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Private Label Food Trends - US - February 2016

Published By :

Mintel

Published Date : Feb 2016

Category :

Non-Alcoholic Drinks

No. of Pages : N/A

Store brand food and beverages represent an opportunity for retailers to distinguish themselves from competitors, yet sales have grown slowly since 2010 and are forecast to continue at this pace.

Table of Content               

Overview

What you need to know
Definition

Executive Summary

The issues
Slow growth projected
Figure 1: MULO sales and fan chart forecast of private label food and beverages, at current prices, 2010-20
Store brand share of sales remains flat
Figure 2: Total and private label MULO food/beverage share of sales, at current prices, 2010-15
Brand transparency is an issue for a majority of buyers
Figure 3: Attitudes toward store brand products – Transparency, November 2015
The opportunities
Targeting key buyers: Millennials, family households, Hispanics
Figure 4: Percentage of grocery spend on store brands, by key buyer groups, November 2015
Millennials likely to gravitate toward brand stories that provide transparency
Figure 5: Attitudes toward store brand products – Transparency, by Millennials versus non-Millennials, November 2015
BFY drives purchases
Figure 6: Factors that increase the likelihood of store brand purchase (any ranking) – Healthiness, November 2015
What it means

The Market – What You Need To Know

Sales growth slow, driven mostly by price inflation
Private label food accounts for more than 78% share
Private label and total MULO grow at similar pace
Improved quality, key demographics help drive sales

Market Size and Forecast

Slow growth projected, price inflation largely driving growth
Figure 7: MULO sales and fan chart forecast of private label food and beverages, at current prices, 2010-20
Figure 8: MULO sales and forecast of private label food and beverages, at current prices, 2010-20

Market Breakdown

Private label food sales share far outweighs beverage sales share
Figure 9: MULO sales of private label food and beverages, by segment, 2015
Private label food sales expected to gain more quickly than beverages
Figure 10: MULO sales of private label food and beverages, by segment, 2010-20

Market Perspective

Private label sales growth on par with total grocery; share change is flat
Figure 11: Total and private label MULO food/beverage sales and private label share of total, at current prices, 2010-15
More product transparency could help store brands compete with national brands
Figure 12: Attitudes toward store brand products – Product transparency, November 2015

Market Factors

Private label quality and selection has improved
Figure 13: Attitudes toward store brand food products – Perceptions of quality, November 2015
Millennials, Hispanics, and households high store brand buyers
Millennials – the most populous generation – very likely to buy
Figure 14: US population by generation, 2010-20
Hispanics likely to buy store brands, projected to grow significantly into 2020
Figure 15: US population by race and Hispanic origin, 2010-20
Presence of children factors significantly; percentage of households with kids down
Figure 16: Households, by presence of own children, 2003-13

Key Players – What You Need to Know

Refocusing on value
Mass, club, and supermarket chains adopt different strategies
Private label sales down in many key categories
Amazon to test own brands; Whole Foods ventures into value

What’s Working

Revisiting the basic value proposition
Figure 17: Walmart YouTube channel video, 2016
Target’s tiered program appeals to budget- and quality-conscious buyers
Costco’s Kirkland Signature helps drive sales and club membership
Aldi pursues unique shopper engagement format with store brands
Figure 18: Aldi YouTube channel video, 2015
Simple labeling can increase appeal

What’s Struggling?

Private label declining in key categories

What’s Next?

Amazon expected to join the private label food market
Whole Foods to open six of its 365 discount concept stores in 2016
Figure 19: Whole Foods 365 Everyday Value YouTube channel video, 2016
Fresh food trend likely to positively impact store brands

The Consumer – What You Need to Know

More than half of consumers are medium-high store brand buyers
Frequent store brand purchasing at perimeter store departments
Transparency, premium products, minimal ingredients important factors
BFY, natural, minimal ingredients are important purchase factors

Percentage of Grocery Spend On Store Brands

More than half dedicate 50% or more share of cart to store brands
Figure 20: Percentage of grocery spend on store brands, November 2015
Private label appeal for Millennials
Figure 21: Percentage of grocery spend on store brands, by Millennials versus non-Millennials, November 2015
Presence of children means higher share of cart for store brands
Figure 22: Percentage of grocery spend on store brands, by presence of children, November 2015
Hispanics significantly likely to dedicate share of cart to store brands
Figure 23: Percentage of grocery spend on store brands, by race/Hispanic origin, November 2015
Opportunity in key categories
Figure 24: Percentage of grocery spend on store brands, by interest in more store brand offerings, November 2015

Retailers Used for Store Brand Grocery Purchases

Most buy store brands from supermarkets and mass stores
Figure 25: Retailers used for store brand grocery purchases, November 2015
Millennials less apt than non-Millennials to use supermarkets
Figure 26: Retailers used for store brand grocery purchases, by Millennials versus non-Millennials, November 2015
Households with kids likely to use mass stores over supermarkets
Figure 27: Retailers used for store brand grocery purchases, by presence of children, November 2015
Hispanics opt for value and natural channels rather than supermarkets
Figure 28: Retailers used for store brand grocery purchases, by race/Hispanic origin, November 2015

Store Brand Purchasing Frequency

More frequent purchasing of store perimeter products
Figure 29: Store brand purchasing frequency, November 2015
Millennials increase store brand purchases more than non-Millennials
Figure 30: Store brand purchasing frequency (the same amount or more), by Millennials versus non-Millennials, November 2015

Interest in More Store Brand Category Offerings

Relatively low interest in more of specific store brand category offerings
Figure 31: Interest in more store brand category offerings, November 2015
Millennials more likely to want to see more store brands
Figure 32: Interest in more store brand category offerings, by Millennials versus non-Millennials, November 2015
More store brand offerings likely to resonate with family households
Figure 33: Interest in more store brand category offerings, by presence of children, November 2015
More store brand category offerings likely to appeal to Hispanics
Figure 34: Interest in more store brand category offerings, by race/Hispanic origin, November 2015

Attitudes toward Store Brand Products

Product transparency is important to vast majority of buyers
Figure 35: Attitudes toward store brand products – Transparency, November 2015
Trust is a key issue in appealing to Millennials
Figure 36: Attitudes toward store brand products – Transparency, by Millennials versus non-Millennials, November 2015
High interest in more premium store brands, but price may be an issue
Figure 37: Attitudes toward store brand products – Interest in premium products, November 2015
Millennials very interested in premium; more than half willing to pay for it
Figure 38: Attitudes toward store brand products – Interest in premium products, by Millennials versus non-Millennials, November 2015
High Hispanic interest in premium; more than four in 10 willing to pay
Figure 39: Attitudes toward store brand products – Interest in premium products, by race/Hispanic origin, November 2015
Ingredients are vital to purchase decisions
Figure 40: Attitudes toward store brand products – Ingredients, November 2015
Local sourcing, simple ingredients appeal to Millennials
Figure 41: Attitudes toward store brand products – Ingredients, by Millennials versus non-Millennials, November 2015
Simple ingredients worth extra cost to more than six in 10 Hispanics
Figure 42: Attitudes toward store brand products – Ingredients, by race/Hispanic origin, November 2015

Factors That Increase the Likelihood of Store Brand Purchase

BFY, natural, minimal ingredients drive purchases
Figure 43: Factors that increase the likelihood of store brand purchase (any ranking) – Healthiness, November 2015
Natural/organic appeal to Millennials more than non-Millennials
Figure 44: Factors that increase the likelihood of store brand purchase (any ranking) – Healthiness, by Millennials versus non-Millennials, November 2015
Natural and organic influence family households to buy
Figure 45: Factors that increase the likelihood of store brand purchase (top three rank) – Healthiness, by presence of children, November 2015
A third prefer local sourcing
Figure 46: Factors that increase the likelihood of store brand purchase (any ranking) – Product sourcing, November 2015

Appendix – Data Sources and Abbreviations

Data sources
Sales data
Fan chart forecast
Consumer survey data
Abbreviations and terms
Abbreviations

Appendix – Market

Figure 47: MULO sales and forecast of private label food and beverages, at inflation-adjusted prices, 2010-20
Figure 48: MULO sales and forecast of private label food, at current prices, 2010-20
Figure 49: MULO sales and forecast of private label food, at inflation-adjusted prices, 2010-20
Figure 50: MULO sales and forecast of private label beverages, at current prices, 2010-20
Figure 51: MULO sales and forecast of private label beverages, at inflation-adjusted prices, 2010-20
Figure 52: Total and private label MULO food sales, and private label share of total, at current prices, 2010-15
Figure 53: Total and private label MULO beverage sales, and private label share of total, at current prices, 2010-15
Market breakdown
Figure 54: MULO sales of private label food and beverages, by segment, at current prices, 2013 and 2015
Retail channels
Figure 55: MULO sales of private label food and beverages, by retail channel, at current prices, 2010-15
Figure 56: US supermarket sales of private label food and beverages, at current prices, 2010-15
Figure 57: US other MULO channel sales of private label food and beverages, at current prices, 2010-15

Appendix – Consumer

Experian Simmons analysis
Figure 58: Household use of various store brand products, July 2014-September 2015

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