Premium Products Gaining Share in Private Label Market

September 12, 2019

This article is included in these additional categories:

Brand-Related | CPG & FMCG | Industries | Store Brands

In a time when more US consumers across all income levels are turning to private labels in an effort to save money, there has also been a rise in premium private label sales. The growing interest in premium private label products, according to new data from Nielsen, has had an impact on discount retailers which have, historically, accounted for the largest share of private label sales.

Indeed, premium private label (or store brand) products now account for 7.2% dollar share of US private label products, up from 5.9% share in 2016. At the same time, discount private label’s share has decreased from 37.0% share in 2016 to 34.2% share in 2019.

The impact that premium private label sales growth has had is evident when looking at the grocery industry. Value grocery stores in the US such as Aldi and Lidl saw private label sales decline 4% y-o-y in 2019, while premium fresh grocery stores like Whole Foods and Sprouts experienced sales growth of 11% y-o-y, per Nielsen’s data.

Private label sales, in general, have been on a steady rise, growing from $129.7 billion in sales in 2015 to $143.4 billion in 2019. In fact, private label has seen higher growth in the last year than branded products, growing 3.7% year-over-year (y-o-y) compared to 1.9% y-o-y for named brands.

While it’s true that consumers are turning to private labels to save money, previous perceptions that private label products are of lesser quality seem to be fading. IRI reported that the majority of consumers feel that the quality of private label products is just as good as national brands, as well as being a better value than national brands. This is especially true among Millennials, among whom about three-quarters shared those sentiments.

With that in mind, it’s no surprise that more consumers are now saying that if they like a private label product they are willing to pay more or the same for it than a name brand product. This year 40% say that’s the case, up from 34% 5 years ago.

Further data can be viewed online here.

About the Data: Figures are based on the 52 weeks ending May 25, 2019, versus 3 years earlier, from the Nielsen Analytic Product Attribute (APA) database.

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