Technavio analysts forecast the Private-Label Food and Beverages Market in the US to grow at a CAGR of around 5% between 2015 and 2019 owing to the increased demand for FMCG with the rise in consumers’ lifestyles and the growing population of millennials in the US. Private-label products have an edge over other national brands as consumers are more inclined towards premium value and low-price alternatives.
The new industry analysis report from Technavio presents an insightful breakdown of the private-label food and beverage market highlighting its growth potential through key drivers and trends.
By types of distribution channels, supermarkets overshadow the market by occupying around 53% share in 2014, and is expected to surpass US $64 billion by 2019, in terms of revenue. Private-label products captivate more than 30% of aggregate revenue generated by supermarkets, as this distribution channel produces first-rate private-label food and beverages products bearing the same quality as those of national brands. Consequently, these food and beverages products are examined for quality and safety by independent companies before final retailing. Also, supermarkets hold pre-eminence over other distribution channels for private-label products because of product ingredients, shelf presence of products, detailed labelling, consumer convenient packaging, and ensuring that the products meet all the regulations set by the FDA.
Private-label food and beverages market in the US by supermarkets 2014-2019 ($ billions)
Source: Technavio research
“Private-label food products have gained more prominence in food products like meats, fresh fruits and vegetables where product differentiation among brands is relatively low. Consumer opt for those products that have matching ingredients mentioned in the noticeable labels right on the packaging. Observing this trend, the vendors have shifted their focus towards manufacturing clean labels, which provide buyer with the ease to read ingredients and product claims,” says Sriram Mohan, Lead Analyst, Consumer Good, Retail, Food Services, Technavio Research.
De novo, private-label products are gaining momentum among consumers due to their A-1 quality and availability in a wide range, which has given extensive opportunities to the market vendors to offer finest products enhancing brand loyalty among buyers and provide substantial advantage over their competitors. Marketing campaigns for promotion and advertisement for private-label products are not required, eventually reducing the manufacturing costs of these products compared to the branded products. Moreover, the cost difference between these private-label products and national brands is noteworthy, further enabling private-label products’ retailers to offer their products at a discounted price, with higher profit margins.
The private-label food and beverages market in the US is highly fragmented with the presence of leading vendors in the market including Costco Wholesale, Kroger, Safeway, Trader Joe’s, and Wegmans, who contest on the basis of price, quality, innovation, service, reputation, and promotion.
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