Private Label Buyer
Review - PLMA Yearbook

PLMA Yearbook Shows Slower Growth In 2012

Industry posts record high sales of more than $108 billion.

August 14, 2013

Private label growth slowed in 2012 but still outpaced national brands, according to Nielsen data compiled for the PLMA 2013 Private Label Yearbook.

Private label manufacturers helped the industry grow again in 2012. The latest data from the PLMA 2013 Private Label Yearbook shows that private label sales rose 2.9 percent in 2012 to a record high of more than $108 billion.

Sales for all outlets grew 2.9 percent in 2012, the Yearbook reported, growing $3 billion to a record high of more than $108 billion for the year. National brands, meanwhile, grew 2.2 percent last year.

Over the past four years, private labels have grown an average of 4.9 percent annually, more than double the 2.1 percent growth of national brands.

Yet despite the dollar growth, unit sales of both private labels and national brands slowed in 2012, falling 0.9 percent from a year earlier.

PLMA President Brian Sharoff said the dollar value improvement showed the strength of the industry in 2012.

“Looking at total outlets, private label dollars sales rose from $105.2 billion to $108.3 billion, which I would say demonstrates growth for store brands is continuing,” he said. “Yes, private label unit volume declined, but that reflects forces at work in all channels affecting both private label and branded.

“Total volume in all channels dropped from 208.0 billion units to 206.2 billion units. Private label declined by only 400 million units. National brands were the big losers.”

That happened for a variety of reasons, Sharoff said, including more consumers buying larger sizes, reflecting growth in warehouse clubs.

“Also, changes in packaging and sizing of national brand products (could be factors),” he said. “But overall, I would say store brands did very well last year.”

Among the biggest growth factors in private label in 2012 were in the mass, club and dollar channels – where dollar sales gained 6.4 percent – and drugstores, where sales rose 5.5 percent. Supermarkets, meanwhile, were nearly flat, with sales up 0.2 percent last year.

Sharoff said the expansion of private label into previous smaller sectors such as dollar, club and drug showed a willingness of manufacturers to be flexible to retailers’ needs.

“Private label manufacturers have responded very well to the shift in consumer purchasing from traditional supermarket formats to other channels,” he said. “This transition will only get larger and larger, and it is important, obviously, that suppliers remain flexible if they want to take advantage of the shift.”

Overall, private labels accounted for 23.1 percent of units sold in supermarkets and 19.1 percent of dollar sales. Across all retailer outlets, unit share was 21 percent and dollar share was 17.3 percent.

Sharoff said that those numbers were impressing, but looking deeper provided an even better look at future potential for private labels.

“Store brands growth has to be seen at the category level, not just total volume or total sales,” he said. “That’s where important changes in consumer acceptance of store brands are taking place. Some categories, such as frozen, ready-to-heat and microwaveables may not be huge in and of themselves, but they contribute to a new respect and popularity that shoppers have toward retail brands – and eventually that all shows up as increased private label share.”

For all outlets, private label units totaled 43.4 billion in 2012, down from 43.8 billion a year earlier. Unit share fell slightly from 21.1 percent in 2011 to 21.0 percent last year.

For the first time, Nielsen found that total consumer spending in traditional supermarkets fell below 50 percent, falling to 49.3 percent as smaller alternative channels grew dollar share.

In the supermarket channel, private label sales totaled a record high $58.9 billion, up 0.1 percent from a year earlier. Unit sales totaled 26.6 billion, down 2.6 percent from a year earlier.

In drugstores, sales totaled $7.9 billion and unit sales totaled 1.9 billion, down 2.2 percent from a year earlier. Private label dollar share in the channel was 15.9 percent, up from 15.3 percent a year ago. Unit share gained 0.2 percent to 16.6 percent as national brand unit sales fell further than private label.

Of the 11 departments Nielsen tracked in the supermarket channel, private label sales grew in six – Deli (+8.4%), Health and Beauty (+5.2%), Produce (+2.7%), Packaged Meats (+2.6%), Frozen Foods (+0.7%) and Dry Grocery (+0.2%).

 In drugstores, private label sales grew in nine of the 11 categories, with Packaged Meats (+58%), Deli (+56.8%), Fresh Meats (+20.5%) and Produce (+16.6%) growing on lower volume. But bigger segments such as Dry Grocery (+11.7%), Frozen Foods (+9.4%) and Dairy (+8%) also showed strong growth.