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Private Label Food Trends - US - February 2016

"Store brand food and beverages represent an opportunity for retailers to distinguish themselves from competitors, yet sales have grown slowly since 2010 and are forecast to continue at this pace."
-Mimi Bonnett, Category Manager - Food and Drink, Foodservice

This report discusses the following key topics:

  • Slow growth projected
  • Store brand share of sales remains flat
  • Brand transparency is an issue for a majority of buyers

According to the Private Label Manufacturers Association, “private label” products encompass all merchandise sold under a retail store’s private label. That label can be the store’s own name or a name created exclusively by that store. The food segment includes private label products in the following categories:

  • Shelf-stable
  • Refrigerated
  • Frozen
  • Bakery
  • Deli

The beverage segment includes private label products in the following categories:

  • Milk, nondairy drinks, and yogurt drinks
  • Tea and coffee
  • Juice and juice drinks
  • Sports, nutritional, and performance drinks
  • Alcoholic beverages and cocktail mixes
  • Carbonated beverages (soda)
  • Energy drinks
  • Bottled water
  • Drink mixes and drink enhancers

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Slow growth projected
            • Figure 1: MULO sales and fan chart forecast of private label food and beverages, at current prices, 2010-20
          • Store brand share of sales remains flat
            • Figure 2: Total and private label MULO food/beverage share of sales, at current prices, 2010-15
          • Brand transparency is an issue for a majority of buyers
            • Figure 3: Attitudes toward store brand products – Transparency, November 2015
          • The opportunities
            • Targeting key buyers: Millennials, family households, Hispanics
              • Figure 4: Percentage of grocery spend on store brands, by key buyer groups, November 2015
            • Millennials likely to gravitate toward brand stories that provide transparency
              • Figure 5: Attitudes toward store brand products – Transparency, by Millennials versus non-Millennials, November 2015
            • BFY drives purchases
              • Figure 6: Factors that increase the likelihood of store brand purchase (any ranking) – Healthiness, November 2015
            • What it means
            • The Market – What You Need To Know

              • Sales growth slow, driven mostly by price inflation
                • Private label food accounts for more than 78% share
                  • Private label and total MULO grow at similar pace
                    • Improved quality, key demographics help drive sales
                    • Market Size and Forecast

                      • Slow growth projected, price inflation largely driving growth
                        • Figure 7: MULO sales and fan chart forecast of private label food and beverages, at current prices, 2010-20
                        • Figure 8: MULO sales and forecast of private label food and beverages, at current prices, 2010-20
                    • Market Breakdown

                      • Private label food sales share far outweighs beverage sales share
                        • Figure 9: MULO sales of private label food and beverages, by segment, 2015
                      • Private label food sales expected to gain more quickly than beverages
                        • Figure 10: MULO sales of private label food and beverages, by segment, 2010-20
                    • Market Perspective

                      • Private label sales growth on par with total grocery; share change is flat
                        • Figure 11: Total and private label MULO food/beverage sales and private label share of total, at current prices, 2010-15
                      • More product transparency could help store brands compete with national brands
                        • Figure 12: Attitudes toward store brand products – Product transparency, November 2015
                    • Market Factors

                      • Private label quality and selection has improved
                        • Figure 13: Attitudes toward store brand food products – Perceptions of quality, November 2015
                      • Millennials, Hispanics, and households high store brand buyers
                        • Millennials – the most populous generation – very likely to buy
                          • Figure 14: US population by generation, 2010-20
                        • Hispanics likely to buy store brands, projected to grow significantly into 2020
                          • Figure 15: US population by race and Hispanic origin, 2010-20
                        • Presence of children factors significantly; percentage of households with kids down
                          • Figure 16: Households, by presence of own children, 2003-13
                      • Key Players – What You Need to Know

                        • Refocusing on value
                          • Mass, club, and supermarket chains adopt different strategies
                            • Private label sales down in many key categories
                              • Amazon to test own brands; Whole Foods ventures into value
                              • What’s Working

                                • Revisiting the basic value proposition
                                    • Figure 17: Walmart YouTube channel video, 2016
                                  • Target’s tiered program appeals to budget- and quality-conscious buyers
                                    • Costco’s Kirkland Signature helps drive sales and club membership
                                      • Aldi pursues unique shopper engagement format with store brands
                                        • Figure 18: Aldi YouTube channel video, 2015
                                      • Simple labeling can increase appeal
                                      • What’s Struggling?

                                        • Private label declining in key categories
                                        • What’s Next?

                                          • Amazon expected to join the private label food market
                                            • Whole Foods to open six of its 365 discount concept stores in 2016
                                              • Figure 19: Whole Foods 365 Everyday Value YouTube channel video, 2016
                                            • Fresh food trend likely to positively impact store brands
                                            • The Consumer – What You Need to Know

                                              • More than half of consumers are medium-high store brand buyers
                                                • Frequent store brand purchasing at perimeter store departments
                                                  • Transparency, premium products, minimal ingredients important factors
                                                    • BFY, natural, minimal ingredients are important purchase factors
                                                    • Percentage of Grocery Spend On Store Brands

                                                      • More than half dedicate 50% or more share of cart to store brands
                                                        • Figure 20: Percentage of grocery spend on store brands, November 2015
                                                      • Private label appeal for Millennials
                                                        • Figure 21: Percentage of grocery spend on store brands, by Millennials versus non-Millennials, November 2015
                                                      • Presence of children means higher share of cart for store brands
                                                        • Figure 22: Percentage of grocery spend on store brands, by presence of children, November 2015
                                                      • Hispanics significantly likely to dedicate share of cart to store brands
                                                        • Figure 23: Percentage of grocery spend on store brands, by race/Hispanic origin, November 2015
                                                      • Opportunity in key categories
                                                        • Figure 24: Percentage of grocery spend on store brands, by interest in more store brand offerings, November 2015
                                                    • Retailers Used for Store Brand Grocery Purchases

                                                      • Most buy store brands from supermarkets and mass stores
                                                        • Figure 25: Retailers used for store brand grocery purchases, November 2015
                                                      • Millennials less apt than non-Millennials to use supermarkets
                                                        • Figure 26: Retailers used for store brand grocery purchases, by Millennials versus non-Millennials, November 2015
                                                      • Households with kids likely to use mass stores over supermarkets
                                                        • Figure 27: Retailers used for store brand grocery purchases, by presence of children, November 2015
                                                      • Hispanics opt for value and natural channels rather than supermarkets
                                                        • Figure 28: Retailers used for store brand grocery purchases, by race/Hispanic origin, November 2015
                                                    • Store Brand Purchasing Frequency

                                                      • More frequent purchasing of store perimeter products
                                                        • Figure 29: Store brand purchasing frequency, November 2015
                                                      • Millennials increase store brand purchases more than non-Millennials
                                                        • Figure 30: Store brand purchasing frequency (the same amount or more), by Millennials versus non-Millennials, November 2015
                                                    • Interest in More Store Brand Category Offerings

                                                      • Relatively low interest in more of specific store brand category offerings
                                                        • Figure 31: Interest in more store brand category offerings, November 2015
                                                      • Millennials more likely to want to see more store brands
                                                        • Figure 32: Interest in more store brand category offerings, by Millennials versus non-Millennials, November 2015
                                                      • More store brand offerings likely to resonate with family households
                                                        • Figure 33: Interest in more store brand category offerings, by presence of children, November 2015
                                                      • More store brand category offerings likely to appeal to Hispanics
                                                        • Figure 34: Interest in more store brand category offerings, by race/Hispanic origin, November 2015
                                                    • Attitudes toward Store Brand Products

                                                      • Product transparency is important to vast majority of buyers
                                                        • Figure 35: Attitudes toward store brand products – Transparency, November 2015
                                                      • Trust is a key issue in appealing to Millennials
                                                        • Figure 36: Attitudes toward store brand products – Transparency, by Millennials versus non-Millennials, November 2015
                                                      • High interest in more premium store brands, but price may be an issue
                                                        • Figure 37: Attitudes toward store brand products – Interest in premium products, November 2015
                                                      • Millennials very interested in premium; more than half willing to pay for it
                                                        • Figure 38: Attitudes toward store brand products – Interest in premium products, by Millennials versus non-Millennials, November 2015
                                                      • High Hispanic interest in premium; more than four in 10 willing to pay
                                                        • Figure 39: Attitudes toward store brand products – Interest in premium products, by race/Hispanic origin, November 2015
                                                      • Ingredients are vital to purchase decisions
                                                        • Figure 40: Attitudes toward store brand products – Ingredients, November 2015
                                                      • Local sourcing, simple ingredients appeal to Millennials
                                                        • Figure 41: Attitudes toward store brand products – Ingredients, by Millennials versus non-Millennials, November 2015
                                                      • Simple ingredients worth extra cost to more than six in 10 Hispanics
                                                        • Figure 42: Attitudes toward store brand products – Ingredients, by race/Hispanic origin, November 2015
                                                    • Factors That Increase the Likelihood of Store Brand Purchase

                                                      • BFY, natural, minimal ingredients drive purchases
                                                        • Figure 43: Factors that increase the likelihood of store brand purchase (any ranking) – Healthiness, November 2015
                                                      • Natural/organic appeal to Millennials more than non-Millennials
                                                        • Figure 44: Factors that increase the likelihood of store brand purchase (any ranking) – Healthiness, by Millennials versus non-Millennials, November 2015
                                                      • Natural and organic influence family households to buy
                                                        • Figure 45: Factors that increase the likelihood of store brand purchase (top three rank) – Healthiness, by presence of children, November 2015
                                                      • A third prefer local sourcing
                                                        • Figure 46: Factors that increase the likelihood of store brand purchase (any ranking) – Product sourcing, November 2015
                                                    • Appendix – Data Sources and Abbreviations

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

                                                                    • Figure 47: MULO sales and forecast of private label food and beverages, at inflation-adjusted prices, 2010-20
                                                                    • Figure 48: MULO sales and forecast of private label food, at current prices, 2010-20
                                                                    • Figure 49: MULO sales and forecast of private label food, at inflation-adjusted prices, 2010-20
                                                                    • Figure 50: MULO sales and forecast of private label beverages, at current prices, 2010-20
                                                                    • Figure 51: MULO sales and forecast of private label beverages, at inflation-adjusted prices, 2010-20
                                                                    • Figure 52: Total and private label MULO food sales, and private label share of total, at current prices, 2010-15
                                                                    • Figure 53: Total and private label MULO beverage sales, and private label share of total, at current prices, 2010-15
                                                                  • Market breakdown
                                                                    • Figure 54: MULO sales of private label food and beverages, by segment, at current prices, 2013 and 2015
                                                                  • Retail channels
                                                                    • Figure 55: MULO sales of private label food and beverages, by retail channel, at current prices, 2010-15
                                                                    • Figure 56: US supermarket sales of private label food and beverages, at current prices, 2010-15
                                                                    • Figure 57: US other MULO channel sales of private label food and beverages, at current prices, 2010-15
                                                                • Appendix – Consumer

                                                                  • Experian Simmons analysis
                                                                    • Figure 58: Household use of various store brand products, July 2014-September 2015

                                                                Companies Covered

                                                                • Walmart Stores (USA)

                                                                Private Label Food Trends - US - February 2016

                                                                £3,277.28 (Excl.Tax)