Have CPG Store Brands Plateaued?
Three years ago at the annual Private Label Manufacturers Association show in Chicago, McKinsey & Co. released data projecting the possibility that 24 percent of supermarkets sales could be store brands by 2016. This week at that same show, Nielsen reported the industry remains at the 2010 level of 19 percent.
Still the industry has several reasons to be hopeful the goal can be met.
"Private brand focus is unprecedented, and best-in-class retailers are investing in brand management activities like their branded peers," said Todd Hale, senior vice president at Nielsen. "With slowing population growth and pressures from current and unforeseen competition, winning retailers will be those who step up their innovation efforts to connect with and create demand for their offerings across diverse and evolving population segments."
Mr. Hale said that store brands are doing better than ever. "Store brand sales reached $111.6 billion for the 52-week period ending 8/31/2013, a level that is 18.5 percent greater than for calendar 2009. National brand sales during that period were $529.4 billion, up eight percent since 2009," he reported.
There was also a positive indication of the sector’s potential in the expo hall, where there were 2,535 booths, 10 percent more than last year. In addition, pre-registration for the show also reached a record high, with 9,500 people expected to attend, an increase of about 12 percent.
Among the special features of this year’s show was a Pet Pavilion to call attention to the rising importance of store brand pet foods and pet care. There were also dozens of exhibitors offering gluten-free and certified organic products, more than double the number from last year.
What does future hold for store brands in the U.S? Why are store brands in the U.S. not as strong as they are in Europe? What will it take for them to become stronger?