Food Retailers & Manufacturers to Boost Private Brand Investments
ARLINGTON, Va. — Private label brands are on the rise.
According to the recently released "The Power of Private Brands 2024: Industry Strategies to Sustain Momentum" report from FMI – The Food Industry Association, 84% food retailers and manufacturers say that private brands are extremely important to their organizations. That, combined with private brands growing popularity among shoppers, has resulted in 93% saying they plan to moderately or significantly increase private brand investments in the next two years, up from 82% a year ago.
Key areas of investment include adding capacity and value through innovation and new product development in growth opportunities like premium, best value, health and well-being, products with simple/clean ingredients, and frozen and fresh foods.
Convenience Retailers Ramping Up Private Label Investments
Texas Born (TXB) recently expanded the chain's private label line of fresh, locally sourced offerings with the introduction of 18 new products. All private label offerings are manufactured, produced, bottled or bagged in Texas.
Kent Kwik also enhanced its line of private label offerings with the introduction of several new snack options that include a variety of trail mixes and nut assortments.
Price (71%) and good value (72%) are top reasons cited by shoppers for buying more private brand items, and 80% of food industry respondents believe that private brands continue to perform well in terms of driving growth of customer purchases via delivering value.
However, more than half (54%) of retailers are focused on emphasizing the value of private brands beyond price, focusing on other areas that motivate consumers' private brand purchases, including quality, taste and meeting meal solution needs.
According to FMI research, younger consumers are key to private brand growth. Eighty-one percent of food industry executives said that appealing to younger consumers is the top area of importance, along with emphasizing value/price, to drive private brand growth.
An increased focus on digital marketing was the top strategy cited by both food retailers (69%) and manufacturers (52%) to attract younger consumers from digital-native generations. Additional strategies cited were:
- Increased use of samples (33%)
- Leveraging shopper insights (30%)
- Boosting convenience (25%)
- Enhancing ecommerce experiences (20%) through improved search functionality, suggestive selling and more compelling online product images
"The private brands industry is thriving, and it's clear why: its value is often unmatched. The sector has become a critical area of growth and investment for both retailers and manufacturers," said FMI Vice President of Industry Relations Doug Baker. "To meet increasing demand, executives are investing substantially in developing new products and appealing to a broader customer demographic — especially younger shoppers. They are also strengthening their supplier and trade partnerships to drive innovation and sustain the ongoing success of private brands in food retail."
"The Power of Private Brands 2024: Industry Strategies to Sustain Momentum" is based on an exclusive survey of 42 food industry executives. To download the report, click here.
Arlington-based FMI works with and on behalf of the entire industry to advance a safer, healthier and more efficient consumer food supply chain.