Is this the end of brand loyalty?
The rise of private label in the FMCG sector is no longer just a trend, itâs a full-scale market shift.
Once seen as a budget alternative to branded products, private labels are now defining new standards of value, quality, and innovation.
In fact, they now account for nearly 40% of FMCG value share and around 62% of volume share across Europeâs six largest markets â France, Germany, Italy, Netherlands, Spain, and the UK. Value sales rose by 9%, and volumes increased by 2% in the year to March 2024.
This growth reflects a long-term shift in consumer preferences and retail strategy. Private labels are no longer following national brands â theyâre leading them.
Consumers are shopping smarterEuropean shoppers are increasingly value conscious. With ongoing cost-of-living pressures, consumers are evaluating every purchase more carefully, and turning to private label for quality and savings. In Spain, private label penetration has reached 48%. Germany and the Netherlands follow closely behind with value shares over 40%.
Even in France and Italy, traditionally brand-loyal markets, private labels have made notable inroads. Today, shoppers are choosing private labels, not as a compromise but as a priority.
Innovation and quality reshaping perceptionsRetailers across Europe are investing in private label like never before. Product innovation, sustainability, and sensory quality are now core to their strategies. From health-forward and plant-based ranges to eco-packaged cleaning products, private label is aligning with emerging consumer trends.
This repositioning is changing perceptions. Research shows 69% of European consumers believe innovative companies make better products, and 64% consider them more trustworthy. Private labels are gaining ground by delivering on these expectations, with increasingly premium offerings at accessible prices.
Traditional brand loyalty is fadingThe pandemic accelerated experimentation as consumers tried alternatives during supply chain disruptions. Many were surprised to find that private labels matched or exceeded the quality of national brands. That trial turned into trust.
In markets like Italy and Spain, younger consumers now show less brand loyalty than previous generations. Theyâre more focused on performance, price and purpose, areas where private labels continue to strengthen. This makes it harder for national brands to regain lost ground as private labels expand their reach and credibility.
National brands under pressureTo maintain share, many brands across Europe have resorted to heavy promotions. In some markets, over 40% of branded sales are promotion-driven. But this is proving unsustainable. Deep discounts weaken margins and do little to build lasting loyalty. Meanwhile, retailers are closely monitoring performance and profitability, and increasingly reallocating shelf space to private label ranges that deliver better returns.
Regulatory and cost pressures are mountingFMCG players across Europe face rising costs, from labour reforms and packaging regulations to environmental compliance. In the UK alone, brands are dealing with ÂŁ30 billion in new cost pressures, while the EUâs evolving Green Deal is reshaping operating environments across member states.
At the same time, new promotional restrictions, such as the UKâs HFSS rules set for October 2025, will limit traditional marketing levers for big brands. In this context, private label becomes even more attractive to retailers: it offers better margin control, shopper loyalty, and less reliance on in-store promotions.
Four ways brands can respondWhile private label momentum is strong, national brands still have opportunities, if they evolve.
Collaboration, category growth, diversification, and premiumisation are key.
Some brands are partnering with retailers on exclusive products or limited editions. Others are growing their categories by launching functional, trend-led products or targeting new shopper occasions. Diversifying into adjacent segments, such as premium snacking can also create growth away from direct private label competition.
Premiumisation remains a viable path, but only if itâs built on meaningful value. Shoppers will pay more for standout benefits, like sustainable sourcing, innovative formats, or enhanced health credentials, not just branding alone.
Innovation is no longer optionalNew product launches across categories have declined by 17% in the past year. This hesitancy risks widening the gap between brands and increasingly agile private labels.
In contrast, private labels are launching more, and doing so with purpose. From functional drinks to affordable indulgence, they are responding faster to evolving consumer needs. In categories like energy drinks and plant-based foods, private label is not just catching up, itâs taking the lead.
A turning point for European FMCGPrivate labelâs rise is not a temporary reaction to economic strain; it is a structural evolution in European retail. Consumers are no longer loyal to brand names; theyâre loyal to value, performance, and purpose.
Retailers are fully behind this shift, treating private label as a core strategic asset. If national brands cannot keep up, on innovation, relevance, and profitability, they risk losing space, visibility, and influence.
All statistics provided by Circana
