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Private-Label Food Sales to Hit 30% Market Share by 2025Private-Label Food Sales to Hit 30% Market Share by 2025

October 16, 2012

2 Min Read
Private-Label Food Sales to Hit 30% Market Share by 2025

NEW YORKPrivate-label food brand sales are predicted to achieve market penetration of between 25% and 30% in the next decade, up from their current market share of just less than 20%, according to new market data from Rabobank. The projected growth translates to one in every three food product purchases in the United States being a retailer-branded product by the year 2025.

According to the report, "What Would Apple Do?  How Can U.S. Branded Food Companies Withstand the Retailer Brand Onslaught?", retailer brands have grown 6% over the past five years, compared with the sales of national branded packaged food manufacturers that have grown just 2%. Increasing competitive strength of private-label brands reflects a power shift from consumer packaged goods companies (CPGs) to food retailers, as well as the growing trust and loyalty consumers have to today's innovative and high-quality retailer brands.

"Retailer brands have matured from their original positioning as 'cheap and cheerless' generic products into a more diverse range of national brand equivalents and, more recently, highly innovative premium products," said Nicholas Fereday, Rabobank analyst and author of the report. On grocery shelves around the U.S., from convenience stores to upscale supermarkets, retail brands now compete successfully and often win against national brands, earning consumer trust in terms of pricing, quality, image and value."

The report also proposes strategies for consumer packaged goods companies to defend their national brands and/or to compensate for the loss of market share to retail brands.

"Many national brand owners need to be bolder in their thinking and strategizing," Fereday said. "Instead of opting for low-cost, low-risk, conservative solutions, they need to think and act more like the Apples of the world, innovating new game-changing food products and entering new categories. Alternatively, national brand owners should consider downsizing brand-building efforts and diversifying their manufacturing into B2B activities."

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