Private Label Foods and Beverages in the U.S., 8th Edition

Private Label Foods & Beverages in the U.S., 8th Edition 

The market for private label foods and beverages – the so-called store brands – has hit a flat patch.

Private label foods have come a long way from their past reputation for being lesser quality, albeit cheaper, alternatives to name-brand foods and beverages. Hurt by the recession, consumers began to turn to store brands as a way of saving money. The stores, in turn, invested in improving the quality, packaging, and breadth of their private label products, which in turn made them credible competitors to nationally known products. Some retailers have store products that rival the national brands in terms of reputation – Costco’s Kirkland brand, Wegman’s brand are good examples. Whole Foods' 365 brand and company Aldi are two of the most aggressive and successful private label marketers that have, much like Costco, extremely loyal customers. Private label products, accounting for more than 80% of products sold in their stores, help cement that loyalty. Trader Joe’s and Whole Foods private label products gain additional prestige from being based in the natural foods channel.

Despite all this, Packaged Facts has found that retail sales of the overall private label food and beverage market were $102 billion in 2013, up about 2% over 2012 (compared to 1.4% growth for the total food and beverage market). Food, with sales estimated at $80 billion compared to $22 million for beverages, accounts for nearly 80% of overall private label dollar and unit sales. Overall private label penetration of the total market was about 20% in dollars and units in 2013.

Packaged Facts’ report, Private Label Foods & Beverages in the U.S., examine these and other trends that are affecting the private label market. For example, making healthier eating more affordable is a major trend in the U.S., and many consumers feel eating healthier is too expensive. Manufacturers and retailers have tried to address consumer concerns with more affordable healthy food options and several retailers have built private label food brands around a position of affordable healthy eating. Retailers launched natural, organic private label brands years ago promoting value and product attributes. More recently several leading retailers have launched new private label foods that evolve natural and organic to more modern wellness positions that shift focus to lifestyle enhancement. Kroger’s Simple Truth, Target’s Simply Balanced, and Aldi’s Simply Nature all attempt to provide consumers with easy solutions for taking care of themselves and their families. The brands cross many food and beverage categories with affordable, nutritious products that are natural or organic, and free of artificial ingredients. Kroger in particular has been extremely successful with Simple Truth, investing heavily to build the brand which the company expects to reach sales of $1 billion in 2014.

Scope of Report

Private Label Foods & Beverages in the U.S., 8th Edition analyzes the U.S. market for private label foods and beverages that retailers market under their own label brands. The analysis includes private label products (often called store brands) sold in all retail outlets. The report outlines key issues and trends affecting the overall market and analyzes virtually all product categories including shelf-stable, refrigerated, and frozen items. The report also discusses major players and brands and analyzes their key activities and performance. Market size data are provided for 2012 and 2013, and projections for 2013–2018.

Product Definitions

For the purpose of this report Packaged Facts divides products into two broad markets: private label foods and beverages. Within the food market, we have established categories based on traditional supermarket departments within which there are several segments and product classes. The six formal food departments/categories broken out in this report are: Bakery Products; Center Store; Dairy Food; Frozen Food; Refrigerated Food; Meat, Poultry and Seafood. The private label beverage market is categorized by beverage type rather than store department. For the beverage market, the six categories are: Dairy Beverages; Juices; Carbonated Beverages; Water; Coffee & Tea; and Sports & Energy Drinks. There is also a grouping called Other which is really a group of miscellaneous products that don’t readily fit into the main categories.

Methodology

The information in this report was obtained from both primary and secondary research. Primary research included consultation with industry sources and on-site examination of retail stores. Secondary research entailed gathering data from relevant trade, business and government sources, as well as company promotional literature and annual reports.

Our estimates of market size and company performance are based on various sources including reported revenues of product manufacturers and retailers; IRI, which tracks data in mass retail outlets; publications and other market research sources.

Our analysis of consumer trends relies on data from several sources including national online consumer usage surveys conducted in June 2013 and January/February 2014 by Packaged Facts, and Simmons National Consumer Surveys for Fall 2004 through Fall 2013, from Experian Marketing Services. The Packaged Facts national online consumer surveys conducted in June 2013 and January/February 2014 reflects a panel of 2,000 U.S. adults (age 18+) that is balanced to the national population on the primary demographic measures of gender, age bracket, race/ethnicity, geographic region, marital status, presence or absence of children in the household, and household income. On an ongoing basis, Experian Marketing Services conducts booklet-based surveys of a large and random sample of consumers (approximately 25,000 for each 12-month survey compilation) who in aggregate represent a statistically accurate cross-section of the U.S. population.