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October 2002 Times & Trends Executive Summary
Private Label Annual Review

Supermarket private label products record strong growth but achieve minimal share gains.
For the year ending August 11, 2002, private label products achieved stronger dollar sales growth than manufacturer brands in supermarkets (3.9% vs 1.6%). With unit declines of -0.9%, (versus manufacturer brand unit decline of -2.3%) private label's growth was driven by price increases and product mix shifts. Total dollar share increased only slightly, however, from 16% to 16.3%. Despite a soft economy, consumers are not broadly gravitating to store brands to reduce spending.

Private label shelf presence is on the rise.
Retailers appear to be giving more shelf space to private label, particularly within non-foods. Average number of private label items per week per store increased 3.5% among food categories and 6.6% in non-food versus prior year. Private label now comprises nearly one-quarter of supermarket items but only 16% of dollar sales. Supermarkets are seeking to attract an increasingly value-conscious consumer base who has switched purchases to alternative channels for deals on manufacturer brands.

Manufacturer brands gain within top ten private label categories, but most of the categories are declining in volume.
Among top ten private label categories, which represent 42% of total private label sales, manufacturer brand dollar growth outpaced private label (2.3% versus 1%). As a result, manufacturer brands gained share in five of the ten categories. With unit declines in nine of the ten categories, however, growth opportunities for both private label and manufacturer brands are limited. Most of the manufacturer share gains were achieved through smaller unit declines and higher pricing.

Private label food category growth was bolstered by "dinner solutions."
Riding the phenomenal growth wave of "dinner solutions" - easy meals and components for busy consumers, private label food category sales increased 4.4%. With more consumers eating at home, dinner solutions are one of the hottest growth areas within supermarkets, and private label products have gained more than their "fair share." Private label accounted for 42% of the growth (but only 18% of dollar sales), in dinner solution categories. Private label frozen seafood grew 65% and gained 10 share points, while refrigerated meat/poultry captured five additional share points with 76% dollar growth. Consumers are willing to pay for the added convenience of dinner solutions, but are still looking for the best values, and retailer brands-particularly in the refrigerated and frozen aisles, have "fit the bill."

Like manufacturer brands, private label non-food category growth is still recovering from the recession.
The CPG non-food market effectively shrank in volume following the September 11 tragedy, as consumers did without non-essential items or switched to lower-priced alternatives. While private label benefited from some of this switching, growth rates were still drastically reduced and have been slow to rebound. Food & trash bags, toilet tissue and paper towels posted the most significant dollar increases, but these increases were price-driven; unit sales declined. With only an 11% share of non-food sales (versus 17.5% for food), there is significant upside potential in private label non-food categories, however, as the more value-conscious consumers resume purchasing "non-essentials."