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Private Label Food - US - November 2011

While private label food sales and market share continue to rise, the pace of growth has slowed considerably since 2008 when a one-two punch of spiking inflation and deepening recession drove many consumers to less expensive store brands. Looking ahead, factors such as a weak economic recovery, shaky consumer confidence, and increasingly positive consumer perceptions of store-brand quality point to the potential for continued growth in private label food sales and share. Leading private label retailers understand that realizing the potential of private label requires not only quality products but also increasingly sophisticated marketing. This report provides an in-depth analysis of the U.S. private label food market and explores:

  • The impact of macro-level economic trends on private label food sales
  • Private label sales and private label share of total sales across major food departments, as well as in key product categories within those departments
  • Key themes that are emerging as leading private label retailers expand and refine their store-brand portfolios
  • A perspective on why improved product quality alone will not be enough to reignite store brand sales and market share growth
  • How leading retailers are evolving the marketing of store brands beyond trial-building to a greater focus on long-term relationships
  • Insight into the demographics of store brands on an overall basis and within major product categories
  • Mintel’s exclusive consumer research on attitudes and behaviors concerning private label food

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Private label food sales continue to grow, but more slowly
                      • Economics are key drivers
                        • Retailer activity also supports sales, drives positive perceptions
                          • National brands fight back on a changing playing field
                            • Private label up overall, but dynamics differ from category to category
                              • Private label share lowest in edible department, where strong national brands compete
                                • Private label share highest in relatively commoditized dairy department
                                  • Frozen department private label sales cool off after strong growth in 2008-09
                                    • Only modest private label share gains in bakery department
                                      • Rising meat prices since 2009 boost private label deli department sales
                                        • Retail channels: supermarkets still dominate
                                          • Retailer activity and innovation
                                            • Private label marketing presents opportunity to build deeper relationships
                                              • Who’s buying: store brand demographics
                                                • Additional findings from Mintel’s consumer research
                                                  • Shoppers perceive heavy private label purchases
                                                    • Name brands still get credit for consistent quality, but store brands are catching up
                                                      • Perceptions of parity alone don’t necessarily translate to loyalty for store brands
                                                        • New varieties and flavors can tip the scale in favor of name brands, or vice versa
                                                          • Store brands can shape store image, influence store selection
                                                            • Value-seeking black and Hispanic consumers show interest in store brands
                                                            • Insights and Opportunities

                                                              • How can we help you?
                                                                • Instead of looking for products to replicate, look for problems to solve
                                                                  • So what’s the problem?
                                                                    • What’s in a name?
                                                                    • Inspire Insights

                                                                        • Inspire Trend: Prove it
                                                                          • Inspire Trend: Cool Vending
                                                                          • Market Size and Forecast

                                                                            • Key points
                                                                              • Private label food sales continue to grow
                                                                                • Figure 1: FDMx sales and forecast of private label food at current prices, 2006-16
                                                                                • Figure 2: FDMx sales and forecast of private label food at inflation adjusted prices, 2006-16
                                                                              • After peaking in 2008, private label share growth moderates
                                                                                • Figure 3: FDMx sales of food, private label food, and private label market share, 2006-11
                                                                              • Fan chart forecast
                                                                                  • Figure 4: Fan chart forecast of FDMx sales of private label food, at current prices, 2006-16
                                                                              • Market Drivers

                                                                                • Overview
                                                                                  • Household income
                                                                                    • Figure 5: Median household income in inflation-adjusted dollars, 2000-10
                                                                                  • Consumer confidence
                                                                                    • Figure 6: University of Michigan’s index of consumer sentiment, January 2006-August 2011
                                                                                  • Inflation
                                                                                    • Figure 7: Food inflation rates for 2005-2010 and forecasts for 2011-12
                                                                                  • Private label accounts for a larger share of new product activity
                                                                                    • Figure 8: Name brand and private label food new product launches, 2006-11
                                                                                  • Perceptions of store brand quality support growth, suggest potential
                                                                                    • Figure 9: Perceptions of store brand quality, August 2011
                                                                                • Competitive Context

                                                                                  • Private label share growth slows as national brands fight back
                                                                                    • Aggressive retail trade promotion closes price gap a little
                                                                                      • Name brand strength benefits retailers as well
                                                                                        • Figure 10: Stop & Shop uses brands on flyer front page 2011
                                                                                      • Price-driven flanker brands go head to head with store brands
                                                                                        • Figure 11: Kraft “Simply” uses value brand look, 2011
                                                                                      • Added-value line extensions can help to set brands apart
                                                                                        • Figure 12: Green Giant added-value line extensions, 2011
                                                                                      • Taking the competition to another level
                                                                                      • Segment Performance Overview

                                                                                        • Private label sales up in all departments, more so in some than others
                                                                                            • Figure 13: FDMx sales of private label food at current prices, by segment, 2006-16
                                                                                            • Figure 14: FDMx sales of private label food, by segment, 2010 and 2011
                                                                                        • Segment Performance—Edible

                                                                                            • Key points
                                                                                              • Big companies and brands still hold sway in edible department
                                                                                                • Figure 15: FDMx sales and forecast of private label edible, 2006-16
                                                                                              • After rising in 2008 and 2009, private label share nearly flat
                                                                                                • Figure 16: FDMx total sales and private label sales, edible, 2006-11
                                                                                              • Canned and jarred goods
                                                                                                • Vegetables and fruits lead the private label pack
                                                                                                  • Figure 17: Edible department FDMx sales and private label share, by select canned and jarred goods categories, 2006-11
                                                                                                • Ingredients/components
                                                                                                  • Home meal prep helps drive ingredient/component category sales
                                                                                                    • Flavored rice a possible platform for private label growth
                                                                                                      • Figure 18: Edible department FDMx sales and private label share, by select ingredients/components categories, 2006-11
                                                                                                    • Cereal and baking
                                                                                                      • Private label cold cereal has little room to maneuver
                                                                                                        • An opportunity at the top
                                                                                                          • Figure 19: Edible department FDMx sales and private label share, by select cereal and baking categories, 2006-11
                                                                                                      • Segment Performance—Dairy (Excluding Milk)

                                                                                                        • Key points
                                                                                                          • Spiking commodity prices drive private label dairy sales
                                                                                                            • Figure 20: FDMx sales and forecast of private label dairy (excl. milk), 2006-2016
                                                                                                          • Private label gains share in commoditized categories
                                                                                                            • Greek invasion puts pressure on private label yogurt sales, for now
                                                                                                              • Figure 21: Dairy department FDMx sales and private label share, by select categories, 2006-11
                                                                                                          • Segment Performance—Frozen

                                                                                                            • Key points
                                                                                                              • Can private label help heat up the freezer case?
                                                                                                                • Figure 22: FDMx sales and forecast of private label frozen products, 2006-16
                                                                                                              • Private label plays a role as consumers eat less but better ice cream
                                                                                                                • Ice cream as private label proof point
                                                                                                                  • Private label frozen seafood grows on convenience, economy, and health
                                                                                                                    • Figure 23: Frozen department FDMx sales and private label share, by select categories, 2006-11
                                                                                                                • Segment Performance—Deli

                                                                                                                  • Key points
                                                                                                                    • Inflation drives private label sales in meat categories
                                                                                                                      • Figure 24: FDMx sales and forecast of private label deli products, 2006-16
                                                                                                                    • Varying private label performance across deli department categories
                                                                                                                      • More specialized concepts in the deli department
                                                                                                                        • Figure 25: Deli department FDMx sales and private label share, by select categories, 2006-11
                                                                                                                    • Segment Performance—Bakery

                                                                                                                      • Key points
                                                                                                                        • Solid share but only modest growth for private label bakery products
                                                                                                                          • Competition from within
                                                                                                                            • Figure 26: FDMx sales and forecast of private label bakery products, 2006-16
                                                                                                                          • Regional bakeries keep private label at bay in bread and rolls
                                                                                                                            • Private label sweet treats offer comfort to recession-weary shoppers
                                                                                                                              • Figure 27: Bakery department FDMx sales and private label share, by select categories, 2006-11
                                                                                                                          • Retail Channels

                                                                                                                            • Key points
                                                                                                                              • Overview
                                                                                                                                • Figure 28: FDMx sales of private label food, by retail channel, 2010 and 2011
                                                                                                                              • Supermarkets
                                                                                                                                • Private label helps supermarkets fend off competition from all angles
                                                                                                                                  • Recent focus on price/value may point to most significant challenge
                                                                                                                                    • Figure 29: Sales of private label food at supermarkets, 2006-11
                                                                                                                                    • Figure 30: Sales of all food vs. private label food at supermarkets, 2006-11
                                                                                                                                  • Other FDMx channels
                                                                                                                                    • Private label gains as food sales grow more important
                                                                                                                                      • At Walgreens, a brand with no name
                                                                                                                                        • Store brands part of Target’s efforts to grow food sales
                                                                                                                                          • Figure 31: Sales of private label food at other FDMx channels, 2006-11
                                                                                                                                          • Figure 32: Sales of all food vs. private label food at other FDMx channels, 2006-11
                                                                                                                                      • Retailer Activity and Innovation

                                                                                                                                        • Overview
                                                                                                                                          • Multitier brand architectures address multiple opportunities
                                                                                                                                            • Safeway’s store brand architecture continues to expand and evolve
                                                                                                                                              • Figure 33: Safeway store brand architecture, 2011
                                                                                                                                            • Target’s brands support both sides of its “Expect More, Pay Less” brand promise
                                                                                                                                              • Figure 34: Target, Market Pantry offerings, 2011
                                                                                                                                              • Figure 35: Target, Archer Farms offerings, 2011
                                                                                                                                            • Brand creation and consolidation
                                                                                                                                              • Back to basics: recent launch activity heavy at price/value level
                                                                                                                                                • Figure 36: Back-to-basics—select retailers’ basic lines, 2011
                                                                                                                                                • Figure 37: Family Dollar, Family Gourmet offerings, 2011
                                                                                                                                              • Health & wellness
                                                                                                                                                • Figure 38: Fresh & Easy Eatwell line, 2011
                                                                                                                                              • Natural & organic
                                                                                                                                                • Premium & indulgence
                                                                                                                                                  • Food Emporium Trading Company seeks out international specialties
                                                                                                                                                    • Schnucks launches gourmet store and brand
                                                                                                                                                      • Figure 39: Schnucks gourmet offerings, Culinaria, 2011
                                                                                                                                                    • A touch of personality
                                                                                                                                                      • Nice!
                                                                                                                                                        • Figure 40: Walgreens’ Nice!, 2011
                                                                                                                                                      • “Sunny Smile”
                                                                                                                                                        • Delish
                                                                                                                                                          • Figure 41: Duane Reade, Delish, 2011
                                                                                                                                                        • The Snack Artist
                                                                                                                                                          • Figure 42: Safeway, The Snack Artist, 2011
                                                                                                                                                        • Credibility/authenticity
                                                                                                                                                          • H-E-B taps into Texas pride
                                                                                                                                                            • Figure 43: H-E-B leverages Texas, 2011
                                                                                                                                                          • Safeway takes ownership with “Farms” and “Kitchens” brands
                                                                                                                                                            • Costco’s Kirkland Signature remains a constant symbol of quality and value
                                                                                                                                                              • Figure 44: Costco co-branding, 2011
                                                                                                                                                            • Giada de Laurentiis for Target—combining style and credibility
                                                                                                                                                              • Figure 45: Giada de Laurentiis for Target, 2011
                                                                                                                                                            • A&P Mid-Atlantic Country Farms
                                                                                                                                                              • IKEA moves to private label food
                                                                                                                                                              • Marketing Strategies

                                                                                                                                                                • Overview: an opportunity to build deeper relationships
                                                                                                                                                                  • Store brands help H-E-B tap into Texas pride
                                                                                                                                                                    • Family Dollar makes employees “in-store ambassadors” for store brand
                                                                                                                                                                      • ShopRite creates online community to support private label food
                                                                                                                                                                        • Wegmans puts price hold on store brands to highlight EDLP position
                                                                                                                                                                          • Safeway’s Open Nature launch paves way for ongoing conversation
                                                                                                                                                                            • Figure 46: Safeway Open Nature TV ad, 2011
                                                                                                                                                                        • Who’s Buying: Store Brand Demographics

                                                                                                                                                                            • Key points
                                                                                                                                                                              • Older shoppers less likely to opt for store brands
                                                                                                                                                                                • Store brands appeal to all income levels
                                                                                                                                                                                  • More people in the household means more private label food
                                                                                                                                                                                    • Private label pantry staples have broad appeal
                                                                                                                                                                                      • Figure 47: Category, store brand and store-brand-only usage in select categories (part I), by household income, April 2010-June 2011
                                                                                                                                                                                      • Figure 48: Category, store brand and store-brand-only usage in select categories (part I), by number of people in household, April 2010-June 2011
                                                                                                                                                                                    • Store brand alternatives to popular name brands appeal to lower incomes
                                                                                                                                                                                      • Figure 49: Category, store brand and store-brand-only usage in select categories (part II), by household income, April 2010- June 2011
                                                                                                                                                                                      • Figure 50: Category, store brand and store-brand-only usage in select categories, by age, April 2010-June 2011
                                                                                                                                                                                    • Higher-end opportunities to win the loyalty of higher-income consumers
                                                                                                                                                                                      • Figure 51: Category, store brand and store-brand-only usage in select categories (part III), by household income, April 2010-June 2011
                                                                                                                                                                                  • Store Brands’ Share of Weekly Spend on Groceries

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • Shoppers perceive heavy private label purchases
                                                                                                                                                                                        • Younger shoppers purchase more private label food
                                                                                                                                                                                          • Figure 52: Share of spend on store brand groceries, by age, August 2011
                                                                                                                                                                                        • Shoppers at all income levels opt for private label
                                                                                                                                                                                          • Figure 53: Share of spend on store brand groceries, by household income, August 2011
                                                                                                                                                                                        • Larger households tend to buy more store brand products
                                                                                                                                                                                          • Figure 54: Share of spend on store brand groceries, by household size, August 2011
                                                                                                                                                                                      • Perception of Quality of Store Brands

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Most shoppers put private label on a par with name brands
                                                                                                                                                                                            • Older shoppers more likely to see store brand parity, but less likely to buy
                                                                                                                                                                                              • Figure 55: Perceptions of store brand quality, by age, August 2011
                                                                                                                                                                                            • Low-income shoppers slightly more likely to appreciate store brand quality
                                                                                                                                                                                              • Figure 56: Perceptions of store brand quality, by household income, August 2011
                                                                                                                                                                                          • Attitudes Toward Store Brands

                                                                                                                                                                                            • Key points
                                                                                                                                                                                              • Store brand vs. name band: variety of factors can influence choice
                                                                                                                                                                                                • Store brands can shape store image, influence store selection
                                                                                                                                                                                                  • Figure 57: Attitudes to store brands vs. name brands, August 2011
                                                                                                                                                                                                • Younger shoppers look past brand to product attributes, benefits
                                                                                                                                                                                                  • Figure 58: Attitudes to store brands vs. name brands, by age, August 2011
                                                                                                                                                                                                • Income impacts attitudes only modestly
                                                                                                                                                                                                  • Figure 59: Attitudes to store brands vs. name brands, by household income, August 2011
                                                                                                                                                                                                  • Figure 60: Attitudes to store brands vs. name brands, by household size, August 2011
                                                                                                                                                                                              • Frequency of Shopping at Major Grocery Retailers

                                                                                                                                                                                                • Walmart/SAM’S CLUB by far most frequently shopped
                                                                                                                                                                                                  • The Kroger Company’s retail banners combined come in second
                                                                                                                                                                                                    • Costco ranks as third-largest grocery retailer
                                                                                                                                                                                                      • Figure 61: Frequency of shopping at major grocery retailers, August 2011
                                                                                                                                                                                                      • Figure 62: Frequency of shopping at major grocery retailers, by household income, August 2011
                                                                                                                                                                                                  • Impact of Race and Hispanic Origin

                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                      • White shoppers somewhat less likely to buy private label food
                                                                                                                                                                                                        • Acculturated Hispanics more likely to purchase private label
                                                                                                                                                                                                          • Figure 63: Share of spend on store brand groceries, by race/Hispanic origin, August 2011
                                                                                                                                                                                                        • Store brand quality gets generally good marks across all groups
                                                                                                                                                                                                          • Figure 64: Perceptions of store brand quality, by race/Hispanic origin, August 2011
                                                                                                                                                                                                        • Asians slightly more likely to appreciate the quality of name brands
                                                                                                                                                                                                          • Figure 65: Attitudes to store brands vs. name brands, by race/Hispanic origin, August 2011
                                                                                                                                                                                                        • Hispanics and Asians less likely to use store brand staples
                                                                                                                                                                                                          • Figure 66: Category, store brand and store-brand-only usage in select categories (part I), by race/Hispanic origin, April 2010-June 2011
                                                                                                                                                                                                        • Store brand use low among all groups in categories led by big national brands
                                                                                                                                                                                                          • Figure 67: Category, store brand and store-brand-only usage in select categories (part II), by race/Hispanic origin, April 2010-June 2011
                                                                                                                                                                                                      • Cluster Analysis

                                                                                                                                                                                                        • Custom Consumer—Food Lifestyle Segmentation

                                                                                                                                                                                                            • Pantry staples
                                                                                                                                                                                                              • Weekend cooks more likely to buy store brand staples
                                                                                                                                                                                                                • Figure 68: Category, store brand and store-brand-only usage in select categories (part I), by food lifestyle, April 2010-June 2011
                                                                                                                                                                                                              • Categories led by popular national brands
                                                                                                                                                                                                                • Weekend Cooks go for snacks
                                                                                                                                                                                                                  • Figure 69: Category, store brand and store-brand-only usage in select categories (part II), by food lifestyle, April 2010-June 2011
                                                                                                                                                                                                                • Specialty and cooking-oriented categories
                                                                                                                                                                                                                  • True Foodies a development opportunity for private label
                                                                                                                                                                                                                      • Figure 70: Category, store brand and store-brand-only usage in select categories (part III), by food lifestyle, April 2010-June 2011
                                                                                                                                                                                                                  • Appendix: Additional Edible Subsegment Sales Tables

                                                                                                                                                                                                                      • Figure 71: Edible department FDMx sales and private label share, by select sauces categories, 2006-11
                                                                                                                                                                                                                      • Figure 72: Edible department FDMx sales and private label share, by select meals/prepared foods categories, 2006-11
                                                                                                                                                                                                                      • Figure 73: Edible department FDMx sales and private label share, by select condiments/spreads/dressings categories, 2006-11
                                                                                                                                                                                                                      • Figure 74: Edible department FDMx sales and private label share, by select snacks and treats categories, 2006-11
                                                                                                                                                                                                                  • Appendix: Trade Associations

                                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                                    • Ahold USA
                                                                                                                                                                                                                    • Albertsons Inc.
                                                                                                                                                                                                                    • Albertsons LLC
                                                                                                                                                                                                                    • Aldi (USA)
                                                                                                                                                                                                                    • American Heart Association, Inc.
                                                                                                                                                                                                                    • Ben & Jerry's Homemade Inc.
                                                                                                                                                                                                                    • Campbell Soup Company
                                                                                                                                                                                                                    • Costco Wholesale Corporation
                                                                                                                                                                                                                    • CVS Caremark Corporation
                                                                                                                                                                                                                    • Delhaize America
                                                                                                                                                                                                                    • Duane Reade, Inc
                                                                                                                                                                                                                    • Facebook, Inc.
                                                                                                                                                                                                                    • Family Dollar Stores, Inc
                                                                                                                                                                                                                    • Food Lion
                                                                                                                                                                                                                    • Food Marketing Institute
                                                                                                                                                                                                                    • Fresh & Easy
                                                                                                                                                                                                                    • Frito-Lay, Inc
                                                                                                                                                                                                                    • Genuardi's Family Markets Inc.
                                                                                                                                                                                                                    • Giant Eagle
                                                                                                                                                                                                                    • Gorton's
                                                                                                                                                                                                                    • Grocery Manufacturers Association (GMA)
                                                                                                                                                                                                                    • Groupe Danone
                                                                                                                                                                                                                    • H. E. Butt Grocery Company
                                                                                                                                                                                                                    • HJ Heinz Company
                                                                                                                                                                                                                    • IKEA USA
                                                                                                                                                                                                                    • Kellogg Company
                                                                                                                                                                                                                    • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                                                                                    • Marine Stewardship Council
                                                                                                                                                                                                                    • McCormick & Company, Inc.
                                                                                                                                                                                                                    • Nature's Path Foods Inc
                                                                                                                                                                                                                    • Pathmark Stores, Inc
                                                                                                                                                                                                                    • Private Label Manufacturers Association (PLMA)
                                                                                                                                                                                                                    • Publix Super Markets
                                                                                                                                                                                                                    • Safeway Inc
                                                                                                                                                                                                                    • SAM's Club
                                                                                                                                                                                                                    • Sara Lee Food & Beverage
                                                                                                                                                                                                                    • Shaw's Supermarkets, Inc
                                                                                                                                                                                                                    • Stop & Shop
                                                                                                                                                                                                                    • Supervalu Inc
                                                                                                                                                                                                                    • Target Corporation
                                                                                                                                                                                                                    • The Great Atlantic and Pacific Tea Company (USA)
                                                                                                                                                                                                                    • The Kroger Co.
                                                                                                                                                                                                                    • The New York Times Company
                                                                                                                                                                                                                    • Trader Joe's Company Inc
                                                                                                                                                                                                                    • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                    • U.S. Bureau of the Census
                                                                                                                                                                                                                    • U.S. Department of Agriculture
                                                                                                                                                                                                                    • University of Michigan, The
                                                                                                                                                                                                                    • US Department of Commerce
                                                                                                                                                                                                                    • Wakefern Food Corporation
                                                                                                                                                                                                                    • Walgreen Co
                                                                                                                                                                                                                    • Walmart Stores (USA)
                                                                                                                                                                                                                    • Wegmans Food Markets, Inc
                                                                                                                                                                                                                    • Whole Foods Market Inc
                                                                                                                                                                                                                    • Winn-Dixie Stores

                                                                                                                                                                                                                    Private Label Food - US - November 2011

                                                                                                                                                                                                                    £2,684.63 (Excl.Tax)