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Private Label Food and Drink Trends - US - February 2017

"Private label food and drinks category sales declined by -2.2% from 2015-16 and are forecasted to continue to decline into 2021. Increased confidence in the economy may lead many consumers to opt for name brands over store brands, especially for products located in the brand-centric center store area. Opportunities for retailers to elevate the perception of their store brands will come through product innovation, sampling, and increased ingredient transparency."

- Michael Averbook, Food & Drink Analyst

This report will cover the following areas:

  • Store brands decline, drop expected to continue
  • Perimeter store brands grow, center of store decline
  • Private labels struggle with taste, national brands compete on price with coupons

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Store brands decline, drop expected to continue
            • Figure 1: MULO sales and forecast of private label food and beverages, at current prices, 2011-21
          • Perimeter store brands grow, center of store decline
            • Figure 2: Private label categories, any purchase, November 2016
          • Private labels struggle with taste, national brands compete on price with coupons
            • Figure 3: Reasons for decreased store brand purchase, November 2016
          • The opportunities
            • Consumers notice quality improvements, still room for growth
              • Figure 4: Private label shopping attitudes, November 2016
            • Simple, healthy ingredients and resealable packaging
              • Figure 5: Private label features, ingredients and packaging, November 2016
            • Core consumers are diverse
              • Figure 6: Private label any product category, purchase all of the time, by generation, parental status, and race and Hispanic origin, November 2016
            • What it means
            • The Market – What You Need to Know

              • Private label category declines, driven by falling unit sales
                • Food segment holds higher share, drinks to decline at greater rate
                  • Increased food and drink shopping options
                    • Growing consumer confidence, declining food prices limit private label
                    • Market Size and Forecast

                      • Private label sales slow, further declines forecasted
                        • Figure 7: MULO sales and fan chart forecast of private label food and beverages, at current prices, 2011-21
                        • Figure 8: MULO sales and forecast of private label food and beverages, at current prices, 2011-21
                    • Market Breakdown

                      • Private label food maintains lion’s share of category
                        • Figure 9: MULO sales of private label food and beverages, by segment, 2016
                      • Private label beverages expected to decline at a greater rate than food
                        • Figure 10: MULO sales and forecast of private label food and beverages, at current prices, 2011-21
                    • Market Perspective

                      • Myriad of options
                        • Online competition
                          • Private label centric stores
                            • Amazon enters brick and mortar
                              • Fresh, less-processed products found at perimeter of store
                              • Market Factors

                                • Increased confidence, falling food prices stifle private label
                                  • Figure 11: Consumer Sentiment Index, January 2007-September 2016
                                • Households are smaller but future growth is expected
                                  • Figure 12: Households, by presence of own children, 2006-16
                                • Core consumers experience life-changing stages
                                  • Figure 13: Population by generation, 2017
                                • Hispanic and Asian consumers among heaviest private label users
                                  • Figure 14: Population growth, by race and Hispanic origin, 2012-22
                              • Key Players – What You Need to Know

                                • Various private label categories prosper while others struggle
                                  • Tiered programs provide private label for everyone
                                    • Store brands communicate health through simplicity and claims
                                      • International inspiration
                                        • Packaging improvements
                                        • What’s Working?

                                          • Categories on the perimeter grow
                                            • Tiered programs
                                              • Value
                                                • BFY
                                                  • Premium
                                                    • Ingredient claims
                                                      • Figure 15: Private label free-from and ingredient claims, by year, 2011-16
                                                    • Keep it simple
                                                      • Ovation for organic
                                                        • Gluten-free for all
                                                          • Around the world
                                                            • Packaging reboot
                                                              • Creative packaging that stands out from national brands
                                                                • Packaging with a sneak peak
                                                                • What’s Struggling

                                                                  • Drinks falling flat
                                                                    • Figure 16: Total and private label MULO beverage sales, and private label share of total, at current prices, 2011-15
                                                                  • Center of store categories struggle
                                                                    • Figure 17: Total and private label MULO food sales, and private label share of total, at current prices, 2011-15
                                                                • What’s Next?

                                                                  • Upgraded packaging
                                                                    • Packaging on the move
                                                                      • Figure 18: Private label food and drink packaging claims, by year, 2011-16
                                                                    • Strategic, clean packaging design
                                                                      • Do it yourself
                                                                        • Private label takes another play from foodservice game plan
                                                                          • Figure 19: Private label food and drink limited-edition claims, by year, 2011-16
                                                                        • GMO-free
                                                                          • Figure 20: Private label GMO-free launches, by year, 2011-16
                                                                        • Store brand promotion outside of store
                                                                          • Figure 21: H-E-B – “Brothers” – June 2016
                                                                        • New players, announcements in the private label market
                                                                          • Lidl heats up the competition
                                                                            • Aldi announces sweeping health initiatives
                                                                              • Amazon launches private label
                                                                                • Whole Foods grows 365
                                                                                • The Consumer – What You Need to Know

                                                                                  • Perimeter store brands purchased most frequently
                                                                                    • Quality improvements drive increased purchase, inferior taste drives decreased purchase
                                                                                      • Consumers agree store brands help save money as they compare prices
                                                                                        • Simple, familiar ingredients important to consumers
                                                                                        • Food Stores Shopped Most Often

                                                                                          • Consumers shop at supermarkets and mass merchandisers most often
                                                                                              • Figure 22: Food stores shopped most often, November 2016
                                                                                            • Age a key indicator of channels shopped at for food and drink
                                                                                              • Figure 23: Channels shopped most often, any rank, supermarkets and mass merchandisers, by age, November 2016
                                                                                              • Figure 24: Channels shopped most often, any rank, stores other than supermarkets and mass merchandisers, by age, November 2016
                                                                                            • Income plays essential role where households shop
                                                                                              • High-income households shop at wider range of channels
                                                                                                • Figure 25: Channels shopped most often, any rank, by household income, November 2016
                                                                                              • Lower-income households shop convenience, value
                                                                                                • Figure 26: Food stores shopped at most often, any rank, by household income, November 2016
                                                                                              • Asian and Hispanic consumers frequent a wide variety of channels
                                                                                                • Figure 27: Food stores any rank, by race and Hispanic origin, November 2016
                                                                                            • Store Brand Purchase

                                                                                              • Perimeter store brand Items most likely to be purchased all of the time
                                                                                                  • Figure 28: Private label categories, any purchase, November 2016
                                                                                                • Millennials aged 25-34 most likely to purchase private label all the time
                                                                                                  • Figure 29: Private label any product category, purchase all of the time, by age, November 2016
                                                                                                • Parents most likely to purchase every store brand category
                                                                                                  • Figure 30: Private label categories, any purchase, by parental status, November 2016
                                                                                                • Hispanics most likely to buy across store brand categories
                                                                                                  • Figure 31: Private label categories any purchase, by Hispanic origin, November 2016
                                                                                              • Store Brand Purchase Drivers

                                                                                                • Close to a quarter of consumers report increased purchase of store brand
                                                                                                  • Figure 32: Private label shopping behavior, purchasing more or less than year ago, November 2016
                                                                                                • Improved quality, budget change drive increased purchase
                                                                                                    • Figure 33: Reasons for increased store brand purchase, November 2016
                                                                                                  • Taste “inferiority” detracts from purchase
                                                                                                      • Figure 34: Reasons for decreased store brand purchase, November 2016
                                                                                                    • Parents increasing private label habits
                                                                                                      • Figure 35: Reasons for increased store brand purchase, by parental status, November 2016
                                                                                                  • Store Brand Behaviors

                                                                                                    • Over two fifths of shoppers compare prices between store and national brands
                                                                                                        • Figure 36: Private label shopping behavior, November 2016
                                                                                                      • Consumer identification of store brand products
                                                                                                        • Younger parents look for new
                                                                                                          • Figure 37: Private label shopping behavior, look for new store brands, by parental status and age, November 2016
                                                                                                        • Parents more likely to buy economy store brand versions
                                                                                                          • Figure 38: Private label shopping behavior, buy economy versions of store brands, by parental status and household size, November 2016
                                                                                                        • Parents and Hispanics most likely to shop at private label-only stores
                                                                                                          • Figure 39: Private label shopping behavior, frequently shop at stores that carry only their own store brands, by parental status and Hispanic origin, November 2016
                                                                                                      • Store Brand Attitudes

                                                                                                        • Most consumers agree store brands are an effective way to save money
                                                                                                            • Figure 40: Private label shopping attitudes, November 2016
                                                                                                          • Multiple categories perceived to be just as good as national brands
                                                                                                            • Figure 41: Private label categories purchased, store brands are just as good as national brands, any agree, November 2016
                                                                                                          • Online retailers show potential for premium
                                                                                                            • Figure 42: Food stores shopped, by private label attitudes, any agree, November 2016
                                                                                                          • Millennials find store brand quality better
                                                                                                            • Figure 43: Private label shopping attitudes, any agree, store brand quality, by generation, November 2016
                                                                                                          • Sampling, transparency, premium interest younger consumers
                                                                                                            • Figure 44: Private label shopping attitudes, any agree, by generation, November 2016
                                                                                                          • Parents have favorable value perception of private label food and drinks
                                                                                                            • Figure 45: Private label shopping behavior, any agree, by parental status, November 2016
                                                                                                          • Hispanics give good marks, want transparency
                                                                                                            • Figure 46: Private label shopping behavior, any agree, by Hispanic origin, November 2016
                                                                                                        • Store Brand Features

                                                                                                          • Natural, recognizable ingredients are key
                                                                                                              • Figure 47: Private label features, ingredients and health claims, November 2016
                                                                                                              • Figure 48: Private label features, November 2016
                                                                                                            • Claim importance varies by channel type
                                                                                                              • Figure 49: Food stores shopped at, by interest in private label features, November 2016
                                                                                                            • Younger consumers more interested in ingredients, packaging
                                                                                                              • Real ingredients encourage young consumers to buy store brand
                                                                                                                • Figure 50: Private label features, ingredient features, by generation, November 2016
                                                                                                              • Younger adults seek packaging features
                                                                                                                • Figure 51: Private label features, packaging features, by generation, November 2016
                                                                                                              • Parents indicate high interest across potential store brand improvements
                                                                                                                • Figure 52: Private label features, by parental status, November 2016
                                                                                                              • Asians are core organic seekers
                                                                                                                • Figure 53: Private label features, organic, by race, November 2016
                                                                                                                • Figure 54: Private label features, all-natural and resealable packaging, by Hispanic origin, November 2016
                                                                                                            • Consumer Segmentation

                                                                                                                  • Figure 55: Store brand food and drink clusters
                                                                                                                • Value Shoppers
                                                                                                                  • National Brand Leaners
                                                                                                                    • Store Brand Enthusiasts
                                                                                                                    • Appendix – Data Sources and Abbreviations

                                                                                                                      • Data sources
                                                                                                                        • Sales data
                                                                                                                          • Fan chart forecast
                                                                                                                            • Consumer survey data
                                                                                                                              • Consumer qualitative research
                                                                                                                                • Abbreviations and terms
                                                                                                                                  • Abbreviations
                                                                                                                                    • Terms
                                                                                                                                    • Appendix – Market

                                                                                                                                        • Figure 56: Total US sales and forecast of private label foods and beverages, at inflation-adjusted prices, 2011-21
                                                                                                                                        • Figure 57: MULO sales and forecast of private label foods and beverages, by segment, at current prices, 2011-21
                                                                                                                                        • Figure 58: MULO sales and forecast of private label foods and beverages, at current prices, 2014 and 2016
                                                                                                                                        • Figure 59: MULO sales and forecast of private label food, at current prices, 2011-21
                                                                                                                                        • Figure 60: MULO sales and forecast of private label food, at inflation-adjusted prices, 2011-21
                                                                                                                                        • Figure 61: MULO sales and forecast of private label beverages, at current prices, 2011-21
                                                                                                                                        • Figure 62: MULO sales and forecast of private label beverages, at inflation-adjusted prices, 2011-21
                                                                                                                                        • Figure 63: MULO sales of private label foods and beverages, by channel, at current prices, 2011-16
                                                                                                                                        • Figure 64: MULO sales of private label foods and beverages, by channel, at current prices, 2011-16
                                                                                                                                        • Figure 65: US supermarket sales of private label foods and beverages, at current prices, 2011-16
                                                                                                                                        • Figure 66: US sales of private label foods and beverages through other MULO channels, at current prices, 2011-16

                                                                                                                                    Companies Covered

                                                                                                                                    • Walmart Stores (USA)

                                                                                                                                    Private Label Food and Drink Trends - US - February 2017

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