Private label growth

Inspired by tastes from the around the world, Toronto-based Loblaw plans to launch 140 new products under its President's Choice private label this month. Among the offerings are hand-rolled dim sum from China; Dulce de Leche, "known as sex in a bottle," from Argentina; and tarte au chocolate and tarte au citron from Paris. Product innovation in private label products has spurred growth of store brands across the U.S., a worrisome development for brand only companies. According to a recent nationwide survey by Ispos MORI for the Private Label Manufacturers Association (PLMA), 41 percent of shoppers now identify themselves as "frequent" buyers of store brands, up from 36 percent five years ago. The survey also found that almost half of consumers are more aware of private label products than five years ago and are more willing to buy them. The average consumer's regular shopping basket now contains some 32 percent of private label products. Moreover, almost two-thirds of respondents say they would buy more private label in the year ahead if their stores stocked a wider variety of products. It's notable that middle-income consumers ($30,000-$75,000) and high-income (over $75,000) brackets are much more likely to buy a larger amount of private label in the coming year than those in the low-income (under $30,000) bracket, according to the survey. Sales of private-label items have been growing up to twice the rate of national brands over the past 10 years (up 4.2 percent), outpacing national brands (3.4 percent) in the 52-weeks ended in June), according to ACNielsen. Since retailers can place their products more advantageously on shelves, brand product managers have a greater challenge. And as those retail brands seek to grab a greater share, management consulting firm McKinsey estimates that as much as $55 billion in sales of national brands may be at stake over the next decade.