while Australia shows the biggest price gap at 38%.
The oversized difference in Australia “arguably indicates that more focus and investment is needed in that better- and best-tier of private-label ranges in order to optimize trading up opportunities,” he said.
Beverages have the most substantial price advantage in private-label across markets globally, he said.
“Where the higher price gap exists, it’s likely to be the departments and categories the retailers are really prioritizing competitiveness at those entry-level price points. Doing so really helps to offset the appeal of discounters and value retailers like Aldi, which are near pure-play private-label players,” he said.
National brands are winning on promotional activity, according to Bone. “That’s partly a response from brands and retailers in partnership recognizing that cost-of-living pressures continue to see shoppers looking for more affordable options in the US,” he added.
Roughly 30% of name brand unit sales are from promotional activity, about six percentage points higher than private-label competitors, he explained.
Differentiation and value
Higher-margin premium products are driving product differentiation in the market, and the resulting profit can be invested back into the business to help lower prices, Bone explained.
Loyalty programs and data mining customers’ shopping habits are helping to build out product lines that are “more likely to have the right private-label range in the right stores and catering for the right customer mission,” he said.
For example, Aldi US’s Summit Popz is capitalizing on functional, better-for-you soda alternatives and challenging market leaders like Poppi as a more affordable option, according to Bone.
In the UK, premium private-label lines like Tesco Finest and Sainsbury’s Taste the Difference, along with Coles Finest in Australia, are growing three to four times faster than value private-label lines, according to Rama Chepala Kaki, who oversees Europe Thought Leadership for Circana.
“When consumers are under financial pressure in a tough, inflationary climate, these premium ranges can provide a form of escapism and resonate with customers looking for an affordable treat,” she said. “These ranges hit that sweet spot of value plus quality, offering elevated quality without that premium brand price tag.”
Marks & Spencer in the UK recently announced it will begin exporting 24 private-label product lines, including confectionery, biscuits and tea exclusively at the Australian supermarket chain Coles. Coles is treating the products as a luxury brand and positioning them as premium imports, she said.
“This is a great example of private label behaving and being positioned as a global CPG brand, and it shifts the conversation entirely,” according to Chepala Kaki. “When private label becomes valuable enough to export, it stops being simply private label. It becomes intellectual property with global value, and that’s where the future is heading.”
Trust is key for private-label
Trust is another important dynamic that’s bringing private-label shoppers to the table, according to Lauren Hassenfeld, head of US CPG Advisory for Circana.
Sustainability is key to building trust with shoppers, whether through responsible sourcing, waste reduction or other social and ethical commitments, and European markets are leading the charge, she said.
“While higher regulations in Europe definitely play a role in the greater focus in this region, retailers are also recognizing sustainability as a foundational, strategic pillar and a lever to strengthen consumer trust,” she said.
US retailers are also making strides in sustainability and ensuring quality ingredients in their private-label brands, Hassenfeld said.
“Walmart-Sam’s Club are among some key retailers making public commitments to remove unwanted ingredients from their private-brand products, with plans to remove upwards of 30 to 40 key ingredients from their own brand products,” she said.
