Retailer Daily

Private Label Gains CPG Unit, $ Share

According to a new study from market research firm IRI, private label CPG products are gaining unit and dollar share as the economic recession which started last year continues. Results from “Private Label 2009” indicate that among all outlets in the last 12 months, private label unit share has grown 1.2 percentage points to 22.8% and dollar share has grown 0.7 percentage points to 17.6%. By retail channel, private label CPG sales are highest in the grocery channel, representing 25.6% of dollar share and 20% of unit share. These shares have risen 1.5 percentage points and 0.7 percentage points since 2008, respectively. Tracked as a unique channel, Wal-Mart is the second-most popular channel for private label CPG purchases, representing 23% of dollar share and 18.1% of unit share. These shares have both risen 0.2 percentage points since 2008, respectively. Wal-Mart has been expanding and enhancing its Great Value CPG private label brand this year, adding 80 new products, changing the formula for 750 others, and redesigning packaging. The other channel with similar private label CPG share penetration is supercenter, representing 22.7% of dollar share and 18.3% of unit share. These shares have risen 0.3 percentage points and 0.2 percentage points since last year, respectively. If Wal-Mart were included with other supercenter retailers, this channel would account for close to half of private label CPG sales. Most notably in this channel, Target rebranded its main private label line of CPG goods earlier this year, with a heavy promotional effort. By department, the largest growth area for private label CPG products in dollar share is healthcare, which saw its dollar share increase 1.8 percentage points to 35.3% and unit share increase 1.4 percentage points to 26.8% since 2008. The largest growth area for private label CPG products in unit share is fresh/perishable, which saw its dollar share increase 0.2 percentage points to 34.1% and unit share increase 1.9 percentage points to 31.5% since last year. The only private label CPG product department to record share shrinkage since last year is frozen, with dollar share dropping 1 percentage point to 19.9% and unit share dropping 0.2 percentage points to 18.3%. Several other recent research findings support the notion that private label products are growing in popularity with consumers. According to a recent report from business information provider Just Food, “The U.S. Private Label Food Market - Forecasts to 2013,” the U.S. private label food market has expanded by almost 60% since 2003, as opposed to 23% growth for the U.S. retail food and drinks industry as a whole. As a result, private label now accounts for more than 19% of market value, up from less than 15% in 2003. In volume terms, private label has increased its share of the overall market to 24%, up from around 20% in 2003. These results echo other recent research findings. “Store Brands and the Recession,” an ongoing study conducted by the Private Label Manufacturers Association (PLMA) and GfK Custom Research North America, indicates that 90% of respondents said private label products are just as good as, or better than, national brand products. The poll also found that 35% of respondents are trying store brand products in categories where they had previously only purchased national brand items, and slightly more than 30% said they are now buying more store brand products than they were a year ago. A report on private label food and beverage trends in U.S. households by NPD Group found in 2008, 24% of all food and beverages served in U.S. homes were store brands, up from 18% in 1999. Furthermore, 97% of all U.S. households consumed private label foods and beverages on a regular basis last year. In addition, research from MediaBuyerPlanner indicates CPG company Procter & Gamble reported a 5% dip in global sales volume for its Q3 2009 (ended March 30, 2009), and analysts predict earnings per share may drop 5% in Q1 2010 (starting July 1, 2009), with private label goods the most likely beneficiary.