Holding their own: top trends in the private-label grocery sector

Holding their own: top trends in the private-label grocery sector

By
Louise Burfitt
December 14, 2020

Private label. Those two words might not mean much to the average shopper, but almost every consumer will have purchased a private-label product – whether that’s a no-frills box of value pasta or an own-brand carton of milk.

But today, that image of private-label products is somewhat stuck in the past. Private label, also known as own-brand, no longer necessarily equals low-cost and basic the way it did back in the 1970s. As such, private-label ranges can no longer be viewed as automatically inferior to national brands, and their packaging and pricing has moved on to reflect this. Growing numbers of grocery retailers carry more than one own-brand line, to suit a range of differing price brackets and demographics.

On the back of these shifts, the international private-label food and beverages market is growing and is expected to increase in size by $215.81 billion between 2020 and 2024, progressing at a CAGR of 6% during that period. One thing’s for certain, then: grocery retailers who nail their private-label offering have a lot to gain.

What is a private-label product?

A private-label product is one that a retailer has produced by a third party, but that is sold by the retailer under its own-brand name. Think Tesco Finest in the UK, or German supermarket Edeka’s Gut & Günstig line. The retailer controls everything about the product, including its ingredients, packaging and distribution. Once manufactured, private-label products are sold as part of the company’s in-store line, with no mention of the third-party producer.

Trend drivers: cutting costs, consumer loyalty and complete control

One of the big benefits of private-label products is that they help retailers to cut costs. There are few, if any, specific marketing costs involved and large grocery store chains can also reduce their transportation and distribution costs. At a time when price is the most important factor for consumers, private-label products offer one of the only routes to bigger profit margins for grocery chains.

With the grocery retail sector becoming more and more crowded, private-label products can also be a way to build customer loyalty and increase footfall in stores. Research shows that over half of grocery shoppers will visit a specific store to buy its own-brand products. The success of stores like Aldi, Lidl and Trader Joe’s, which primarily sell private-label lines, shows that consumers are attracted to own-brand products when the price is right and they offer something unique or different to their branded counterparts.

Like most aspects of the food and beverage industry, private label has been affected by the coronavirus crisis. In fact, it seems to have benefited: in March 2020, sales of own-brand groceries in the UK rose by more than 20% to £5.6 billion. With national brands struggling to keep up with demand and an increase in panic-buying, customers were more likely to turn to private-label products - some for the first time. Incomes affected by the pandemic also made consumers more likely to pick up products at a lower price point.

Lastly, a major draw of own-brand products is the complete control they allow retailers to exercise over the end product. As well as offering full control of pricing, packaging and production, private-label ranges offer retailers an opportunity to adapt quickly to changes in the market. By eliminating the various middle men ordinarily involved in the manufacturing and supply process, retailers can bring new products to market much more quickly and adapt their products to the latest trends more quickly than national brands.

Exploring the trend: premium, plant-based & trend-focused

Long gone are the days when private label meant dull, unadorned packaging and a price low enough to mean compromised quality. Own-brand products are in fact undergoing a process of ‘premium-ization’. Research by Nielsen found that consumers are much more likely to splurge on own-brand items than branded products. Canny grocery stores are capitalising on this trend by offering ‘premium’ private-label products – examples include Sainsbury’s Taste The Difference in the UK and Walmart’s Sam’s Choice brand stateside. Premium private-label lines help to attract a wider variety of consumers and, as they can be sold at a higher price point, increase profit margins for retailers.

Retailers like Aldi and Lidl were among the first to develop a tiered system of own-brand products - with ranges of private-label products spanning low-cost, mid-range and premium. This helps to attract shoppers of all kinds, though it is their premium ranges that are driving their growth. Other major stores have followed suit: European supermarket business Carrefour relaunched their own-brand products this year, with a similar tiered focus on classic, simple products and gourmet versions that offer ‘new experiences to break the daily grind’ - showing just how far private-label products have diverged from their humble origins.

Increasingly, grocery store chains are responding to the latest trends in an attempt to lure in trend-focused millennial shoppers. Studies have shown that it’s this age demographic - shoppers born between 1981 and 1996 - driving growth in the private-label market. With little allegiance to national brands, younger shoppers see own-brand products as just another brand, rather than a cheap or low-quality alternative to branded items. A Cadent study found that 54% of millennials choose where to shop based on a retailer’s own-brand line.

Plant-based private-label products are just one example of these on-trend, millennial-focused offerings. The Good Food Institute has identified private-label, plant-based products as a major growth area for grocery retailers: US grocery chain Kroger expanded its plant-based own-brand brand this autumn in response to the growing number of flexitarian consumers while own-brand vegan ranges in the UK have witnessed major growth with new ranges launched by Co-op, Asda and Sainsbury’s in recent years.

Case Studies: Tesco’s Plant Chef & Trader Joe’s

UK supermarket Tesco has jumped on the plant-based private-label trend with its own-brand Plant Chef range with vegan chef Derek Sarno. Launched in more than 450 stores last year, the popular offering spans plant-based meat dishes like Breaded Goujons and Battered Fish-free Fillets and vegan versions of homely favourites such as Butternut Cauli Mac’n’Cheese and Mushroom Cottage Pie. In October 2020, the Plant Chef range won a Best Vegan Range award. Having just launched a number of festive products in the range to rival branded competitors, Tesco is now eyeing expansion to the US market for its Plant Chef label.

Across the pond, US grocery store Trader Joe’s is one of the most powerful own-brand success stories out there. The store, founded in the 1960s and now boasting over 500 stores throughout the US, is known for its low prices, unusual products and own-brand offerings: more than 80 per cent of Trader Joe’s stock is private-label. This strategy allows the supermarket to keep its prices low and draw hungry customers back for more, knowing they’ll only be able to find cult products like Everything but the Bagel Seasoning and Cauliflower Gnocchi on its shelves. Exercising its control over products, Trader Joe’s has gone all in with its quirky product names (such as Joe’s Os, the store’s private-label version of Cheerios). By leaning into the ‘offbeat neighbourhood store’ vibe, Trader Joe’s invites customers to forget it is a nationwide chain and regularly ranks as one of the top three grocery chains for customer satisfaction.

Private label products: advice for retailers and competitors

We’ve learned the numerous advantages of private-label lines for retailers: be that increased profit margins, greater control, a way to build customer loyalty. But despite the growth in the private-label market this year, grocery retailers should not rest on their laurels. Private label can no longer compete on price alone. Competition from national brands means that private-label lines need to convince consumers, whether that’s through eye-catching packaging designs or a taste that can’t be beaten.

That’s all well and good, but what if you’re in charge of a brand that needs to compete with own-brand products on supermarket shelves? One area where private-label products can’t compete with brands is what makes the branded product unique – that is to say, the product’s ‘why’ and the story behind them. Persuasive messaging can help to relay this story to consumers.

Another advantage? National food brands have name recognition that can’t be matched (well, except for some of those Trader Joe’s smash hits) while smaller CPG brands have chances to forge customer loyalty in ways that private-label products manufactured by big stores cannot: whether it’s offering a discount code for continued loyalty or a personal touch with each order, like a handwritten note or personalised offers.

Ultimately, unique products that deliver value for consumers and retailers will stay on the shelves, private label or not. But the own-brand trend looks like it’s set to stick around, so ignore it at your peril.

The 30-second pitch: Private-label grocery products

🥫 What

  • Private label, or own-brand products, are sold by grocery retailers as part of their own in-store product ranges.


🤷‍♂️ Why

  • Private label lines offer retailers total control over their product, from packaging to pricing to distribution.
  • Grocery stores can cut costs with their own products, benefiting from economies of scale when it comes to distribution and needing to invest little in marketing their in-store ranges.
  • Truly memorable in-store lines will draw customers back time and time again, so grocery chains are investing in their own-branded products to increase footfall and consumer loyalty.


🍫 How

  • Premium private-label products
  • Plant-based private-label products
  • Wide ranges of private-label lines
  • Trend-focused private-label products
  • Millennial-focused private-label products


👀 Who


👍 The good

  • Private label products offer grocery retailers far greater control over their products - whether it’s how they’re manufactured, packaged or distributed.
  • Growth in the private-label sector means consumers have far greater choices available to them, with some grocery stores (e.g. Aldi, Lidl) offering a tiered system of private-label lines to suit many tastes.  
  • Private label products offer higher profit margins for retailers, which also allows them to price their own-brand ranges more competitively – drawing in customers.


👎 The bad

  • Private label lines don’t necessarily have a story to sell to consumers, so they have to convince with great taste, unique selling points and price sensitivity.
  • National brands tend to have name recognition and a developed brand story that consumers are aware of and trust. Private labels developed by grocery retailers won’t have invested the same amount of money into marketing
  • Brands competing with private-label lines will need persuasive origin stories and targeted marketing to stay competitive, especially in tougher economic times.


💡 The bottom line

  • Private label brands offer many benefits to retailers and consumers alike, but CPG companies in the food and beverage sphere will need careful strategising to maximise their sales when competing for shelf space. The growth in own-brand ranges could also offer new opportunities for food and drink suppliers, manufacturers and distribution partners.
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Private label. Those two words might not mean much to the average shopper, but almost every consumer will have purchased a private-label product – whether that’s a no-frills box of value pasta or an own-brand carton of milk.

But today, that image of private-label products is somewhat stuck in the past. Private label, also known as own-brand, no longer necessarily equals low-cost and basic the way it did back in the 1970s. As such, private-label ranges can no longer be viewed as automatically inferior to national brands, and their packaging and pricing has moved on to reflect this. Growing numbers of grocery retailers carry more than one own-brand line, to suit a range of differing price brackets and demographics.

On the back of these shifts, the international private-label food and beverages market is growing and is expected to increase in size by $215.81 billion between 2020 and 2024, progressing at a CAGR of 6% during that period. One thing’s for certain, then: grocery retailers who nail their private-label offering have a lot to gain.

What is a private-label product?

A private-label product is one that a retailer has produced by a third party, but that is sold by the retailer under its own-brand name. Think Tesco Finest in the UK, or German supermarket Edeka’s Gut & Günstig line. The retailer controls everything about the product, including its ingredients, packaging and distribution. Once manufactured, private-label products are sold as part of the company’s in-store line, with no mention of the third-party producer.

Trend drivers: cutting costs, consumer loyalty and complete control

One of the big benefits of private-label products is that they help retailers to cut costs. There are few, if any, specific marketing costs involved and large grocery store chains can also reduce their transportation and distribution costs. At a time when price is the most important factor for consumers, private-label products offer one of the only routes to bigger profit margins for grocery chains.

With the grocery retail sector becoming more and more crowded, private-label products can also be a way to build customer loyalty and increase footfall in stores. Research shows that over half of grocery shoppers will visit a specific store to buy its own-brand products. The success of stores like Aldi, Lidl and Trader Joe’s, which primarily sell private-label lines, shows that consumers are attracted to own-brand products when the price is right and they offer something unique or different to their branded counterparts.

Like most aspects of the food and beverage industry, private label has been affected by the coronavirus crisis. In fact, it seems to have benefited: in March 2020, sales of own-brand groceries in the UK rose by more than 20% to £5.6 billion. With national brands struggling to keep up with demand and an increase in panic-buying, customers were more likely to turn to private-label products - some for the first time. Incomes affected by the pandemic also made consumers more likely to pick up products at a lower price point.

Lastly, a major draw of own-brand products is the complete control they allow retailers to exercise over the end product. As well as offering full control of pricing, packaging and production, private-label ranges offer retailers an opportunity to adapt quickly to changes in the market. By eliminating the various middle men ordinarily involved in the manufacturing and supply process, retailers can bring new products to market much more quickly and adapt their products to the latest trends more quickly than national brands.

Exploring the trend: premium, plant-based & trend-focused

Long gone are the days when private label meant dull, unadorned packaging and a price low enough to mean compromised quality. Own-brand products are in fact undergoing a process of ‘premium-ization’. Research by Nielsen found that consumers are much more likely to splurge on own-brand items than branded products. Canny grocery stores are capitalising on this trend by offering ‘premium’ private-label products – examples include Sainsbury’s Taste The Difference in the UK and Walmart’s Sam’s Choice brand stateside. Premium private-label lines help to attract a wider variety of consumers and, as they can be sold at a higher price point, increase profit margins for retailers.

Retailers like Aldi and Lidl were among the first to develop a tiered system of own-brand products - with ranges of private-label products spanning low-cost, mid-range and premium. This helps to attract shoppers of all kinds, though it is their premium ranges that are driving their growth. Other major stores have followed suit: European supermarket business Carrefour relaunched their own-brand products this year, with a similar tiered focus on classic, simple products and gourmet versions that offer ‘new experiences to break the daily grind’ - showing just how far private-label products have diverged from their humble origins.

Increasingly, grocery store chains are responding to the latest trends in an attempt to lure in trend-focused millennial shoppers. Studies have shown that it’s this age demographic - shoppers born between 1981 and 1996 - driving growth in the private-label market. With little allegiance to national brands, younger shoppers see own-brand products as just another brand, rather than a cheap or low-quality alternative to branded items. A Cadent study found that 54% of millennials choose where to shop based on a retailer’s own-brand line.

Plant-based private-label products are just one example of these on-trend, millennial-focused offerings. The Good Food Institute has identified private-label, plant-based products as a major growth area for grocery retailers: US grocery chain Kroger expanded its plant-based own-brand brand this autumn in response to the growing number of flexitarian consumers while own-brand vegan ranges in the UK have witnessed major growth with new ranges launched by Co-op, Asda and Sainsbury’s in recent years.

Case Studies: Tesco’s Plant Chef & Trader Joe’s

UK supermarket Tesco has jumped on the plant-based private-label trend with its own-brand Plant Chef range with vegan chef Derek Sarno. Launched in more than 450 stores last year, the popular offering spans plant-based meat dishes like Breaded Goujons and Battered Fish-free Fillets and vegan versions of homely favourites such as Butternut Cauli Mac’n’Cheese and Mushroom Cottage Pie. In October 2020, the Plant Chef range won a Best Vegan Range award. Having just launched a number of festive products in the range to rival branded competitors, Tesco is now eyeing expansion to the US market for its Plant Chef label.

Across the pond, US grocery store Trader Joe’s is one of the most powerful own-brand success stories out there. The store, founded in the 1960s and now boasting over 500 stores throughout the US, is known for its low prices, unusual products and own-brand offerings: more than 80 per cent of Trader Joe’s stock is private-label. This strategy allows the supermarket to keep its prices low and draw hungry customers back for more, knowing they’ll only be able to find cult products like Everything but the Bagel Seasoning and Cauliflower Gnocchi on its shelves. Exercising its control over products, Trader Joe’s has gone all in with its quirky product names (such as Joe’s Os, the store’s private-label version of Cheerios). By leaning into the ‘offbeat neighbourhood store’ vibe, Trader Joe’s invites customers to forget it is a nationwide chain and regularly ranks as one of the top three grocery chains for customer satisfaction.

Private label products: advice for retailers and competitors

We’ve learned the numerous advantages of private-label lines for retailers: be that increased profit margins, greater control, a way to build customer loyalty. But despite the growth in the private-label market this year, grocery retailers should not rest on their laurels. Private label can no longer compete on price alone. Competition from national brands means that private-label lines need to convince consumers, whether that’s through eye-catching packaging designs or a taste that can’t be beaten.

That’s all well and good, but what if you’re in charge of a brand that needs to compete with own-brand products on supermarket shelves? One area where private-label products can’t compete with brands is what makes the branded product unique – that is to say, the product’s ‘why’ and the story behind them. Persuasive messaging can help to relay this story to consumers.

Another advantage? National food brands have name recognition that can’t be matched (well, except for some of those Trader Joe’s smash hits) while smaller CPG brands have chances to forge customer loyalty in ways that private-label products manufactured by big stores cannot: whether it’s offering a discount code for continued loyalty or a personal touch with each order, like a handwritten note or personalised offers.

Ultimately, unique products that deliver value for consumers and retailers will stay on the shelves, private label or not. But the own-brand trend looks like it’s set to stick around, so ignore it at your peril.

The 30-second pitch: Private-label grocery products

🥫 What

  • Private label, or own-brand products, are sold by grocery retailers as part of their own in-store product ranges.


🤷‍♂️ Why

  • Private label lines offer retailers total control over their product, from packaging to pricing to distribution.
  • Grocery stores can cut costs with their own products, benefiting from economies of scale when it comes to distribution and needing to invest little in marketing their in-store ranges.
  • Truly memorable in-store lines will draw customers back time and time again, so grocery chains are investing in their own-branded products to increase footfall and consumer loyalty.


🍫 How

  • Premium private-label products
  • Plant-based private-label products
  • Wide ranges of private-label lines
  • Trend-focused private-label products
  • Millennial-focused private-label products


👀 Who


👍 The good

  • Private label products offer grocery retailers far greater control over their products - whether it’s how they’re manufactured, packaged or distributed.
  • Growth in the private-label sector means consumers have far greater choices available to them, with some grocery stores (e.g. Aldi, Lidl) offering a tiered system of private-label lines to suit many tastes.  
  • Private label products offer higher profit margins for retailers, which also allows them to price their own-brand ranges more competitively – drawing in customers.


👎 The bad

  • Private label lines don’t necessarily have a story to sell to consumers, so they have to convince with great taste, unique selling points and price sensitivity.
  • National brands tend to have name recognition and a developed brand story that consumers are aware of and trust. Private labels developed by grocery retailers won’t have invested the same amount of money into marketing
  • Brands competing with private-label lines will need persuasive origin stories and targeted marketing to stay competitive, especially in tougher economic times.


💡 The bottom line

  • Private label brands offer many benefits to retailers and consumers alike, but CPG companies in the food and beverage sphere will need careful strategising to maximise their sales when competing for shelf space. The growth in own-brand ranges could also offer new opportunities for food and drink suppliers, manufacturers and distribution partners.

Private label. Those two words might not mean much to the average shopper, but almost every consumer will have purchased a private-label product – whether that’s a no-frills box of value pasta or an own-brand carton of milk.

But today, that image of private-label products is somewhat stuck in the past. Private label, also known as own-brand, no longer necessarily equals low-cost and basic the way it did back in the 1970s. As such, private-label ranges can no longer be viewed as automatically inferior to national brands, and their packaging and pricing has moved on to reflect this. Growing numbers of grocery retailers carry more than one own-brand line, to suit a range of differing price brackets and demographics.

On the back of these shifts, the international private-label food and beverages market is growing and is expected to increase in size by $215.81 billion between 2020 and 2024, progressing at a CAGR of 6% during that period. One thing’s for certain, then: grocery retailers who nail their private-label offering have a lot to gain.

What is a private-label product?

A private-label product is one that a retailer has produced by a third party, but that is sold by the retailer under its own-brand name. Think Tesco Finest in the UK, or German supermarket Edeka’s Gut & Günstig line. The retailer controls everything about the product, including its ingredients, packaging and distribution. Once manufactured, private-label products are sold as part of the company’s in-store line, with no mention of the third-party producer.

Trend drivers: cutting costs, consumer loyalty and complete control

One of the big benefits of private-label products is that they help retailers to cut costs. There are few, if any, specific marketing costs involved and large grocery store chains can also reduce their transportation and distribution costs. At a time when price is the most important factor for consumers, private-label products offer one of the only routes to bigger profit margins for grocery chains.

With the grocery retail sector becoming more and more crowded, private-label products can also be a way to build customer loyalty and increase footfall in stores. Research shows that over half of grocery shoppers will visit a specific store to buy its own-brand products. The success of stores like Aldi, Lidl and Trader Joe’s, which primarily sell private-label lines, shows that consumers are attracted to own-brand products when the price is right and they offer something unique or different to their branded counterparts.

Like most aspects of the food and beverage industry, private label has been affected by the coronavirus crisis. In fact, it seems to have benefited: in March 2020, sales of own-brand groceries in the UK rose by more than 20% to £5.6 billion. With national brands struggling to keep up with demand and an increase in panic-buying, customers were more likely to turn to private-label products - some for the first time. Incomes affected by the pandemic also made consumers more likely to pick up products at a lower price point.

Lastly, a major draw of own-brand products is the complete control they allow retailers to exercise over the end product. As well as offering full control of pricing, packaging and production, private-label ranges offer retailers an opportunity to adapt quickly to changes in the market. By eliminating the various middle men ordinarily involved in the manufacturing and supply process, retailers can bring new products to market much more quickly and adapt their products to the latest trends more quickly than national brands.

Exploring the trend: premium, plant-based & trend-focused

Long gone are the days when private label meant dull, unadorned packaging and a price low enough to mean compromised quality. Own-brand products are in fact undergoing a process of ‘premium-ization’. Research by Nielsen found that consumers are much more likely to splurge on own-brand items than branded products. Canny grocery stores are capitalising on this trend by offering ‘premium’ private-label products – examples include Sainsbury’s Taste The Difference in the UK and Walmart’s Sam’s Choice brand stateside. Premium private-label lines help to attract a wider variety of consumers and, as they can be sold at a higher price point, increase profit margins for retailers.

Retailers like Aldi and Lidl were among the first to develop a tiered system of own-brand products - with ranges of private-label products spanning low-cost, mid-range and premium. This helps to attract shoppers of all kinds, though it is their premium ranges that are driving their growth. Other major stores have followed suit: European supermarket business Carrefour relaunched their own-brand products this year, with a similar tiered focus on classic, simple products and gourmet versions that offer ‘new experiences to break the daily grind’ - showing just how far private-label products have diverged from their humble origins.

Increasingly, grocery store chains are responding to the latest trends in an attempt to lure in trend-focused millennial shoppers. Studies have shown that it’s this age demographic - shoppers born between 1981 and 1996 - driving growth in the private-label market. With little allegiance to national brands, younger shoppers see own-brand products as just another brand, rather than a cheap or low-quality alternative to branded items. A Cadent study found that 54% of millennials choose where to shop based on a retailer’s own-brand line.

Plant-based private-label products are just one example of these on-trend, millennial-focused offerings. The Good Food Institute has identified private-label, plant-based products as a major growth area for grocery retailers: US grocery chain Kroger expanded its plant-based own-brand brand this autumn in response to the growing number of flexitarian consumers while own-brand vegan ranges in the UK have witnessed major growth with new ranges launched by Co-op, Asda and Sainsbury’s in recent years.

Case Studies: Tesco’s Plant Chef & Trader Joe’s

UK supermarket Tesco has jumped on the plant-based private-label trend with its own-brand Plant Chef range with vegan chef Derek Sarno. Launched in more than 450 stores last year, the popular offering spans plant-based meat dishes like Breaded Goujons and Battered Fish-free Fillets and vegan versions of homely favourites such as Butternut Cauli Mac’n’Cheese and Mushroom Cottage Pie. In October 2020, the Plant Chef range won a Best Vegan Range award. Having just launched a number of festive products in the range to rival branded competitors, Tesco is now eyeing expansion to the US market for its Plant Chef label.

Across the pond, US grocery store Trader Joe’s is one of the most powerful own-brand success stories out there. The store, founded in the 1960s and now boasting over 500 stores throughout the US, is known for its low prices, unusual products and own-brand offerings: more than 80 per cent of Trader Joe’s stock is private-label. This strategy allows the supermarket to keep its prices low and draw hungry customers back for more, knowing they’ll only be able to find cult products like Everything but the Bagel Seasoning and Cauliflower Gnocchi on its shelves. Exercising its control over products, Trader Joe’s has gone all in with its quirky product names (such as Joe’s Os, the store’s private-label version of Cheerios). By leaning into the ‘offbeat neighbourhood store’ vibe, Trader Joe’s invites customers to forget it is a nationwide chain and regularly ranks as one of the top three grocery chains for customer satisfaction.

Private label products: advice for retailers and competitors

We’ve learned the numerous advantages of private-label lines for retailers: be that increased profit margins, greater control, a way to build customer loyalty. But despite the growth in the private-label market this year, grocery retailers should not rest on their laurels. Private label can no longer compete on price alone. Competition from national brands means that private-label lines need to convince consumers, whether that’s through eye-catching packaging designs or a taste that can’t be beaten.

That’s all well and good, but what if you’re in charge of a brand that needs to compete with own-brand products on supermarket shelves? One area where private-label products can’t compete with brands is what makes the branded product unique – that is to say, the product’s ‘why’ and the story behind them. Persuasive messaging can help to relay this story to consumers.

Another advantage? National food brands have name recognition that can’t be matched (well, except for some of those Trader Joe’s smash hits) while smaller CPG brands have chances to forge customer loyalty in ways that private-label products manufactured by big stores cannot: whether it’s offering a discount code for continued loyalty or a personal touch with each order, like a handwritten note or personalised offers.

Ultimately, unique products that deliver value for consumers and retailers will stay on the shelves, private label or not. But the own-brand trend looks like it’s set to stick around, so ignore it at your peril.

The 30-second pitch: Private-label grocery products

🥫 What

  • Private label, or own-brand products, are sold by grocery retailers as part of their own in-store product ranges.


🤷‍♂️ Why

  • Private label lines offer retailers total control over their product, from packaging to pricing to distribution.
  • Grocery stores can cut costs with their own products, benefiting from economies of scale when it comes to distribution and needing to invest little in marketing their in-store ranges.
  • Truly memorable in-store lines will draw customers back time and time again, so grocery chains are investing in their own-branded products to increase footfall and consumer loyalty.


🍫 How

  • Premium private-label products
  • Plant-based private-label products
  • Wide ranges of private-label lines
  • Trend-focused private-label products
  • Millennial-focused private-label products


👀 Who


👍 The good

  • Private label products offer grocery retailers far greater control over their products - whether it’s how they’re manufactured, packaged or distributed.
  • Growth in the private-label sector means consumers have far greater choices available to them, with some grocery stores (e.g. Aldi, Lidl) offering a tiered system of private-label lines to suit many tastes.  
  • Private label products offer higher profit margins for retailers, which also allows them to price their own-brand ranges more competitively – drawing in customers.


👎 The bad

  • Private label lines don’t necessarily have a story to sell to consumers, so they have to convince with great taste, unique selling points and price sensitivity.
  • National brands tend to have name recognition and a developed brand story that consumers are aware of and trust. Private labels developed by grocery retailers won’t have invested the same amount of money into marketing
  • Brands competing with private-label lines will need persuasive origin stories and targeted marketing to stay competitive, especially in tougher economic times.


💡 The bottom line

  • Private label brands offer many benefits to retailers and consumers alike, but CPG companies in the food and beverage sphere will need careful strategising to maximise their sales when competing for shelf space. The growth in own-brand ranges could also offer new opportunities for food and drink suppliers, manufacturers and distribution partners.

Private label. Those two words might not mean much to the average shopper, but almost every consumer will have purchased a private-label product – whether that’s a no-frills box of value pasta or an own-brand carton of milk.

But today, that image of private-label products is somewhat stuck in the past. Private label, also known as own-brand, no longer necessarily equals low-cost and basic the way it did back in the 1970s. As such, private-label ranges can no longer be viewed as automatically inferior to national brands, and their packaging and pricing has moved on to reflect this. Growing numbers of grocery retailers carry more than one own-brand line, to suit a range of differing price brackets and demographics.

On the back of these shifts, the international private-label food and beverages market is growing and is expected to increase in size by $215.81 billion between 2020 and 2024, progressing at a CAGR of 6% during that period. One thing’s for certain, then: grocery retailers who nail their private-label offering have a lot to gain.

What is a private-label product?

A private-label product is one that a retailer has produced by a third party, but that is sold by the retailer under its own-brand name. Think Tesco Finest in the UK, or German supermarket Edeka’s Gut & Günstig line. The retailer controls everything about the product, including its ingredients, packaging and distribution. Once manufactured, private-label products are sold as part of the company’s in-store line, with no mention of the third-party producer.

Trend drivers: cutting costs, consumer loyalty and complete control

One of the big benefits of private-label products is that they help retailers to cut costs. There are few, if any, specific marketing costs involved and large grocery store chains can also reduce their transportation and distribution costs. At a time when price is the most important factor for consumers, private-label products offer one of the only routes to bigger profit margins for grocery chains.

With the grocery retail sector becoming more and more crowded, private-label products can also be a way to build customer loyalty and increase footfall in stores. Research shows that over half of grocery shoppers will visit a specific store to buy its own-brand products. The success of stores like Aldi, Lidl and Trader Joe’s, which primarily sell private-label lines, shows that consumers are attracted to own-brand products when the price is right and they offer something unique or different to their branded counterparts.

Like most aspects of the food and beverage industry, private label has been affected by the coronavirus crisis. In fact, it seems to have benefited: in March 2020, sales of own-brand groceries in the UK rose by more than 20% to £5.6 billion. With national brands struggling to keep up with demand and an increase in panic-buying, customers were more likely to turn to private-label products - some for the first time. Incomes affected by the pandemic also made consumers more likely to pick up products at a lower price point.

Lastly, a major draw of own-brand products is the complete control they allow retailers to exercise over the end product. As well as offering full control of pricing, packaging and production, private-label ranges offer retailers an opportunity to adapt quickly to changes in the market. By eliminating the various middle men ordinarily involved in the manufacturing and supply process, retailers can bring new products to market much more quickly and adapt their products to the latest trends more quickly than national brands.

Exploring the trend: premium, plant-based & trend-focused

Long gone are the days when private label meant dull, unadorned packaging and a price low enough to mean compromised quality. Own-brand products are in fact undergoing a process of ‘premium-ization’. Research by Nielsen found that consumers are much more likely to splurge on own-brand items than branded products. Canny grocery stores are capitalising on this trend by offering ‘premium’ private-label products – examples include Sainsbury’s Taste The Difference in the UK and Walmart’s Sam’s Choice brand stateside. Premium private-label lines help to attract a wider variety of consumers and, as they can be sold at a higher price point, increase profit margins for retailers.

Retailers like Aldi and Lidl were among the first to develop a tiered system of own-brand products - with ranges of private-label products spanning low-cost, mid-range and premium. This helps to attract shoppers of all kinds, though it is their premium ranges that are driving their growth. Other major stores have followed suit: European supermarket business Carrefour relaunched their own-brand products this year, with a similar tiered focus on classic, simple products and gourmet versions that offer ‘new experiences to break the daily grind’ - showing just how far private-label products have diverged from their humble origins.

Increasingly, grocery store chains are responding to the latest trends in an attempt to lure in trend-focused millennial shoppers. Studies have shown that it’s this age demographic - shoppers born between 1981 and 1996 - driving growth in the private-label market. With little allegiance to national brands, younger shoppers see own-brand products as just another brand, rather than a cheap or low-quality alternative to branded items. A Cadent study found that 54% of millennials choose where to shop based on a retailer’s own-brand line.

Plant-based private-label products are just one example of these on-trend, millennial-focused offerings. The Good Food Institute has identified private-label, plant-based products as a major growth area for grocery retailers: US grocery chain Kroger expanded its plant-based own-brand brand this autumn in response to the growing number of flexitarian consumers while own-brand vegan ranges in the UK have witnessed major growth with new ranges launched by Co-op, Asda and Sainsbury’s in recent years.

Case Studies: Tesco’s Plant Chef & Trader Joe’s

UK supermarket Tesco has jumped on the plant-based private-label trend with its own-brand Plant Chef range with vegan chef Derek Sarno. Launched in more than 450 stores last year, the popular offering spans plant-based meat dishes like Breaded Goujons and Battered Fish-free Fillets and vegan versions of homely favourites such as Butternut Cauli Mac’n’Cheese and Mushroom Cottage Pie. In October 2020, the Plant Chef range won a Best Vegan Range award. Having just launched a number of festive products in the range to rival branded competitors, Tesco is now eyeing expansion to the US market for its Plant Chef label.

Across the pond, US grocery store Trader Joe’s is one of the most powerful own-brand success stories out there. The store, founded in the 1960s and now boasting over 500 stores throughout the US, is known for its low prices, unusual products and own-brand offerings: more than 80 per cent of Trader Joe’s stock is private-label. This strategy allows the supermarket to keep its prices low and draw hungry customers back for more, knowing they’ll only be able to find cult products like Everything but the Bagel Seasoning and Cauliflower Gnocchi on its shelves. Exercising its control over products, Trader Joe’s has gone all in with its quirky product names (such as Joe’s Os, the store’s private-label version of Cheerios). By leaning into the ‘offbeat neighbourhood store’ vibe, Trader Joe’s invites customers to forget it is a nationwide chain and regularly ranks as one of the top three grocery chains for customer satisfaction.

Private label products: advice for retailers and competitors

We’ve learned the numerous advantages of private-label lines for retailers: be that increased profit margins, greater control, a way to build customer loyalty. But despite the growth in the private-label market this year, grocery retailers should not rest on their laurels. Private label can no longer compete on price alone. Competition from national brands means that private-label lines need to convince consumers, whether that’s through eye-catching packaging designs or a taste that can’t be beaten.

That’s all well and good, but what if you’re in charge of a brand that needs to compete with own-brand products on supermarket shelves? One area where private-label products can’t compete with brands is what makes the branded product unique – that is to say, the product’s ‘why’ and the story behind them. Persuasive messaging can help to relay this story to consumers.

Another advantage? National food brands have name recognition that can’t be matched (well, except for some of those Trader Joe’s smash hits) while smaller CPG brands have chances to forge customer loyalty in ways that private-label products manufactured by big stores cannot: whether it’s offering a discount code for continued loyalty or a personal touch with each order, like a handwritten note or personalised offers.

Ultimately, unique products that deliver value for consumers and retailers will stay on the shelves, private label or not. But the own-brand trend looks like it’s set to stick around, so ignore it at your peril.

The 30-second pitch: Private-label grocery products

🥫 What

  • Private label, or own-brand products, are sold by grocery retailers as part of their own in-store product ranges.


🤷‍♂️ Why

  • Private label lines offer retailers total control over their product, from packaging to pricing to distribution.
  • Grocery stores can cut costs with their own products, benefiting from economies of scale when it comes to distribution and needing to invest little in marketing their in-store ranges.
  • Truly memorable in-store lines will draw customers back time and time again, so grocery chains are investing in their own-branded products to increase footfall and consumer loyalty.


🍫 How

  • Premium private-label products
  • Plant-based private-label products
  • Wide ranges of private-label lines
  • Trend-focused private-label products
  • Millennial-focused private-label products


👀 Who


👍 The good

  • Private label products offer grocery retailers far greater control over their products - whether it’s how they’re manufactured, packaged or distributed.
  • Growth in the private-label sector means consumers have far greater choices available to them, with some grocery stores (e.g. Aldi, Lidl) offering a tiered system of private-label lines to suit many tastes.  
  • Private label products offer higher profit margins for retailers, which also allows them to price their own-brand ranges more competitively – drawing in customers.


👎 The bad

  • Private label lines don’t necessarily have a story to sell to consumers, so they have to convince with great taste, unique selling points and price sensitivity.
  • National brands tend to have name recognition and a developed brand story that consumers are aware of and trust. Private labels developed by grocery retailers won’t have invested the same amount of money into marketing
  • Brands competing with private-label lines will need persuasive origin stories and targeted marketing to stay competitive, especially in tougher economic times.


💡 The bottom line

  • Private label brands offer many benefits to retailers and consumers alike, but CPG companies in the food and beverage sphere will need careful strategising to maximise their sales when competing for shelf space. The growth in own-brand ranges could also offer new opportunities for food and drink suppliers, manufacturers and distribution partners.
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