Private Label CPG Dollar, Unit Sales Continue Pattern - Update
Continuing a pattern that has existed for the past few months, unit sales of private label CPG goods grew during the four-week period ending December 26, 2009, while dollar sales slightly receded. According to research firm The Nielsen Company, annual private label dollar sales of prepacked, UPC-coded CPG goods declined 0.1%, while annual unit sales of prepacked, UPC-coded CPG goods increased 2%.
Combo Pack Decline Outpaces Dairy
Overall annual private label CPG dollar sales fell 0.1%, from $7.17 billion to $7.16 billion. Following two straight months of the dairy department experiencing the most severe dollar sales decline, the combo pack department had the steepest drop in December, falling 10.6% from $33.97 million to $30.36 million. Dairy had the second-steepest decline, falling 10.2% from $1.79 billion to $1.61 billion for the four-week period. The other department declining in dollar sales was general merchandise, which fell 6.8%, from $336.8 million to $313.9 million. General merchandise also reported declining dollar sales for the four-week period ending November 28, 2009.
For the third month in a row, alcoholic beverages reported the highest dollar sales increase of any department. Alcoholic beverage sales rose 13.2%, from $12.31 billion to $13.93 billion. The fresh produce department also reported a double-digit dollar sales increase, rising 11.6% from $208.6 million to $232.8 million.
Dollar Segment Share Slightly Rises
Annual growth for private label CPG goods in terms of dollar segment share was minimal for the second straight month. Following 0.1% growth in the previous two four-week periods, private label CPG goods increased their dollar segment share another 0.4%, rising from 16.6% of the segment to 17 % of the segment. Branded CPG goods accounted for the remaining 83% of the segment.
The only departments which experienced an annual positive dollar segment share increase of more than 1% were fresh meat, with 2.1%, fresh produce, with 1.8%, and and health and beauty aids, with 1.2%. The only department with negative dollar segment share growth for the third straight month was dairy, with negative 1.5%.
Fresh Produce and Meat, Alcohol Lead Unit Sales Performance
Overall annual unit sales grew 2 %, from 3.22 billion units to 3.29 billion units. In a partial repeat of departmental unit sales performance from the previous four-week period, fresh produce, fresh meat and alcoholic beverages were the top three departments in unit sales growth. Fresh produce and alcoholic beverages were the top two departments last month, with packaged meat coming in third.
Fresh produce unit sales grew 22.6% for the second straight month, from 76.7 million units to 94 million units. Fresh meat unit sales increased 12.8%, from 48.7 million units to 54.4 million units. Alcoholic beverage unit sales rose 13.3%, from 8.38 million units to 9.45 million units. On the negative side, combo pack unit sales dropped 7.2%, from 4.45 million units to 4.13 million units. General merchandise unit sales decreased for the second straight month, dropping 4.9%, from 100.4 million units to 95.5 million units.
Unit Segment Share Grows 2.3%
Unit segment share of private label CPG goods grew 0.5%, from 21.7% to 22 % of the segment. Annual unit segment share performance continues to be stronger than dollar segment share performance has been since it initially spiked from about 19.75% to 20.75% in mid-May. Following a second spike from about 21.5% to 22% in late January-early February 2009, at the low point of the current recession, unit share dipped below 21.5% in mid-May but rebounded in mid-June and is still posting gains, having grown 0.6 percentage points during the four-week period ended October 31, 2009.
Fresh produce led all departments in unit segment share growth with a 2.6% improvement. Dairy, the only department experiencing negative unit segment share growth, dropped 0.6%.
Anemic Price Growth Affects CPG Dollar Sales Growth
On an annual basis, prices remained virtually flat in November 2009. According to the Consumer Price Index for All Urban Consumers, overall prices only rose 0.1% during the month. The food price index only increased 0.2%, and the food at home index rose 0.3%. Thus private label CPG dollar sales growth shrank despite healthy unit sales improvement.
Other Research Supports Nielsen’s Findings
Recent research from several sources supports Nielsen’s findings that private label grocery and CPG goods are becoming increasingly popular with U.S. consumers. A study released in September by market research firm IRI offers similar figures on private label CPG products’ unit and dollar share performance. 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%.
In addition, according to a 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.
And a study from market research firm NPD Group, Private Label Perceptions, Usage Patterns & Intentions, indicates that 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.
Retailers across Verticals Enter Private Label CPG Arena
Several major retailers of CPG products across a variety of verticals have been expanding their private label offerings this year. According to Bloomberg News, drugstore chain Walgreens is in discussions with CPG/grocery companies including Sara Lee, Nestle and Unilever about launching an assortment of private label goods.
In addition to considering creating an assortment of CPG goods and freshly-prepared meals, Walgreens is also currently offering private label wine for $2.99 a bottle in about 1,500 of its approximately 7,000 U.S. stores. Walgreens will reportedly introduce a higher-priced wine assortment with a $5.99 price tag in April 2010 and also reportedly has hired a director of fresh foods.
Earlier this month, supermarket retailer Supervalu said it plans to reduce the number of items it sells in stores by as much as 25% in order to make room for more private-label goods.
And in the past 12 months, supermarket chain Safeway Inc. expanded the reach of its private label “Eating Right” food products by selling them through other retailers, and mall-format grocery chain Fresh & Easy launched a private label brand of prepared meals.
United Supermarkets, operator of 50 Texas-based supermarkets, took a direct step into the private-label food arena in August 2009 by purchasing Praters Foods, a Texas-based prepared foods provider. United reportedly plans to develop synergies between its own private label and Praters brands.
Outside the supermarket/grocery vertical, discount retailer Wal-Mart is significantly expanding its Great Value private label grocery/consumer product brand, and discount retailer Target Corporation has rebranded and expanded its private-label assortment of grocery and CPG goods under the “up & up” banner. Regional discount chain Meijer relaunched its Meijer Gold line of private label CPG food products, with more than 80 grocery items, in November 2009. In addition, convenience chain 7-Eleven also grew its 7-Select line of consumer and grocery goods last year.