ROCKVILLE, Md. -- Private label accounted for almost a fifth of the $530 billion total food and beverage market dollar sales in 2013. Packaged Facts estimates retail dollar sales of private-label food and beverages were $102 billion in 2013, up about 2%. Food products accounted for approximately 80% of the private-label segment's sales.
Market research firm Packaged Facts published the findings in Private Label Foods & Beverages in the U.S., 8th Edition.
"Store brands have moved far beyond cheap generic knockoffs to become trusted, quality lines that can compete effectively with national brands. They usually have higher profit margins for retailers than name brands, help differentiate a retailer from competition and help build consumer loyalty," said Packaged Facts research director David Sprinkle
Looking ahead, Packaged Facts projects retail dollar sales of private-label food and beverages will grow by a compound annual growth rate (CAGR) of 4% to reach $122 billion in 2018, due in part to the segment's attractiveness to consumers seeking to eat healthy on a budget. Sales of private-label food are expected to reach $98 billion.
Many consumers believe eating healthier is too expensive. Organic and natural products are obviously a part of the healthy eating trend, and roughly a quarter of Americans eat organic foods on a regular basis—though the level has remained the same for years due to high prices. Manufacturers and retailers have tried to address consumer concerns about wellness and nutrition with more affordable healthy food options, and several retailers have built private label-brands around a position of affordable healthy eating.
Natural and organic private-label brands have been around for a number of years led by Safeway's O Organics, Stop & Shop and Giant's Nature's Promise, Food Lion and Hannaford's Nature's Place and Supervalu's Wild Harvest. These brands continue to expand and update with a focus on healthy product attributes. Other retailers are just catching up with the natural and organic trend, launching private label brands for first time.
Likewise, several leading private-label retailers have evolved natural and organic positions to more modern wellness brands that shift focus from product attributes to lifestyle enhancement. Kroger's Simple Truth, Target's Simply Balanced, and Aldi's Simply Nature all attempt to provide consumers with easy solutions for taking care of themselves and their families. The brands cross many food and beverage categories with affordable, nutritious products that are natural or organic, and free of artificial ingredients. Kroger has invested heavily to build Simple Truth and the company stated in the first quarter of 2014 it expected the brand to reach $1 billion in sales this year.
Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, consumer packaged goods and pet products and services.
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