Private-label food products have been on the rise in recent years, with more and more consumers choosing store-brand options over national food brands. While for some, making sure to get name-brand goods is like a point of pride, various factors have made private-label foods a more attractive choice for customers of all different tastes and economic positions.
What is Private-Label Food?
For those unaware, private-label food manufacturers like Euro Food Brands and ETA Lumis Foods produce food goods for retail outlets to sell, generally as an alternative to name or national-brand food products. These foods might also be referred to as “generic” or “store-brand”.
We’ve put together this blog to track the evolving perception of private-label food products over time, from the humble beginnings of store-brand goods to their status as a viable option in today’s economy.
The Origins of Private Labels
While retailers often used to exist as distributors for national brands, they began to produce their own products, working with private-label food suppliers to increase profit margins and offer some exclusive products. In the early days, private-label food products generally existed with little to no branding, offered at significantly lower prices when compared to national brands.
The earliest adopters of private-label food products were generally the more established department stores and grocery chains in Europe and the US, with British retailer Marks & Spencer being a pioneer of this sector in the late 19th century.
Early Perceptions of Private Label Food Products
Because of their affordability and lack of recognizable brand identity, private-label products were seen by many in a negative light. While they still are produced and sold at cheaper rates, the negative light in which the quality was perceived massively influenced their overarching reputations. While of course, some customers would purchase the cheaper, generic products for economic reasons, overcoming consumer skepticism was the largest obstacle for supermarket brands.
The Rise of Private Labels
Over the years, private-label food products have become a go-to for many shoppers, with supermarket loyalty becoming about more than just location. In 2024, choosing to purchase Target store brand food isn’t something that many consumers would turn their noses up at, being a totally viable choice when grocery shopping.
Factors Contributing to the Growth of Private Labels:
There are multiple factors that have contributed to private-label food products becoming more and more popular among consumers.
The State of the Economy: The overarching position of the economy and the general population has a lot of influence on how well private-label food products tend to do. Currently, the world is in the midst of a cost-of-living crisis, which has led to many making more fiscally responsible decisions in the supermarket.
Retailer Positioning: Retailers and supermarkets have started to be more proactive in the ways that they promote their private-label goods. This can encompass everything from more literal advertisements for store-brand food products to simply positioning them more prominently on a shop floor.
Consumer Preferences: In many cases, supermarkets take steps to ensure that their private-label food products are made in healthier, ethically sourced, and sustainable ways than their name-brand counterparts, which aligns with increasingly prevalent consumer preferences. If people can make more conscious choices for cheaper, many of them will.
Enhanced Branding: Supermarkets have been putting more time, money, and effort into effectively branding their private-label foods. For example, if you look at the Whole Foods Store Brand, 365, the branding has a clean, simple, but premium feel to it – stepping out from the perception-altering bare-bones style that private labels were known for in the past.
Improvements in Quality: Above all else, private-label food products have just become a lot better than they used to be. While the drop might’ve been more notable in previous years, many consumers can’t even detect a difference in quality in today’s market, with some even preferring supermarket products to name-brand goods.
Over the years, the perception of private-label food products as “generic” and “value” items has shifted to a sense of “affordable quality”. Retailers have given consumers plenty of reasons to trust their own-brand goods, especially in a period when people need to be particularly conscious of their finances.
Innovation and Differentiation Within Private Label Food Products
As we’ve touched on, one of the most significant reasons for private-label food products becoming more popular is the innovation and differentiation that supermarkets and suppliers have been applying in this field. This development encompasses everything from building unique new products to expanding on existing ranges, along with adopting innovative packaging and marketing strategies.
Examples of Successful Private Label Innovations and Partnerships with Suppliers:
There are plenty of clear examples of retailers working with private-label food suppliers to develop successful products and campaigns.
Trader Joe's: This grocery chain is renowned for its wide range of private-label food products, often developing exclusive, popular items directly with suppliers. One such example is their “Two-Buck Chuck”, a super affordable wine that became something of a cultural sensation.
Kirkland Signature (Costco Brand): Even though Costo is stuffed to the gills with massive incarnations of popular national brands, they’re also known for their legendary Kirkland Signature brand that encompasses food, drinks, and household products. Recently, they’ve received praise for their organic range, offering bulk-sized quantities of organic produce at affordable prices.
Aldi’s Various In-House Brands: Aldi (and primary competitor Lidl) is known for its wide range of private label brands. One of the appeals of Aldi is the differentiation offered between the in-house brands, with options including Simply Nature, Specially Selected, and Fit & Active, encompassing a range of consumer preferences under one primary brand umbrella.
Each of these retailers has tapped into the desire for affordable quality that consumers share across the board in today’s economy, allowing them to rival the national brands that they and other spaces stock. In cases like Trader Joe’s Two Buck Chuck, it’s clear that with the right alchemy of quality, pricing, and widespread appeal, along with other clever marketing moves like supermarket loyalty cards, a private-label food product can have a significant cultural impact.
Tapping into Niche Markets and Addressing Evolving Consumer Preferences:
Something else that has positively impacted private-label food products is the ability that retailers have demonstrated in terms of addressing evolving consumer preferences.
For example, retailers are focusing on markets such as:
- Organic
- Vegan
- Gluten-Free
- Ethically Produced
- Eco-Conscious
This has allowed retailers to access a sect of consumers that some national brands might not have reached yet, offering niche alternatives to cultural favorite products. Looking back at success stories like those described above, along with considering the innovative approaches to satisfying niche markets, it’s clear that private-label food products are earning their stake in the wider food market landscape.
Conclusion
Looking back at the history of private-label food products, it’s clear just how far the sector has come over the years. While in the past, it might have felt like a space occupied by generic knock-offs and substandard goods, the field is now populated with premium goods that rightfully challenge the national brands we know so well.
Our predictions for private-label food products include:
- Continued growth in terms of market share
- Further penetration of different market avenues
- Increasingly premium and specialty products to satisfy high-grade preferences
- Global expansion beyond the shop floor into eCommerce platforms.
With the sector only going from strength the strength, it’s set to be an exciting few years for the retail sector, with the face of groceries changing forever.
If you’re interested in learning more about the private-label food sector, along with other private and white-label product avenues, why not attend this year’s White Label World Expo, taking place in New York City on May 30th & 31st? This event is set to be attended by thousands of professionals in the retail and eTail sectors, encompassing everything from food products to household electronics. For more relevant articles and updates, check out our blog today.