Brand Blurring

NPD: Nearly every U.S. household consumes private-label, store-brand foods

CHICAGO -- Tough economic times have certainly been a boon for private-label foods and beverages, but according to market research firm The NPD Group, private-label usage has been growing over the last decade. According to a new NPD report, Private-Label Perceptions, Usage Patterns & Intentions, last year, 24% of all food and beverages served in American homes were store brands, up from 18% in 1999. Today, 97% of all households consume private-label foods on a regular basis.

Also, data from NPD's Economy Tracker shows consumer confidence continues to decline, albeit [image-nocss] slightly, while intent to spend at retail remains steady, indicating that consumers may have reached their cost-cutting limits.

"There is no question that private-label foods have become an integral part of American life," said Harry Balzer, chief industry analyst at NPD and author of Eating Patterns in America.

"Furthermore, we do not hide private-label foods as an ingredient or as an additive to another dish. Today, over half of all store-brand food eatings are the end dish."

Price and value are the chief reasons why consumers purchase private label or store brands, according to an NPD survey of grocery shoppers, but most respondents also believe that the quality of store brands is often equal to, or in some cases better than, name brands. Users of private-label foods and beverages span all income levels and demographic profiles.

"The bottom line is that private-label foods can offer a great value to budget-minded consumers. If a consumer is working with less disposable income, stretching the food dollar and finding value will naturally gain importance," said Dori Hickey, director of product management at NPD and author of the Private Label Perceptions, Usage Patterns & Intentions report. "Name-brand and private-label marketers will each need to focus on differentiating their products while finding ways to effectively address consumer needs, as the lines between the two are blurring in the minds of consumers."

Click the Download Now button below for the chart: Usage of Private-Label Food by Household Income.

Meanwhile, NPD's Economy Tracker shows consumer confidence continues to decline slightly, while intent to spend at retail remains steady, indicating that consumers may have reached their cost-cutting limits.

According to the tracking study, consumers' perception of the economy slipped a fraction of a point to 36.5 in March from 36.7 in February. "With the indicator off only a fraction of a point, consumers' perception of our economic situation is virtually unchanged from last month," said Marshal Cohen, chief industry analyst for NPD. The Economy Tracker measures consumer concerns regarding the economy on a scale between 0 and 100, with 0 being "very concerned" and 100 being "very confident."

With concern down only slightly, consumers did not dial back spending intentions. The Economy Tracker's Retail Response Indicator rose 0.5 points in March. "This slight rise could be an indication that we are seeing the beginning of stabilization," said Cohen. The Retail Response indicator measures consumer spending intentions on a 0 to 100 scale, with 0 representing "reduce or spend less" and 100 representing "spend more."

"Despite continued news about economic challenges and the tough jobless numbers March brought, I am encouraged that consumers aren't saying they'll cut spending further. I believe that consumers have reached the point where they've cut as much as they can and just need to replenish. Consumers are telling us they are thinking about spending again, but spending with caution," Cohen observed.

The NPD Group, Chicago, is a leading provider of consumer and retail information for a wide range of industries for manufacturers, retailers and service companies on the global, national and local market levels. NPD helps clients identify new business opportunities and guide product development, marketing, sales, merchandising and other functions. Information is available for the automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toy and wireless markets.