Private Label Grocery Products: Quality Perception
While the growth for private label brands is outpacing that of national brands, U.S. consumers still consider name brands superior to private label brands; however, private label grocery items are more likely to be considered equal to national brands, specifically in the categories of dairy, produce, fresh meat, bakery products, paper products, and bottled water. More details on the perception of private label products are below.
Private Label Brand Growth
- Consumers care more about the ingredients in a product than they do about the label, which has led to private label brands growing three times faster than national brands since 2017.
- Following the "clean label" trend, Kroger developed a private label for products that are "free of 101 components that concern the retailer’s customers." This line generates $2 billion of the $20 billion per year that Kroger earns from its private label brands.
- According to FMI, 97% of all U.S. households purchased a private label product in 2017.
- A Nielsen study found that 76% of U.S. consumers say that their "perceptions about private label quality has improved over time," which is leading to significant growth in private label sales.
- The categories of private label brands that have shown the most growth are cooking oil, natural cheese slices, antacid tablets, refrigerated bacon, seltzer and sparkling water, and tortilla chips.
- Despite the growth of private label brands, though, a study from Acosta found that shoppers still view "national brands as superior to private label brands in most categories." Name brands are considered better than private label brands in 41 categories, including "pet food, beauty & personal care, carbonated soft drinks, coffee, and chocolate."
- Name brands and private label brands are considered about the same in 12 categories, which include "dairy, produce, fresh meat, bakery, paper products, and bottled water."
Private Labels are no Longer Solely Equated With Value
- Private labels used to be considered "generic" and were aimed at "financially conservative customers," and while 71% of U.S. consumers still say they buy private label products to save money, private label brands have expanded to include organic, all-natural, and gluten-free products to target customers who demand these specialty items to provide them with a lower-priced option.
- This may be why 62% of U.S. consumers say that private label brands offer "extremely good value for money," as this indicates they are getting the ingredients they want in products for less money.
- Moreover, 58% of U.S. consumers believe that "private labels are good alternative of name brand," which seems to show that consumers will buy private label products if they offer the ingredients they want.
- Overall, about 16% of U.S. customers believe that the quality of private label brands is not as good as national brands. This perception is highest among people between the ages of 55 and 64 at 18%.
- Nielsen found that millennials are more willing than other generations to try new brands, which include private label brands; however, generation X consumers purchase the most private label products at 31%.
- Millennials and younger baby boomers are tied for the second-most private label purchases at 19%, older baby boomers are at 16%, seniors and retirees are at 12%, and younger millennials are at 3%.
- Millennial shoppers are driven to buy private label products by value, their budget, and promotions (sales).
- Generation X shoppers are driven to buy private label products by their budget, quality, and value.
- Baby boomer shoppers are driven to buy private label products by value, their budget, and quality.
Categories of Most Interest for Private Labels
- A study conducted by Daymond indicates that U.S. consumers would buy more private label grocer products in the following categories: single serve coffee or tea, salty snacks, cheeses, specialty milk, frozen appetizers, frozen pizzas, vitamins, frozen seafood, bacon, value-added meat, deli dips, deli entrees and salads, and bakery cookies.
- Consumers are open to always or often buying private label brands the following products:
- Hamburger/Hot Dog Buns: 68% (age 18-34), 69% (age 35-44), 66% (age 45-54), 68% (age 55-64), 62% (age 65+)
- Hot Cooking and Salad Oil: 63% (age 18-34), 56% (age 35-44), 56% (age 45-54), 56% (age 55-64), 46% (age 65+).
- Sparkling Water/Seltzer: 50% (age 18-34), 52% (age 35-44), 43% (age 45-54), 54% (age 55-64), 52% (age 65+).
- Hot Cereal/Oatmeal: 54% (age 18-34), 47% (age 35-44), 44% (age 45-54), 44% (age 55-64), 48% (age 65+).
- Natural Cheese Slices: 56% (age 18-34), 48% (age 35-44), 40% (age 45-54), 49% (age 55-64), 43% (age 65+).
- Tortilla Chips: 47% (age 18-34), 39% (age 35-44), 41% (age 45-54), 46% (age 55-64), 41% (age 65+).
- Bacon: 51% (age 18-34), 41% (age 35-44), 37% (age 45-54), 42% (age 55-64), 37% (age 65+).
- Salad Dressing (shelf stable): 40% (age 18-34), 34% (age 35-44), 38% (age 45-54), 40% (age 55-64), 34% (age 65+).
- Ice Cream: 37% (age 18-34), 19% (age 35-44), 35% (age 45-54), 40% (age 55-64), 38% (age 65+).
- An FMI survey found that 69% of customers say it is important to have a "good assortment" of private brands for food and beverage products.
- A "good assortment" of products is less important for home care products (48%), health care products (46%), personal care products (42%), beauty care products (29%), and pet care products (26%).
- Categories that may benefit most from more variety of private label products based on the percentage of people who haven't purchased private label items because "the specific variety [they] prefer is not available from the store brand are sparkling water/seltzer (38%), ice cream (27%), bacon (26%), and tortilla chips (26%).
- The top 10 categories that private label brands are mostly or exclusively purchased are the following.
- Milk (49%)
- Bottled Water (36%)
- Bread, Buns, Rolls (32%)
- Sugar/Sweeteners (32%)
- Prepared Foods (31%)
- Canned Vegetables/Fruits (30%)
- Cheese (27%)
- Butter/Margarine (26%)
- Coffee Creamer (25%)
- Pasta (24%)
- The top 10 categories that national brands are mostly or exclusively purchased are the following.