Private label continues US expansion

27 July 2009

CHICAGO: Nearly 1,800 private label food products have been launched in the US grocery sector this year, with manufacturers focusing on an increasingly diverse range of touchpoints beyond price, from premium ingredients to health-related benefits.

According to figures from Mintel, the research firm, private label's share of new product development in the food category in America has increased from 13% in 2005 to 27% over 2009 to date.

More specifically, Mintel argued that "as the recession causes more consumers to cut down on food spending, both at home and by dining out less, private label has benefited."

In support of this statement, it estimated that the market for store brands in the US expanded by 9.3% in 2008, compared to a total of just 4.5% for branded food sales.

The own brand segment will continue to expand this year, growing by a further 8.1% over the period to the end of 2009, as retailers continue to tap into changing consumer behaviour.

One example of this is Supervalu's Culinary Circle, which "delivers a casual restaurant meal experience at home, at a fraction of the time and cost of dining out."

Safeway's Rice Noodle Soup Bowl was also described by Mintel as offering a "portable, high-quality lunch" which enables consumers to "save money by lunching at the office".

In a similar vein, Lucerne Foods is offering a range of new healthy goods, from Whole Wheat Mini Ravioli for children to "plant sterol-fortified" Apple Cinnamon Granola and probiotic ice cream.

Krista Faron, a senior analyst at Mintel, argued that "not only have private label introductions increased, but product innovation is reaching unprecedented highs."

"Retailers no longer only launch 'me-too' products to compete against major national brands. Instead, private label lines are hotbeds of creativity, driving markets and establishing themselves as trend leaders."

"Private label manufacturers realise ‘value' means more than ‘low price' to consumers, so they're wisely creating new products that deliver on some of today's most exciting food trends," she added.

Data sourced from Mintel; additional content by WARC staff