Times & Trends

PRIVATE LABEL 2008

EXECUTIVE OVERVIEW

OCTOBER 2008

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 edition of Times & Trends reveals that the changing shopping habits brought about by a transforming economy have combined with marketers' efforts to enhance the shopping experience and communicate with consumers on a more intimate level to create a defining moment for in-store merchandising. A free summary is also accessible via the GMA website at www.gmaonline.org.

INTRODUCTION

For a majority of Americans, the country’s economic struggles are impacting nearly every aspect of daily living, and the packaged goods arena is no exception.

Private label is well-positioned to compete in these difficult conditions. In fact, retailers are increasingly leveraging store brands as a key aspect of their differentiation strategies.

The evolution of private label has coincided perfectly with the emerging CPG needs of our country. With economic woes in the headlines daily and consumers grappling to stay afloat amid escalating financial strains, private label has become a formidable force in the packaged goods industry.

This report provides insight into current and emerging private label trends that will enable manufacturers and retailers to develop and execute private label strategies that align with overall corporate goals while simultaneously addressing the rapidly changing needs of U.S. shoppers.

KEY FINDINGS

»With difficult economic conditions expected to last at least 12 more months, private label is well-positioned to play a major role in satisfying consumers’ need for value in the CPG marketplace. Over the past several years, private label has consistently accounted for about 16% of CPG spending and one-fifth of products purchased. This past year has seen escalating growth rates as consumers increasingly turn to private label in order to save money on packaged goods.

»Private label share varies across channels but is highest in grocery. Retailers across channels have elevated the importance of private label as a key source of differentiation, and drug and dollar retailers posted sizable private label share gains the year

»Habitual private label shoppers are concentrated among a select segment of the population. At 33% of the CPG population, these heavy private label shoppers represent two-thirds of private label sales.

»The average private label discount versus national brand is about 30%, but the average price gap varies markedly across departments. Department dynamics play a major role in determining average private label price gap versus national brand.

»Private label is protecting or growing share in two-thirds of top CPG categories. Innovation has been a key private label mitigation strategy for manufacturers, and is becoming more critical as private label trial activity increases