Private Label Grocery Market Poised for Growth
The private-label grocery market is experiencing a surge in popularity, with experts predicting a forthcoming super cycle. Simeon Gutman, a food retail analyst at Morgan Stanley, recently discussed the transformative potential of private labels in a podcast, highlighting the increasing consumer interest in these offerings as a means to stretch their food budgets further. This trend has its roots in the shifts brought about by the COVID-19 pandemic, with store brand sales experiencing significant growth in recent years.
In 2024, store brand sales saw a $9 billion increase compared to the previous year, reaching a record total of $271 billion, according to the Private Label Manufacturers Association. Categories such as refrigerated, general food, and beverages showed the highest growth rates, signaling potential for further expansion in these areas. PLMA president Peggy Davis emphasized the quality, value, and innovation that store brands provide, making them an attractive choice for consumers.
UNFI, a wholesaler, projects a 40% growth in private label market share over the next six years, highlighting it as a key trend for food and beverage professionals to capitalize on. This growth is driven by changing consumer preferences, as younger generations are increasingly less loyal to traditional brands and more receptive to private label products.
The evolution of store brands has been remarkable, with private labels shedding their outdated image of being generic or inferior to name brands. Today, private labels are seen as a value-driven alternative that offers quality and innovation. Major retailers like Walmart, Target, and Dollar General are investing heavily in expanding their private label offerings to meet the diverse needs and preferences of modern consumers.
Walmart’s Bettergoods line features premium private label products, including plant-based alternatives and upscale frozen items, catering to wellness trends and dietary preferences. Target has introduced 250 new wellness-focused items under its Good & Gather brand, while Dollar General has expanded its Clover Valley line with over 100 new products. These investments have proven successful, with private label sales contributing significantly to retailers’ bottom lines.
Looking ahead, private label market share is expected to continue growing, with retailers focusing on innovation, consumer feedback, and operational efficiencies to stay competitive. AI technology is playing an increasingly important role in product development and marketing strategies, helping retailers launch new products more efficiently and effectively. Retailers must continue to surprise and delight consumers with their private label offerings to maintain customer loyalty and market differentiation.
In conclusion, the private-label grocery market is poised for continued growth and innovation as retailers and manufacturers adapt to changing consumer preferences and market dynamics. By investing in private label strategies and embracing new technologies, businesses can position themselves for success in this evolving landscape.
