Pondering Private Label

As food and beverage manufacturers and retailers search for growth areas during uncertain economic times, they are taking a closer look at private label products. For some, private label raises the hideous specter of those unappetizing black-and-white-labeled bargain brands of the early ‘80s. Depending on how the economy sorts itself out, these plain Jane products may yet make a comeback, but the current buzz involves more trendy, upscale products, such as Safeway’s Eating Right and O Organics brands, and Target’s Archer Farms and Choxie selections.

According to the Private Label Manufacturers Association (PLMA),  “Store brands now account for one of every five items sold in U.S. supermarkets, drug chains and mass merchandisers. They represent more than $65 billion of current business at retail and are achieving new levels of growth every year.”

U.S. private label consumer packaged goods show dollar sales up by 10.1%, or $80.3 billion in sales for the year ended September 2008, says a new report by Nielsen; but unit sales growth was only 0.4%. Nielsen suggests private label growth may be “driven more by higher unit pricing than shoppers switching away from traditional brands.” But these numbers might also be due in part to more spending on upscale, higher margin products.

No one likes to give up on all their indulgences and everyone loves a bargain, especially now. Combining a lower price tag with higher quality sounds like a winning combination that many stores are adding to the mix.

   –Lynn A. Kuntz