Lines blurring between private label and national brands?
Tough economic times have certainly been a boon for private label foods and beverages, but according to The NPD Group, a leading market research company, private label usage has been growing over the last decade and among all financial demographics.
According to a new NPD report from America, Private Label Perceptions, Usage Patterns, & Intentions, last year, 24 per cent of all food and beverages served in homes were store brands, up from 18 per cent in 1999. In Australia, it is a similar story, with private label now commanding a market share of around 23 per cent and continuing to outpace the growth of national brands (it had done so in 22 of the past 23 quarters to August ’08, according to Nielsen data).
“There is no question that private label foods have become an integral part of American life,” suggests Harry Balzer, Chief Industry Analyst at NPD and author of Eating Patterns in America. “Furthermore, we do not hide private label foods as an ingredient or as an additive to another dish. Today over half of all store brand food eatings are the end dish.”
In all, 97 per cent of households have purchased private label and 54% now purchase private label goods as an end dish. Private label products are also used as ingredients (26%), additives (18%) or as cooking aids (2%).
Price and value are the chief reasons why consumers purchase private label or store brands, according to the NPD survey of grocery shoppers, but most respondents also feel that the quality of store brands is often equal to, or in some cases better than, name brands.
Users of private label foods and beverages span all income levels and demographic profiles, with the survey discovering that the percentage of food servings from private label was 30% amongst households with income of less than US$30,000, 37% amongst households with income of $30,000-$69,000 and 33% for households with more than $70,000 in annual income.
“The bottom line is that private label foods can offer great value to budget-minded consumers. If a consumer is working with less disposable income, stretching the food dollar and finding value will naturally gain importance,” Dori Hickey, Director of Product Management at NPD, said.
A proliferation of private label goods around the world has been evident over the last decade and the look of products has come a long way from the generic home brand products often seen in the 80s and 90s. And, with the attempts to turn private label products into brands in their own right, the contrast with national brands is on the wane, according to Ms Hickey.
“Name brand and private label marketers will each need to focus on differentiating their products while finding ways to effectively address consumer needs, as the lines between the two are blurring in the minds of consumers,” she explained.
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