Private Label Grocery Brands Gain Momentum Amid Changing Consumer Perceptions and Expanding Demographics
This surge is fueled by shifting attitudes among younger and higher-income consumers, who increasingly see private label brands as high-quality, value-driven alternatives.
Higher food prices and inflationary pressures over the last two years initially drew consumers to private label options due to their lower cost. However, recent studies reveal that taste, quality, and variety are becoming key factors driving repeat purchases of private label items. According to a new report fr om CoBank’s Knowledge Exchange, this changing perception is reshaping the grocery landscape, with retailers now prioritizing the expansion of private label lines in high-growth categories such as bakery, seafood, and beverages.
“Quality perceptions of private label foods have improved considerably since the last surge in usage, which was around the 2008 recession,” stated Billy Roberts, food and beverage economist at CoBank. “While these products remain more affordable than national brands, consumers no longer feel they are sacrificing quality. This shift suggests private labels have stronger long-term growth potential, with retailers eager to capture higher margins.”
The report notes that U.S. dollar sales of private label products have surged by more than a third since 2019, and are projected to exceed $250 billion in 2024, representing 20% of grocery basket share, according to Nielsen data. Retailers such as Aldi and Trader Joe’s lead the market, with private label products accounting for 80% and 69% of their total sales, respectively. Additionally, more than a quarter of grocery sales at major chains like Costco, Walmart, and H-E-B come from private label goods.
Research from the Private Label Manufacturers Association shows that most consumers now view private label products as equivalent in quality to national brands. This sentiment is shared across various income brackets and generational groups, with only 2% of surveyed consumers perceiving private label products as inferior.
Traditionally, private label brands have dominated grocery categories like produce, dairy, and animal proteins, wh ere consumer preference for branding and innovation is minimal. However, new private label offerings in center-store categories suggest increasing competition for name brands.
Roberts notes that national brands are already strategizing to defend their market share. Companies like ConAgra and Hershey have announced plans to ramp up innovation in response to growing competition from private label offerings, with a focus on regaining share among key demographics, including Gen Z and high-income shoppers.
“Innovation has always been the way for national brands to reclaim lost market share, and consumer packaged goods companies are now doubling down on that approach,” said Roberts. “With private label options becoming more entrenched in the consumer’s mind as quality alternatives, national brands will need to innovate to stay competitive.”
As private label products continue to gain ground, grocery retailers are expected to further expand these offerings, recognizing the opportunity to enhance profitability while delivering value and quality to a growing base of discerning consumers.
