Private Label Foods & Beverages in the U.S., 8th Edition
NEW YORK, Oct. 29, 2014 /PRNewswire/ -- Retail sales of foods and beverages have been challenged by a frugal consumer who is struggling with the lingering effects of recession, a continuing sluggish economy, and higher food prices. These factors have affected overall spending on both national and private label brand groceries in the U.S.
Total U.S. retail sales of the overall private label food and beverage market were $102 billion in 2013, up about 2% over 2012. Unit sales were virtually flat, with average unit prices higher during the year. The total food and beverage market grew at 1.4% to reach $530 billion in 2013, with unit sales also flat. Food, with sales estimated at $80 billion compared to $22 million for beverages, accounts for nearly 80% of overall private label dollar and unit sales. Overall private label penetration of the total market was about 20% in dollars and units in 2013.
Private label growth has slowed from the last several years when consumers flocked to private label brands during the recession and its aftermath. Consumers sought out lower prices and greater value, and retailers responded with numerous introductions of their own brands. In many cases, retailers raised the quality of product and packaging to equal national brands, and leading retailers launched different private label brands to create portfolios offering consumers good, better, best and specialty product options. The most successful retailers have heavily marketed and promoted their private label brands as equal or superior alternatives to national brands. In some cases, even mass-market retail brands like Costco's Kirkland adn Wegmans private label have achieved (if not edged out) the status of a national brand in consumer's minds, thus providing the retailer with competitive advantage. Whole Foods' 365 brand and Trader Joe's private label gain additional prestige from being based in the natural foods channel. Trader Joe's and its sibling company Aldi are two of the most aggressive and successful private label marketers that have, much like Costco, extremely loyal customers. Private label products, accounting for more than 80% of products sold in their stores, help cement that loyalty.
Making healthier eating more affordable is a major trend in the U.S., and many consumers feel eating healthier is too expensive. Manufacturers and retailers have tried to address consumer concerns with more affordable healthy food options and several retailers have built private label brands around a position of affordable healthy eating. Retailers launched natural, organic private label brands years ago promoting value and product attributes. More recently several leading retailers have launched new private label brands that evolve natural and organic to more modern wellness positions that shift focus 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 in particular has been extremely successful with Simple Truth, investing heavily to build the brand which the company expects to reach sales of $1 billion in 2014.
Many consumers appreciate that private label products continue to evolve from low-priced knockoffs to quality brands that offer value. While forty-five percent of American adults surveyed by Packaged Facts say they prefer to buy national brand name groceries, higher percentages appreciate store brands for their quality and value. Sixty percent feel store brand groceries have the same level of quality as national brands, and often provide better value. Fifty-five percent choose food stores in part for the quality of their store brand groceries. Consumers most often buy private label products in commodity and staple grocery segments like milk, bottled water, cheese, eggs, sugar, bread, frozen vegetables, and butter, which have the highest private label penetration rates. No beverages, other than milk and bottled water have high penetration levels due to the presence of strong brands and heavy price promotions in most beverage categories. One beverage segment private label marketers have jumped on is single cup coffee, the standout performer for the private label market in 2013. Private label versions of the wildly popular K-cups proliferated after dominant market leader Keurig Green Mountain lost patent protection in September 2012. Numerous retailers across virtually all key retail channels launched and continue to launch their own brands, with some sourcing product from new manufacturers and others partnering with Keurig to produce products under license. Sales of private label single cup coffee surged in 2013 by over 400% in units and dollar sales, albeit off a small base.
Scope of Report
Private Label Foods & Beverages in the U.S., 8th Edition analyzes the U.S. market for foods and beverages that retailers market themselves under their own private label brands. The analysis includes private label products (often called store brands) sold in all retail outlets. The report outlines key issues and trends affecting the overall market and analyzes virtually all product categories including shelf-stable, refrigerated, and frozen items. The report also discusses major players and brands and analyzes their key activities and performance. Market size data are provided for 2012 and 2013, and projections for 2013–2018.
Product Definitions
For the purpose of this report Packaged Facts divides products into two broad markets: foods and beverages. Within the food market, we have established categories based on traditional supermarket departments within which there are several segments and product classes. The six formal food departments/categories broken out in this report are: Bakery Products; Center Store; Dairy Food; Frozen Food; Refrigerated Food; Meat, Poultry and Seafood. The beverage market is categorized by beverage type rather than store department. For the beverage market, the six categories are: Dairy Beverages; Juices; Carbonated Beverages; Water; Coffee & Tea; and Sports & Energy Drinks. There is also a grouping called Other which is really a group of miscellaneous products that don't readily fit into the main categories.
Methodology
The information in this report was obtained from both primary and secondary research. Primary research included consultation with industry sources and on-site examination of retail stores. Secondary research entailed gathering data from relevant trade, business and government sources, as well as company promotional literature and annual reports.
Our estimates of market size and company performance are based on various sources including reported revenues of product manufacturers and retailers; IRI, which tracks data in mass retail outlets; publications and other market research sources.
Our analysis of consumer trends relies on data from several sources including national online consumer usage surveys conducted in June 2013 and January/February 2014 by Packaged Facts, and Simmons National Consumer Surveys for Fall 2004 through Fall 2013, from Experian Marketing Services. The Packaged Facts national online consumer surveys conducted in June 2013 and January/February 2014 reflects a panel of 2,000 U.S. adults (age 18+) that is balanced to the national population on the primary demographic measures of gender, age bracket, race/ethnicity, geographic region, marital status, presence or absence of children in the household, and household income. On an ongoing basis, Experian Marketing Services conducts booklet-based surveys of a large and random sample of consumers (approximately 25,000 for each 12-month survey compilation) who in aggregate represent a statistically accurate cross-section of the U.S. population.
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