Private Brand Usage Increases But Customers Have no Love For The Value Brands

The number of consumers using Private Brand food and beverage products continues to rise, but U.S. consumers are losing their enthusiasm for the traditional value-oriented options, according to a recently released report by The NPD Group. NPD’s food and beverage market research report finds that Private Brand’s share of household servings was 18% in 2000 and reached 27% in 2011. In contrast to steadily increasing usage, the satisfaction with Private Brand foods meeting consumers’ needs has dipped from 32% in 2009 to 24% in 2012.

The increased usage of private label foods and beverages in recent years may have been more a matter of necessity as a result of the economy and higher grocery prices than deliberate intention. According to the report entitled The Evolution of Private Label – Does Brand Name Really Matter?, in 2009, 34% of adults said they intended to purchase more private label foods versus year ago, but that percentage has dropped to less than a quarter of adults in 2012. This does not mean private label products have failed to make progress over the last decade since the report finds that two-thirds of adults say store brands’ quality is much better today than it was five years ago.

The report examines why Private Brand servings may be up, but intent to purchase more private label is down. One of the explanations, according to the report findings, is that consumers’ store brand name awareness and identification remain quite low. For example, 25% of shoppers are unable to identify the top selling store brand as a store brand.

The report also found that while more private label end dishes are being served, consumers’ loyalty to private label is still strongest in categories that are mostly used as ingredients. Flour and butter top the list of private label-loyal categories. On the flip side, categories where there is a stronger loyalty to name brands are very likely to display the brand to the user. Examples of these categories are frozen dinners / entrees, yogurt, and carbonated soft drinks.

“The question is if food inflation declines and at the same time the economy improves, will consumers return to the name brands they know and trust,” says Darren Seifer, NPD food and beverage industry analyst and author of the report. “This could become a reality if retailers don’t respond to declining satisfaction and if name brand manufacturers continue to aggressively build loyalty. On the flip side, name brands need to be aware that private label usage continues to increase and the quality perception is improving.”

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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, and consultant who has worked with Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro, Lowe’s, Food Lion, Hannaford and more building private brands. 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 latest book Vanguard: Vintage Originals a look at innovation and disruption in private brand going back to the mid-1800’s. Durham lives in Charlotte, NC with his wife Laraine and two daughters Olivia and Sarah.