2024 was a good year for private label brands, reaching a record $271 billion in sales, growing by 3.9% and outpacing the 1% growth of national brands. Private labels have positioned themselves as competitors in the consumer packaged goods (CPG) market, according to a report from Circana, and have opportunities for further growth thanks to consistent and strategic investments.
In the U.S., store brands have a 22% dollar share of CPG sales, a 4.6% growth from 2023. In the EU, including France, Germany, Italy, Netherlands, Spain and UK, private labels have a 39% euro share, a 3.4% increase, and Australia has a 36% Australian dollar share, a 4.8% change.
In a direct challenge to name brands, private labels have historically gained share during periods of high inflation and even in times when it has eased, growing in all regions by unit percentage from 2021 to 2024 based on Circana's report. Private labels also are not entirely reliant on price gaps for growth. Price gaps now remain similar to prior years and in categories where private labels are gaining the most. They aren’t dependent on promotional gaps either, some name brands are increasing promotions in some regions in order to compete.
Store brands are strategic actors in the CPG market and retailers have invested in them for decades due to their unique approaches. Not only are they strategy obsessed with category dynamics, margin and volume focus and range discipline, but they are consumer focused, innovative and data driven, using demand forecasting, pricing analytics and promotion effectiveness.
Non-food private labels may be feeling the pressure from name brands, but food and beverage categories are driving the recent growth. The value share of food and beverage is increasing in all regions apart from Australia.
High- and low-penetration segments see the most private label growth, aligning to local consumer needs and opportunities. In the U.S., dairy, meat & seafood, bakery and kitchen & paper have value share, meat & seafood have share in the EU countries and only meat & seafood has share in Australia.
State of private label by region
Retailer strategies to drive private label growth across the globe vary, with the U.S. producing new launches and some EU countries expanding store estate, range and innovation. By focusing on store estate expansion, range expansion and everyday low-price offerings rather than innovation, Spain is seeing growth results, while France focuses on range expansion and retailer push to see an increase in their share percentage compared to 2023.
According to Sally Lyons Wyatt, global executive vice president and chief advisor at Circana, “Private label will continue its growth trajectory, but the next wave of growth may come from different places. While value channels have recently driven private label gains, expect more grocers- both large and mid-sized – to invest more aggressively, making private labels a core growth strategy.
“Retailers will continue to tier their offerings with more margin-accretive premium products, while also leaning in on entry price-point products,” she continued. “As retailers continue to build brand equity, they may rethink pricing and promotion strategies, but innovation – including with new products, localization, regionalization or unique partnerships – will continue to take center stage.”
This happens with retailers across different regions.
U.S. retailers are leaning into innovation across different price tiers and consumers’ appetites for exploring new store brand offerings. The best performing private labels are clean and sustainably sourced, culinary inspired, trend-forward innovations, restaurant-quality meals, elevated entertainment on a budget and functional health on a budget.
It doesn’t hurt that consumers in the U.S. are becoming increasingly open to exploring new private label offerings, especially those who traditionally gravitate toward name brands. On average, consumers are buying private label in seven more categories. 28% of “name brand loyalists” have tried a new private label product for the first time in the last three months, compared to only 21% in 2022. Only 26% of “private label loyalists” tried a new product, according to Circana.
Store brands are gaining momentum in traditional brand-dominated spaces, such as chocolate candy, sports drinks, carbonated soft drinks and salty snacks. Leading U.S. retailers are also launching new lines to defend and expand consumer reach, with Amazon Saver, Target Deal Worthy, Walmart bettergoods and CVS Well Market all releasing in 2024.
The U.S. is following along this growth trajectory but is finding private label growth in different places. Channels are expanding beyond value channels into large and mid-sized grocers, making private labels a core pillar of their growth strategies. Retailers made innovation central, expanding through localization, regionalization or unique partnerships. Brands are also doubling down on innovation and contributing to a greater collaboration with retailers.
EU retailers, meanwhile, use a variety of strategies to accelerate growth, as private label prevalence is highly established. Retailers are recruiting Michelin star chefs to create meal ranges and offering premium and super-premium ranges. Retailers have aided private label growth by offering more food and beverage and non-food bundles, products developed and co-branded with leading restaurants, route-to-market innovation and functional food and beverage ranges.
Store brand share gains in the European sample countries will continue but at a slower rate. Supermarkets are intensifying their price matching and engaging in aggressive range expansion, particularly in food and beverage categories. Discounters are expanding into small-format stores, and convenience is becoming a strategic channel to drive premiumization, merchandising and vending innovation. Brands are focusing on growing categories through innovation and promotion effectiveness using retail media, marketing to consumers at or near their point of purchase.
Finally, Australian retailers find themselves improving innovation to underpin the rising consumer acceptance, driving conversion and additional private label spending. Retailers are focusing on co-branded partnerships, brand and private label cross-promotion, back-to-basics bounce back and inspiration by lifestyle trends.
Australia is seeing marginal private label share gains as the cost-of-living pressure abates. The double-digit highs once seen are drawing down, but consumer acceptance will grow more than 70% thanks to “on-trend” innovation, greater assortment management. Brands must deliver variety through price points, attributes and benefits, or private labels will.
The future for name brands
A high proportion of CPG name brand unit sales remain vulnerable to private labels. 16% of unit sales in the U.S. are at risk, including deli prepared meats, kitchen storage and frozen chicken categories, according to the report. In the EU, store brands could overtake 21% of unit sales, including in condensed milk, noodles and cooking oil. In Australia, 17% of unit sales in cosmetic accessories, baby food and hair accessories could handed over to private label brands.
All is not lost for brand manufacturers, as there is opportunity for competition and creating impact alongside private labels. To do so requires product superiority, crafting uniqueness and consumer connection. Circana suggests that manufacturers should grow their category, optimize their portfolio, connect with customers, collaborate with retailers and ensure their product excellence.
