Private-label grocery brands gain momentum

Private-label grocery brands are gaining momentum as changing consumer perceptions and a widening customer base are fueling sales growth and market share gains. 

Once perceived as inferior to national brands, private-label store brands reached an all-time high market share in dollar and unit sales during the first half of 2024 as quality perceptions have improved. 

Growing acceptance among younger and higher-income consumers is also propelling category growth.

Higher food prices and the inflationary environment over the last two years prompted more consumers to try private-label products, given their lower prices and association with value. However, recent research shows consumers are increasingly citing quality, taste and variety as key drivers influencing their repeat purchases.

According to a new report from CoBank’s Knowledge Exchange, grocery retailers are seizing on the growing popularity of private-label products, which typically generate higher profit margins than national brands. 

The report suggests retailers will accelerate efforts to expand their private label offerings, targeting growth segments such as bakery, seafood and beverages.

Dollar sales of private-label products in the U.S. have grown more than one-third since 2019 and are projected to surpass $250 billion in 2024, representing roughly 20 percent of the grocery basket share, according to data from Nielsen. 

Aldi and Trader Joe’s lead large U.S. retailers in private-label purchase share, with 80 percent and 69 percent respectively, but private-label options account for more than a quarter of grocery sales at Costco, Samʼs Club, H-E-B and Walmart.

Recent survey data from the Private Label Manufacturers Association shows most consumers now believe private-label products are equivalent to name brand products. This assessment was consistent across a wide swath of income and generational demographics. Even more telling, only two percent of consumers regard private-label food and beverage products as inferior to name brands in quality.