Despite some market watchers’ predictions that private label is set to take over the world, its share of the packaged-food market has been relatively flat since 2008, and it stopped gaining in other categories in 2011. This leveling off suggests that food brands are able to withstand the private label competition. Yet, we’ve found the story is more complex.
The first clue is obvious to retailers: there is enormous variation in private label share at the category level. In some categories, such as milk, private label has 60 percent or more market share. In others, such as RTD coffee, canned ham and toaster pastries, private label has only 1 or 2 percent share.
Private Label Share of Packaged Food
The numbers belie reports about how beautifully private label is performing overall and reveal, instead, how the culture of brand shapes consumer receptivity by category.
That snapshot of private label does not necessarily portend future successes or challenges. It’s impossible to predict how much retailers will expand the private label model in coming years or the growth of premium innovation in private label products – or “control labels,” which simulate name brands but actually belong to retailers.
Retailers and CPG companies should analyze their portfolios for exposure in the “battleground” segment, where market and cultural forces threaten CPG bottom lines and offer more opportunities for retailers. Retailers are most threatened in the “growth engine” categories, including the fresh perimeter, where CPG could take hold.
To read the full report, use this link to download your free copy of The Future of Private Label Food, where we explore the category-specific dynamics of private label, how culture is a key variable in explaining them, and the key uncertainties that could alter the power dynamic between private label and brand moving forward.
Hartbeat EXEC is a quarterly report from Hartman Strategy written for executives at major U.S. food and beverage companies. Free copies of Hartbeat EXEC can be downloaded from Hartman Strategy’s website.
About Hartman Strategy
Hartman Strategy partners with senior leaders in the food and beverage industry to help them align their portfolios to existing and emerging consumer demand. A strategic adviser to major retail and packaged-goods companies, it drives growth with a range of customizable solutions: portfolio innovation strategy, market-trend and global food culture analysis, M&A/investment advisory services.
As leaders in the study of American food culture, The Hartman Group has been tracking how Americans shop for food since the 1990s. From one-stop shopping to multichannel shopping to online markets and click-and-collect, we continue to track consumers’ evolving perceptions, needs, habits and relationships with food retailers. New to the 2017 report is a special section on the expansion of the discount grocery channel, the emerging fresh-format channel and smaller-footprint retail formats.