Private brands have seen unprecedented growth in recent years, and a new Mintel Private Label Foods: What’s Driving Purchase? documents that positive perceptions have taken hold among Millennials and other consumers.
The report presents an analysis of the following factors that have the greatest potential to impact on private brand performance:
- The most influential factors when shoppers buy private label food products
- Areas of improvement that can be made to private label food products
- Frequency of private label food purchases and top factors consumers consider when making a purchase
- The most important packaging factors that do and could influence consumers to purchase more private label food products
- Consumer attitudes and behaviors toward private label food products, including purchase preferences, perceptions of product quality, ingredients, and overall trust
One interesting finding: 42% of Millennials (ages 18-36) agree that private brand products are more innovative than name-brand products. In fact 94% of all U.S. shoppers, Millennials are more likely to buy private brand foods in general.
Furthermore, 37% of U.S. shoppers as a whole say they prefer to buy private brands over brand name products.
Unlike the traditional assumption that consumers “settle” for buying private brands for cost reasons but view them as inferior, 63% of store brand buyers — including 70% of Millennials — agree that these products are higher quality than they used to be. Many shoppers also agree that store brands compete favorably against their name brand counterparts in flavor, packaging and variety of product offerings.
“We’re seeing a shift in consumer thinking at the grocery store,” sums up Mintel food analyst Amanda Topper. “Name brand power no longer holds the most weight. Quality, price and innovation are carving out a larger portion of consumer mindshare.”
Topper adds “Improvements made to the quality and varieties of store brand foods have not gone unnoticed by consumers. However, there is opportunity to increase category participation among older consumers, and to introduce more premium product lines featuring organic, non-GMO, and/or vegetarian products which consumers feel are lacking in the current market.”
In addition to improved quality and product innovation, nearly 70% of all private brand customers agree that they trust certain store brands more than others, and 64% said that once they’ve tried one store brand product, they are likely to try others. Brand trust as a store brand purchase driver is even stronger among Millennials.
Mintel identified unique groups within the 94% of shoppers who are private brand buyers, including the “private label lovers” — consumers who seek out products that are lower in price than name brand products, but equivalent in terms of ingredients and quality. Cost savings is a priority for these shoppers, “but not at the expense of sacrificing quality,” said Topper.
Mintel reports that enhancing the quality, variety and innovation levels of private brand foods is key for engaging with private label lovers.
Functional packaging attributes are important to store brand shoppers, including easy to open (35%), resealable (35%) and easy to store (29%). Private-label lovers would also like to see more product for the same price (55%) and products made in the USA (45%).
“Along with a move toward healthier eating and better-for-you foods, many private label food products are focusing on clean labels, with easy-to-read ingredients and product claims,” said Topper. “Store brand shoppers are…seeking out products that list ingredients they recognize, and feature prominent claims such as ‘organic,’ ‘low/no/reduced’ or ‘made with natural ingredients.'”
30% of adults who buy private brand foods say that the “no artificial ingredients” claim is a factor in purchase decisions.
Furthermore, the number of private label food products launched between 2009 and 2014 with a ‘low/no/reduced allergen’ claim has increased by 11.7%, and the gluten-free claim has increased by 10.5%.