Economy Improves, Private Label Slows?

Giant Private Label Ketchup

According to this article from the June 6th edition of Brandweek “Private Brand Growth Slows” It is an interesting interpretation of data from a number of sources looking for a trend. I am not sure if this crystal ball is accurate but it is optimistic for publication that has traditionally focused on National Brands.

Private Label Growth Slows

Since the recession began, private label has become a major threat, biting into food earnings among companies like Kellogg and Kraft. Now, with signs of an economic recovery on the horizon, price increases abating and consumer confidence on the rise, sales of store branded products—though still growing—are tapering off, analysts say.

Data by The Nielsen Co., owner of Brandweek, for instance, shows that private label actually lost a 0.8 unit share point in the food, drug and mass channels during  the four weeks ended April 18, compared to the same period a year ago (Wal-Mart sales are included).

Moreover, in a research note published May 29, J.P. Morgan food analyst Terry Bivens wrote that private-label share gains, while up on a year-on-year basis in most categories, “remain relatively steady” rather than growing quickly as they had previously.

At least one food marketer is expressing some relief. In Heinz’s fourth-quarter earnings call last month, CEO Bill Johnson noted: “Private [label’s] growth, while still a major concern, does appear to be easing somewhat, albeit at higher sustained share levels.”

Indeed. While most of the nation’s largest food purveyors aren’t dropping their guard against private label anytime soon, certain socioeconomic and market factors are lessening private label’s menace—if only a bit. The Congressional Budget Office, for instance, now expects an official end to the recession by the second half of 2009—and that’s without the trillion-dollar stimulus.

Though consumer confidence and the economy go hand-in-hand, Matt Arnold, a food analyst at Edward Jones, argued that perception aside, not much has really changed.

Read the entire article.

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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.