What are Store Brands?
Store brands, Private Label or Private Brands is massive segment of the food and beverage sector.
You will find Trader Joes, Archer Farms (Target), Great Value (Wal-Mart) and 365 (Whole Foods) as a small sampling of some of the more well know private brands. Some have the retailer name and others a brand name unrelated to the retailer banner name.
The PLMA's 2011 Private Label Yearbook, based on Nielsen Co. data for the year ended Dec. 25, 2010, supermarkets, drug stores and mass merchandisers (Target and Walmart) volume purchases store-brands jumped by nearly 2%. Consumers purchase more than $88.5 billion, according to the Nielsen data. Drug chains like CVS and Walgreens increased by 2.5 times the average to almost a 5% gain. If you see more private label store brands in supermarkets... you are on point: sales of private-label products increased by 40%.
PLMA noted that while the numbers prove the growth of the private-label market, there is an estimated $15 to $20 billion in additional private-label sales that occur in channels not reported to the Nielsen databases, including warehouse clubs, limited-assortment stores, convenience stores and dollar stores. If these data were reported, the total sales likely would have produced a grand total exceeding $100 billion for 2010, PLMA said.
The Economy as a Driver for Consumer Behavior
PLMA also notes that private label's robust growth is driven by the recession. Affordability has permeated consumer purchases and Private Labels can be 25% to 50% less than the equivalent national brands. National brands are trying to deal with consumers new shopping habits since the national brands are losing market share they lost to store brands over the previous years.
What do Retail Food Shoppers Say?
The PLMA Private Label Yearbook provides lots of sales, unit and gross margin data. Consumer research by PLMA, GfK/Roper says US consumers are going to stick with store brands.
More than ½ said they buy more store brands today vs. last year and also describe themselves as frequent store brand shoppers. The clincher for national brands: 80% of shoppers believe private label are as good as or better than national brands.
Tips for Food Entrepreneurs
Here are some valuable tips for how to start a food business and more successful new product launches:
- Start paying attention to what you see on the shelf for store brands
- Are you seeing more private label products as you shop?
- Are you seeing more and different products under the store brand?
- Visit the aisles of Trader Joes to get inspiration for new product launch ideas since they have an aggressive program of finding smaller specialty foods companies to make interesting and not to be found anywhere else products under the Trader Joes brand name.
