The Future of Private Label in Grocery

from Grocery Insight June 2023

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The Private Label Manufacturers Association (PLMA) in February released its 2023 Private Label Report which led with the astounding data point that private brand sales totaled $228.6 billion in the US in 2022, jumping 11.3 percent throughout the previous year. Store brands grew at nearly twice the rate of national brands, which were up 6.1 percent in dollar sales, according to PLMA’s exclusive IRI Unify sales data.

“Last year’s record sales and double-digit growth reflect the strong consumer demand for store brands,” said PLMA President Peggy Davies. “Shoppers are filling their baskets with great-tasting, innovative and high-quality store brand foods, beverages, nonfoods, household goods and many other categories.”

The PLMA report also cited a major reason for the double-digit surge was recent inflation motivated more shoppers to come around to store brands because of the quality and value they provide. Private label manufacturers know that while concerns regarding spending might introduce new consumers to the value of store-owned brands, what will keep them coming back is continuing to reflect trends and actively developing and bringing novel innovations to market, based on the specific needs of their customers.

Mondiv, a division of Lassonde Specialties, is a leading manufacturer of long-shelf-life specialty foods catering to US, Canada, export, grocery and club industries. “Mondiv’s strength through the years has been the development of innovative private label products, some of which were introduced well ahead of the national brands,” said Rob Wagner, Vice President, US Sales for Lassonde Specialties. “This focus continues as we search to increase capacity and position ourselves for future growth.”

Retailers are increasingly looking to private label manufacturers for solutions to out-of-stock products, and Mondiv is ready to respond. “Our partnerships remain as strong as ever coming out of the pandemic due to creative methods to increase capacity; retailers looked to Mondiv to solve in stock is- sues as national brands experienced widespread and lengthy service problems,” Wagner said.

Catania Oils has similarly found itself in this role and embraced the opportunity to demonstrate its dexterity in the face of challenge. “As simple as it sounds, just keeping retailers and wholesalers in stock on all orders is some of the best support any manufacturer can provide,” said Mark Coleman, Catania Oils SVP of Global Sales. “Retailers have grown in the area of merchandising private brands throughout the store. Throughout the pandemic as national brands could not handle the volume increases as needed, the wholesaler and retailer utilized private brands to not only secure additional end cap display space, but also filling empty space on the shelf itself.”

Catania Oils has met the moment, sustaining its retail partnerships with honesty, integrity and character, along with reliable stock, he said. “Another driving force behind a true partnership is education. Catania Oils has become a dominant force not only in the retail sector, but also in the foodservice and bulk/ingredient classes of trade. If you had to ask what Catania Oils is best at, the answer is, without a doubt, educating the customer,” he said.

Retailers are embracing the full potential of private label given that most recent data shows the category doing better than national brands in weathering the current inflation. “The latest IRI data for total store products is showing private brands are rebounding much faster than national brands in terms of unit sales,” Coleman said. “The first quarter of the year, all sales were down roughly 3-5 percent but YTD ending May 14 shows private brands are trending higher versus national brands.”

Cross merchandising of private brands in different store departments is also a driving force to increase share, he said. “I see olive oil displays in produce departments, infused oils in bread sections and vegetable oils merchandised within baking displays. Mostly private brands.”

While traditional ideas of innovation are harder to come by in the world of commodities, said Coleman, Catania Oils is up to the task of fulfilling retailer calls for innovation in packaging. “There is a calling from the retailer for sustainable packaging especially in the area of plastic bottling,” he said. “Utilization of a percentage of recycled plastics will be a driving trend over the next couple of years for the entire food industry. Catania Oils will be a leader in this effort going forward.”

Even in the non-food categories, innovation underscored by sustainability is driving private label. “Global Tissue has become a leader in private label products by focusing our strengths: quality, service and innovation, while differentiating ourselves from others in the industry by developing customer-centric private label programs and offering diverse at home tissue paper products in each quality category,” said Daniel David, evp Global Tissue Group.

Global Tissue Group is focusing on sustainability, both in implementing more environmentally friendly operations and utilizing eco-friendly ingredients. “We are adding eco-friendly, tree-free paper products made from sustainably grown bamboo as a new product category to our assortment of diverse green products,” David said. “We offer a unique and innovative coreless bath tissue capability to further our continued goal to reduce emissions by adding for more sheets per roll, maximizing truckload quantities and eliminating core waste. We believe that this unique item can be added to any retailers’ private brand program focused on sustainability attributes, value and differentiation in the paper category.”

The differentiation of private label offerings holds high appeal to consumers looking for value. Davies PLMA told Grocery Insight last summer, "Two things I will predict: the gains private brands have recently made are a great base for continued consumer engagement, and with overall grocery sales rising, consumers have maintained their ability to spend. That means they’re adapting and shopping smarter for themselves and their families, looking for high-quality, innovation and value, a trend that always accrues to store brands’ favor.”

•National brand equivalent extra virgin olive oil