Yokuna’s Brief On Private Labels:

According to IRI statistics, private label businesses have failed to keep up with brand name offers over the last year. According to the Chicago-based market research company, brand name sales grew 3.6 percent to $536 billion in the 52 weeks ended September 19, while private label sales gained 1.5 percent to $142 billion.

According to IRI, brand names accounted for 79.1 percent of all food dollars spent in the 52 weeks ended September 5, 2021, a 0.3 percentage point increase over the previous year, compared to 20.9 percent for private labels. According to the statistics, the rise in share for brand names over private labels was notably noticeable in pork, up 3.3 points; beef, up 2.9 points; and fresh bread and rolls, as well as bottled juice, all up 1.5 points.

Private labels, which were formerly regarded as inferior by customers, have now become a common go-to item for many individuals when they shop, earning billions of dollars in additional income for the firms who produce these items.

Yokuna’s Observation On Private Labels:

As the epidemic progressed, there was widespread belief that private label brands would continue to rise. According to NielsenIQ data, national brand sales growth exceeded private label growth last year for the first time in a decade.

According to Krishnakumar Davey, head of strategic analytics at IRI, private label businesses have been affected more than brand name counterparts by supply chain difficulties such as transportation.

He believes that in certain situations, brand name manufacturers may have prioritized manufacturing their own higher-margin items over private label alternatives.

Another reason for harming private labels is that many customers haven’t gone out as much or avoided costs like driving to work, purchasing a cup of coffee, or vacation since they have spare money, he added. Because of their higher-quality reputation and countrywide awareness, brand names are a more appealing alternative due to the money and the increasing trend toward premiumization.

“Even among low-income customers, people are buying more expensive items,” he added.

Nonetheless, Davey believes that private labels will regain at least part of its impetus in the near future.

Many customers are no longer receiving government assistance, which has disproportionately impacted lower and middle-income consumers. Inflation is also wreaking havoc on much of the US economy, as food and beverage manufacturers of everything from beef and pizza to snacks and sports drinks are passing on a large percentage of their cost increases to consumers.

Coca-Cola, Unilever, Nestlé, Mondelez International, and General Mills are just a handful of the businesses whose leaders have declared or hinted at price rises to cover growing expenditures.

“We’re already seeing in certain areas that customers are starting to cut back, right on the more costly side and on the poor substitute side,” Davey added. “The consumer does not have an unlimited budget.”

In many respects, the last year produced a perfect storm that made private label a less appealing choice and decreased the reasons consumers would have gone to it in the past. However, with less money available, higher pricing, and improvements in the supply chain, private labels may regain momentum.

There’s also the expanding e-commerce channel, through which more customers are purchasing their groceries. Kara Sheesley, then-vice president of retail engagement at NielsenIQ, stated in April that e-commerce gives retailers more control over their online platforms, which they can utilize to boost sales.

“Retailers own that area, so they have greater influence over what your attention is drawn to,” she explained. “It also offers a fantastic opportunity for retailers to assist the growth of their own brands.”


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