Private Label Food and Beverages in the U.S.

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Market Insights: A Selection From The Report

Channel Sales of Food & Beverage

Packaged Facts estimates supermarkets and grocery stores accounted for 59% of all food and beverage sales in 2009 with warehouse clubs and supercenters together accounting for 20%. These two categories make up not only the bulk of all food and beverage sales, but also private label food and beverage products. In general, supermarkets and grocery stores have lost market share since 2005 falling from 62% of the market. Meanwhile supercenters and warehouse clubs showed a gain of about three percentage points from the 2005 level of 17%.
Convenience stores, including those with gas stations accounted for five percent of total food and beverage retail sales, down from seven percent in 2005. Meanwhile food and beverage sales through drugstores pushed the channels market share up 0.5 percentage points to nearly two percent of the total retail market in 2009.

Level of Price-Consciousness Has Not Changed

A survey of private-label consumers using data compiled by Simmons Market Research Bureau for a basket of typical foods (bagels, crackers, orange juice, ice cream, peanut butter, or rice/rice dishes) with typical private-label preference rates provides a basis for some general observations about the private-label mindset. In the 2006 edition of this report, Packaged Facts noted that private-label shoppers were price-conscious but attitudes were shifting. The data reflected a growing interest in quality.  In 2006, expressed negatively, private-label shoppers were 10% (index of 90) less likely than adults on average to believe that price wasn’t the most important factor to purchases. This was a slight shift from 2004 when 13% were less likely (index of 87) than adults on average to believe that price isn’t the most important factor to purchases. By 2009, consumer mindsets have been little influenced by the recession in this regard. Now, private-label shoppers are nine percent (index of 91) less likely than adults on average to believe that price isn’t the most important factor to purchases—a mere one-point difference from 2006. However, expect these indexes to rise more aggressively post-recession, especially as private label quality continues to improve and shoppers become less price-focused.

Private-Label Food Prices Grow 5%

The average price per unit increased the most in 2008, up eight percent from the 2007 level of $1.83 per unit to $1.98 per unit. National brands also posted the highest price per unit increase in 2008, but at a lower rate of 6.5% to reach $2.24. In all, the average price per unit for private-label foods grew at a CAGR of nearly five percent during the 2005-2009 period. By comparison, national brands posted annual growth for average unit prices at four percent to reach $2.31. In all, Packaged Facts estimates the average price per unit for all food products grew at four percent CAGR to reach $2.25 per unit.

Traditional Grocery Stores Losing Market Share to Specialty Retailers in Private Label Food and Beverage Market, Report Finds

New York, July 29, 2010 — Specialty food retailers, such as Trader Joe¡¯s and Whole Foods, have capitalized on renewed consumer interest in and acceptance of private label foods and enjoyed greater growth in store brand product sales between 2005 and 2009 than traditional supermarkets, according to Private Label Food and Beverage in the U.S. by market research publisher Packaged Facts.  

Packaged Facts estimates private-label food and beverage dollar sales totaled $87 billion in 2009, to account for 17% of total food and beverage retail sales in the United States. Dollar sales rose 6% over the 2008 level of $82 billion, driven primarily by a 7% increase in the food market. Private-label beverage sales rose less than 1%. Private label¡¯s penetration rate was at 14% of total food and beverage retail sales in the beginning of the 2005-2009 period, but began to rise in 2007 as the economy showed signs of slowing. Hitting 15% in 2007 set the stage for a jump in 2008 as the penetration rate grew to 16%.

The report found that traditional supermarkets and grocery stores are losing market share to alternative stores. Growth among traditional food and beverage retailers was modest at a compound annual growth rate (CAGR) of 4% between 2005 and 2009. Perhaps most notable was the growth in specialty food stores Whole Foods and Trader Joe¡¯s, which grew at a CAGR of 14% during the 2005-2009 period. Supercenter stores such as Walmart and Target also witnessed high growth at a CAGR of 9%. Club stores, such as BJ¡¯s Wholesale, Costco, and Sam¡¯s Club grew slightly better than the mean at a CAGR of 6%. At the low end, discount supermarkets, including SuperValu, Aldi, and dollar store Dollar General saw food and beverage sales actually decline in 2009 from the level seen in 2008. Still the group managed to eke out a small five-year gain growing at a CAGR of 2%.

¡°Private-label food and beverage have eclipsed their ignoble past of no name and generic products with the development of new flavor varieties, enhanced product packaging and different pack sizes, and the emergence of premium lines,¡± says Don Montuori, publisher of Packaged Facts. ¡°Plus private labels entered into new territory where the additional power of the retailer name and its inherent benefits are aiding private labels to emerge as brand name. Store reputation alone may be the driving force in the success of chains such as Trader Joe's and Whole Food Markets in attracting more affluent consumers to the category.¡±

Private Label Food & Beverage in the U.S., from Packaged Facts, analyzes the U.S. market for foods and beverages sold under the proprietary labels of retailers, referred to in the trade as private-label or store-brand products. The primary focus is on the mass-market products sold through supermarkets, big box, warehouse clubs, and mass merchandisers, but the report also examines trends affecting other food and beverage retailers, including convenience stores, drugstores, health and natural food stores. Included are estimates of total dollar sales, unit sales and average prices per unit for the 2005-2009 period along with forecasts for growth through 2014.

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