PRIVATE LABEL MARKET TRENDS
 EXECUTIVE OVERVIEW
NOVEMBER 2006
IRI's Times & Trends highlights new developments and critical events across all major CPG categories and channels, providing powerful benchmarking data to help guide your strategic decisions. This issue examines private label trends.

This free summary is also accessible via the GMA Web site  at http://www.gmabrands.com/publications/gmairi.cfm

INTRODUCTION
At first glance, private label share trends appear to paint an uneventful market: total CPG private label share has held steady over the past four years.

A closer look at the underlying trends behind these numbers, however, reveals substantial changes that are reshaping private label. For instance, there have been sizable private label share shifts -- both increases and decreases -- at the category level. Within these categories, private label’s role and influence have evolved significantly.

This issue of Times & Trends provides an assessment of current and emerging private label trends across channels, categories and consumer segments. Insights from this analysis are intended to help CPG manufacturers and retailers see new opportunities and risks with respect to private label development and act on these insights to drive sales and margin growth.


 KEY FINDINGS

CPG private label share trends hold steady. Total CPG private label share has not changed dramatically over the past several years; sizable share changes have occurred at the category level, however. Categories with major private label share increases include cups and plates and frozen seafood, while sizable decreases have occurred in bottled water and ice cream/sherbet, among others.
 

Value channels continue to step up focus on private label. Value retailers (club, mass, supercenters) have significantly increased private label share over the past few years. As a result, both manufacturers and traditional retailers are facing increased competition within the highly value-conscious lower-to-middle-income consumer segment.

A majority of consumers allocate only a small proportion of their budget to private label. While all consumers are private label buyers to some extent, private label spending is fairly concentrated: 40 percent of consumers drive two-thirds of sales; the remaining majority are “light” buyers, who allocate only 11 percent of their CPG budget to private label. Young couples and households with young children have the highest private label spending indices.

Private label buyers are selective across categories. Even the heaviest private label buyers are selective in their private label purchases; across a majority of CPG categories, less than half of heavy private label category buyers purchased any private label over the past year. These purchase patterns highlight the need for category-specific private label competitive strategies.

Private label products are sold at a 27 percent discount, on average. Across all CPG categories, private label pricing is 27 percent below manufacturer brands, on average. However, there is a wide range across categories. Discounts exceed 40 percent in one-fifth of categories, while private label is sold at a premium in 14 percent of categories. The optimal price gap between private label and branded products must be determined for each category.

  Back to Top
  


                         


Source: IRI's Times & Trends Reports
Information Resources, Inc. (IRI) is the world’s leading provider of enterprise market information solutions and services to the consumer packaged goods (CPG), retail, and healthcare industries.