Power of Retailer Names Raises Store Brands' Reputation

August 3, 2010
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Private label food and beverage dollar sales totaled $87 billion in 2009, accounting for 17 percent of total food and beverage sales in the United States, according to a just-released report, “Private Label Food and Beverage in the U.S.,” from market research firm Packaged Facts, New York City.

Private label sales at specialty food retailers, such as Trader Joe’s and Whole Foods, attracted new consumers to private label and so helped propel private label’s share increase, the report notes.

Private label’s market share was 14 percent of total food and beverage retail sales in 2005, but began rising in 2007, to 15 percent, as the economy showed signs of slowing. In 2008, private label share hit 16 percent.

In 2009, private label dollar sales rose six percent over the 2008 level of $82 billion, the report says, driven primarily by a seven percent increase in food dollar sales. Private label beverage sales rose less than one percent.

The report found that traditional supermarkets are losing market share to alternative stores.

  • Growth among traditional food and beverage retailers was modest, at a compound annual growth rate (CAGR) of four percent between 2005 and 2009.
  • On the other hand, specialty food stores Whole Foods and Trader Joe’s grew at a CAGR of 14 percent from 2005 – 2009.
  • Supercenters such as Walmart and Target witnessed compound annual growth of nine percent.
    Club stores, such as BJ’s Wholesale, Costco, and Sam’s Club grew slightly better than the mean, at six percent.
  • Discount supermarkets, including Supervalu, ALDI, and Dollar General saw food and beverage sales decline in 2009, but eked out a small five-year CAGR gain of two percent.

“Private label food and beverage have eclipsed their ignoble past of no name and generic products with the development of new flavor varieties, enhanced product packaging and different pack sizes, and the emergence of premium lines,” says Don Montuori, publisher of Package Facts. “Plus private labels entered into new territory where the additional power of the retailer name and its inherent benefits are aiding private labels to emerge as brand names. Store reputation alone may be the driving force in the success of chains such as Trader Joe’s and Whole Food Markets in attracting more affluent consumers to the category.”

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