Dive Brief:
- Private label products have evolved from "generics" to legitimate competition for branded product manufacturers, according to a new report from FONA International.
- At least half of shopping carts for more than half of consumers contain private label products, the report said.
- Trends driving the growth of private label brands include better-for-you, natural, minimal ingredients, clean labels and ingredient sourcing.
Dive Insight:
The trends boosting private labels in the eyes of consumers closely mirror what branded product manufacturers are attempting with their own portfolios. That's in part why private labels have become such a threat to brands' market shares. The two industries are becoming increasingly similar in their offerings, which makes them less distinguishable to consumers strolling the grocery store aisles.
Once purely focused on price, store brands now balance price with quality ingredients to achieve a better sense of value in the eyes of consumers. Private label manufacturers like TreeHouse are also increasingly exploring segmentation and multi-tiered pricing, which makes them all the more competitive to branded manufacturers.
However, private label manufacturers have also struggled recently with trust and transparency issues due to a flurry of recalls. Additionally, some retailers, like Trader Joe's, refuses to identify the manufacturers of their products.
To stand out from the other, both branded and private label manufacturers may consider improving upon transparency and whole chain traceability to develop more trust with consumers.