Own-label still strong in US

06 July 2011

NEW YORK: Sales of own-label products continued to increase in the US last year, further challenging the position of brands in many categories.

The Private Label Manufacturers Association, an industry group, drew on data provided by The Nielsen Company covering the 12 months to 25 December, 2010.

It estimated the value and market share recorded by retailer brand offerings in the US both achieved "all-time highs" in this period.

Sales of own-label lines climbed 2% on an annual basis in supermarkets and 5% in drug stores.

Over the last decade, supermarket sales of own label goods have grown 40% and those in drug stores 96%, the PLMA revealed.

In financial terms, own-label ranges now take 19.1% of supermarket turnover, and contribute 23.5% of volume purchases. For drug stores the equivalent figures are 14.7% and 16.2%.

Across supermarkets, drugstores and mass merchandisers, own-label goods accounted for 21.8% volume share in 2010. In terms of value share, own-label goods accounted for 17.4%across these three categories -  a year on year rise of half a percentage point - to total $88.5bn in sales.

"In supermarkets, store brands sales increased by $1.2bn and accounted for 100% of the growth in the channel, even offsetting a sales drop of $149m by national brands," the study said.

"The picture was much the same in drug stores, where store brands dollar sales increased by $300m, comprising 60% of all incremental revenue in the channel."

The PLMA argued the own label figures would have been even greater if channels such as warehouse clubs, limited assortment stores, dollar stores and convenience stores had been included. The PLMA suggested these channels could account for a further $15bn - $20bn of own-label sales.

Elsewhere, the analysis stated that national brands had implemented "extreme efforts" to regain their former role as the financial crisis started to ease.

"In particular, elevated promotional spending and short-term price cuts by national brands may have hedged the erosion of unit sales at the cost of any and all growth when it came to dollar sales," it said.

A poll of consumers conducted for the trade body by GFK/Roper, the survey firm, also found a third of the panel had increased store brand purchase rates.

Another half agreed they were now more familiar with these items, compared to last year, and 80% stated retailer-manufactured products could be described as similar or better quality than the national alternatives.

Data sourced from PLMA; additional content by Warc staff