U.S. private label sales in total outlets up 2% to a record US$88.5B last year as retailers increasingly focused on marketing, packaging; annual private label sales jumped 39% in supermarkets, 97% in drugstores over past decade

Andrew Rogers

LOS ANGELES , September 14, 2011 (Industry Intelligence) – The success of private label brands in the wake of the recession will not wane as U.S. retailers are becoming more sophisticated in the way private label products are packaged and marketed, Beverage Industry Magazine reported Sept. 12.

Private labels in the U.S. have tended to be more “me too” products without much innovation, but they’re developing marketing departments and are increasing attempting to market their trademarks in their stores, according to Richard Haffner, head of beverages global research at Euromonitor Interational, Chicago.

Annual private sales grew 39% in supermarkets and 97% in drug stores over the past decade, according to “Private Label Manufacturers Association’s (PLMA) 2011 Private Label Yearbook,” prepared by The Nielson Co., New York.

Private label sales increased about 2% last year in total outlets, made up of U.S. supermarkets, drug stores, and mass merchandisers such as Wal-Mart Stores Inc. Sales reached US$88.5 billion for the year, a record high, according to Nielson. That number excludes warehouse clubs, limited assortment stores, convenience stores and dollar stores, which could contribute $15 to $20 billion in private label sales in the year, Nielson said.

National brand marketers took drastic steps in 2010 to regain some of the market share that have ceded to private label brands in recent years, according to the report. National brands were down in supermarkets 0.1% in year-to-year dollar sales, but unit sales were up 1%. National brands looked to promotional spending and short-term price cuts to maintain higher unit sales, even if it required reducing dollar sales, the report said.

Brands have needed to work harder and offer more promotions in the recent downturn, which has seen the trend toward private label interrupted and actually reversed in some markets, Zenith International founder Richard Hall said.

Private label sales are still solid, but they are not enjoying double-digit increases seen 10 years ago. Private label sales growth across food, drug, and mass merchandise has been relatively flat since the end of 2008 as brands increased their promotional support and innovation efforts, according to Nielson’s senior vice president of consumer and shopper insights Todd Hale. National brands still have 78% of consumer product good unit sales currently, Hale added.

The primary source of this article is Beverage Industry Magazine, Troy, Michigan, on Sept. 12, 2011.

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