Battle of the Brands: Private Labels Filling Grocery Carts…For Now

As consumer purchasing power has been squeezed globally, some consumers have become more brand agnostic, swinging the pendulum in favour of private label consumer packaged goods.

Key Highlights
• Given the generally higher margins of private labels, this trend benefits all grocers with solid private label offerings.
• The deepening penetration of private labels confirms they have become brands themselves, having benefitted over the years from grocers’ multi-pronged investment approach.
• We expect the long term growth trend of private labels to persist, albeit at a reduced rate, and branded consumer packaged goods to continue to dominate the global consumer packaged goods industry.

“While private labels have certainly made inroads into volumes of branded consumer packaged goods in some product categories and/or regions, branded products remain an integral part of the merchandising mix to drive consumer traffic. This, coupled with brand reputation, ongoing research and development, product tiering, and advertising and promotions, should keep the manufacturers of branded consumer packaged goods in good stead,” said Aarti Magan, Vice President, Diversified Industries at DBRS Morningstar.