Private label beats brands in battle for supremacy

Once considered the poor relation of glossy food and beverage brands, private label has undergone a huge transformation, and is reaping the rewards.

“The global private label market is thriving,” says a spokesperson for market insight firm NIQ.

In fact, a new NIQ report found that 50% of global consumers are buying more private label products than ever before.

And multiple countries exceed that average, including Germany (61%), Spain (58%), India (56%), France (54), and Italy (53%).

“We’ve seen consumers in markets around the world showing a newfound respect for store brands,” says NIQ.

There are also a few notable markets, which fall just short of that average, but are growing and expected to surpass it within the next few years.

These include the United States (48%), Canada (48%), and the United Kingdom (46%).

What’s more, younger generations of shoppers are proving more willing to move over to private label products, and might even prefer them.

Twice as many Millennials (46%) and Gen Z (46%) respondents to NIQ’s Mid-Year Consumer Outlook survey said they’re willing to spend more on private label products, compared with 23% of Boomer respondents who said they wouldn’t.

“Millennial and Gen Z shoppers will have incredible spending power in the years ahead,” says a spokesperson for NIQ. “And they’re already developing product preferences and loyalties.”

Supermarkets now offer a huge range of own-brand options, so brands need to work hard to compete in a the space they once dominated. (Image: Getty/andresr)How is private label growing so fast?The primary driver for growth across all markets is undoubtedly price.

Consumers are seeking affordable options as the cost-of-living crisis continues to impact household budgets.

“Consumers are feeling the squeeze,” says Michael Della Penna, chief strategy officer at InMarket.

As a result, they’re more willing to trade brand loyalty for private label. This is particularly true in categories including crisps, snacks, cereals, biscuits, sweets and breads, where there is deemed to be limited differentiation. However, that list could grow as supermarkets continue to expand their own label offerings.

And it’s not just about price. Private label is increasingly winning customers over with quality.

“Over the years, the quality of private label products has improved significantly, resulting in a positive shift in consumer perception,” says Katya Witham, associate director for Mintel Food & Drink.

In fact, Witham says, many consumers now view own label products as comparable, if not superior, to branded goods in terms of quality.

This has been supported by the introduction of premium ranges, such as Tesco Finest, Sainsbury’s Taste The Difference, and Carrefour’s Reflet de France, which have elevated the status and appeal of private label offerings.

Moreover, high-end supermarkets such as Waitrose and Marks & Spencer in the UK, La Grande Epicerie de Paris in France, and Eataly in Italy, were established as premium food and beverage retailers offering superior quality from the start.

Marks & Spencer, in particular, is considered the luxury option for everything from pre-prepared meals and snacks to desserts and confectionery.

The retailer’s seasonal collections, including their decadent Easter eggs and elaborate Christmas biscuits and cakes, are so sought after that they often sell out, prompting shoppers to go from store to store in the hopes of finding them.

And their sweet treats have been known to go viral on social media – if you have’t heard of the Marks & Spencer Big Daddy Pistachio Bar, then you’re likely one of the few who don’t frequent TikTok or Instagram – well done!

Marks & Spencer has established itself as a premium supermarket, offering luxury own-brand food and beverage options to consumers. (Image: Marks & Spencer)Is this the end of brand culture?While the rise of private label might be cause for concern for brands, it isn’t the end. Far from it.

“Brand loyalty is still holding strong in most categories, even as private label spending increases,” says InMarket’s Della Penna.

What could change, when it comes to brand buying, is how people shop. Della Penna predicts a shift towards wholesale shopping, so consumers can get the brands they want at discounted prices, through bulk buying.

The growing global population means that consumer demand is rising, not falling. In other words, there’s space for everyone. Brands just need to learn to compete in the space they once occupied almost entirely alone.

Brands could consider discount vouchers as a way to encourage consumers to remain loyal. ( Image: Getty/Noel Hendrickson)How can brands compete with private label?“Now’s the time for named brands to embrace innovation to drive success,” says InMarket’s Della Penna.

Rather than looking at the rise of private label as a bad omen brands should, says Della Penna, see it as an opportunity to revitalise marketing strategies and reinforce value. To do this, brands should focus on what sets them apart, so they can justify additional costs.

This could mean celebrating attributes like superior quality, health and wellness benefits, or unique flavours, to stand out against private label alternatives.

Discount vouchers could also be a way to sway consumer choice.

Now is the time for brands to act, in order to win the consumer loyalty war, because private label is working hard and that work is paying off.