Private label – also known as store-branded and generic – products have been seeing growth in recent years. Stores saw value in investing in their own brands and consumers were looking for value. The increasing introduction of higher-end private label items that moved beyond the basics also helped by boosting the average sale price of store-branded products.
However, these firms did not all see the huge pandemic retail grocery gains that the major food and beverage brands saw. Supply chain challenges and the cost-driven lack of flexibility built into their systems made it harder for them to respond to the sudden surges in demand that came as people shifted their food dollars from restaurants to retail.
In some cases, consumers sought traditional branded products to provide some level of certainty and comfort in uncertain times. However, more often than not, people bought what they could get. Because there were supply chain issues and low inventories, shoppers had to buy whichever oatmeal, peanut butter, frozen waffles, canned veggies, etc. that they could obtain. Even dedicated store brand value-based shoppers shifted to branded versions when no other option was available. This was one of the reasons why the average shopping basket price was up in 2020...sales of more branded products and fewer private label versions.
However, that trend is expected to shift back as private label suppliers increase their capacity shortages and improve their supply chains. Branded food product suppliers will need to offer unique options or other elements to retain value-driven shoppers who will shift back to price-based choices when the options are there.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area, with titles such as Frozen Food Packaging, Ice Cream & Frozen Dessert Packaging, Fresh Produce Packaging, Processed Food Pouches, Candy & Snack Food Pouches, Egg Cartons, Vacuum Skin Packaging, and Meat, Poultry, & Seafood Packaging. Further analysis in Food & Beverage research is also available from our sister publisher Packaged Facts, with titles such as Home Baking: US Market Trends & Opportunities, Food Market Outlook, Beverage Market Outlook, Meal Kits, Global Meat & Poultry Trends, and Global Breakfast Cereal. Freedonia Custom Research is also available for questions requiring tailored market intelligence.