Top 5 Private Brand Retailers: 2016-2020?

Research firm Technavio has released an interesting if puzzling report on private brand which purports to name the top five leading vendors in the private-label food and beverage market in the US. Oddly the term “vendors” is perplexing at best and confusing at worst – the list includes the expected set of larger retailers from the grocery, big box and club segments.

According to the press release:

In the US food and beverage market, private brands are no longer seen as supplier low-cost and low-quality products, but as credible and viable alternatives to national brands. People look for value for money, irrespective of whether the product is being offered by a national brand or a private label. Private labels are traditionally more successful in segments where product differentiation is low, such as meat products and fresh produce items.

Competitive vendor landscape
The private-label food and beverages market in the US is fragmented, with the presence of many small and large vendors that compete based on price, quality, innovation, service, reputation, and promotion. Increased competition in the market is expected to result in a reduction of product prices in the market, which will negatively affect profit margins of the vendors and the growth of the market.

Intense competition among vendors and rapid changes in technology are significant risk factors. The competition has led to an increase in the number of M&A, where smaller entities are being acquired by or being merged with major players,” says Poonam Saini, a lead food research analyst from Technavio.

To survive and succeed in this highly competitive environment, it is imperative for vendors to distinguish their products and service offerings through a clear and unique value proposition.

Top five private-label food and beverage market vendors in the US

In addition to national brands, Costco sells through its private brand named Kirkland Signature. Kirkland Signature products are premium products offered to members at prices that are generally lower than national brand prices. These products generally carry higher margins than the national brands and represent a growing portion of the overall sales.

In 2015, Costco introduced new Kirkland Signature items such as organic 2% milk, organic liquid eggs, organic coconut water, artisan breads, and light beer. The sales of all organic products reached USD 4 billion during the FY2015.

The sales of private labels generate revenue of nearly USD 20 billion annually for the company. Kroger sells private labels through its brands Kroger, Private Selection, Simple Truth, Simple Truth Organic, HemisFares, Heritage Farm, Comforts for Baby, Big K, and Pet Pride. The company manufactures 40% of its products, leading to stronger margins and enabling faster product launches in the market.

Trader Joe’s
It is one of the leading private label retailers in the US with vast product offerings. The company is opening new stores across the US to make its presence stronger in the country. It launched a variety of new products, which include Turkish Fig Bites, Super Seed & Ancient Grain Blend, Cold Pressed Watermelon Juice, and new Dark Chocolate Covered Honey Grahams, providing consumers with new and innovative food and beverage products.

Walmart is one of the key leading players in the private label food and beverage market and offers low-cost alternatives to national brands. Some of its major brands in the market are Sam’s Choice, Great Value, Dr. Thunder, and Price First. Close to 40% of the products sold in Walmart are private-label brands that are produced by contract manufacturers for the company.

Wegmans is a major vendor in the US private-label sector. While Wegmans stores feature national and other brands, the company focuses on promoting its own private-label brands. It pursues an aggressive private-label strategy that includes frequent product updates and innovations. The company’s private-label products feature distinctive and creative packaging. On average, Wegmans stores are larger than most supermarkets (about 75,000 to 140,000 square feet).

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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.