Private Label Driving Disruption in CPG
By Jack Grant
Major retailers continue to launch innovative store brands that consumers embrace. As these sales grow, so does their competitive muscle in the marketplace. Makers of national CPG brands are watching their traditional hold on certain product categories erode from the emergence of private label as well as from smaller, nimble entrepreneurial name brands.
The growth in mass retail has private label outpacing national brands in both dollars and units across all channels combined. The latest Nielsen data reveals that store brand dollar volume in the mass retail channel surged +41% over the last five years, compared to a gain of only +7.4% for national brands.
“Private-label products are a major disruptor in the US consumer packaged goods category,” stated Deborah Weinswig, CEO and Founder of Coresight Research and author of a recent white paper on his topic.
“We’re definitely seeing the switch to private label accelerating,” said Bahige El-Rayes, a partner in the retail and consumer practice of A.T. Kearney, a global management consultancy. “We only need look to major mass retailers, who are realizing that this is the best way to defend their core and stay relevant. The current shift is around how to create a destination, high quality private label. One of the biggest indications of this is in the area of plant-based meat where Lidl, Costco and Trader Joe’s are all launching their own plant-based meat private label brands.”
A study by the Private Label Manufacturers Association (PLMA) estimated that 65% of consumers are likely to buy more or at least the same amount of private label products as they did last year. This growth in sales can in part be attributed to consumers’ willingness to spend more for higher-end private label products. Premium private-label products have grown their share of total private-label sales 1.3 percentage points to 7.2% since 2016, though low-priced private-label products still represent the largest share of private-label sales in the US, at 34.2%, according to Nielsen.
Store brands not only accounted for virtually half of all growth last year in brick-and-mortar stores, where sales continue to climb at a rate that is four times that of national brands, but private label has emerged as the new challenger brand in e-commerce as well, according to a June 2019 report by Nielsen.
Today’s retailers are especially interested in expanding their store brands in response to growing consumer trends. That is why virtually every major U.S. retailer will be in Chicago November 17-19 to source for their brands at PLMA’s 2019 Private Label Trade Show.
The show will reflect consumers’ latest tastes, preferences and values by offering more fresh, natural and organic foods, as well as plant-based and “free-from” foods, sustainably sourced products and ingredients, international cuisines, wines and spirits, fair trade, kosher and halal to name a few. Fast growing nonfoods categories will include cookware and kitchenware, treatments and diagnostics for health and wellness, including a range of new CBD formulations entering the marketplace.
Overall, PLMA’s 2019 trade show will present more than 2,500 exhibit booths from the best store brands manufacturers of every size and description, while more than 5,000 visitors will include buyers and executives from U.S. supermarkets, mass merchandisers, drug chains, discount, club, convenience and dollar stores, in addition to online and specialty retailers, foodservice distributors and wholesalers.
International products will also be in the spotlight as PLMA hosts national pavilions from more than 25 countries, presenting exhibitors and products from Europe, South America, and Asia
For information on attending or exhibiting at PLMA's Private Label Trade Show, contact PLMA (212) 972-3131 or email email@example.com