Private Label Grocery Trends in 2020 and 2021

Private label has gone from a small niche to an integral part of retail sales and shows no signs of slowing.

Though continually shifting, influenced by ever-changing factors, private label grocery trends have one trajectory: up. The constant battle between big manufacturers and smaller private labels is a true David-and-Goliath tale. And while Goliath isn’t going anywhere, David has been scoring most of the hits lately. Let’s delve into this interplay and identify the trends that have emerged.

Big brands are boosting PL footprint.

In 2020, big chains had big private label gains. One such example is Kroger, which saw private label sales of over $26 billion last year, now on track to launch more than 600 private-label products in 2021. Albertsons and Target showed similar strides with their private label sales.

Able to gauge customer needs with almost eerie precision, Amazon is making a massive move into the private-label market with Aplenty. Amazon’s new food label is poised to produce hundreds of products, offering everything from cookies, crackers, and salty snacks to frozen foods and a host of pantry items. All with an eye toward health; the brand's products won't have high fructose corn syrup, synthetic colors, or artificial flavors.

Amazon is following fast on the heels of Target, which rolled out its private label Favorite Day earlier this year. Sold both in stores and online, over 700 Favorite Day private-label products span a wide spectrum. Ice cream, trail mix, candy, and baked goods are just a few of the items that will be available under the Favorite Day banner. Target is not a newcomer to the private-label biz; their Good & Gather food and beverage brand debuted in 2019 and now offers over 2,000 items. Its annual sales top $2 billion.

Price is driving the private label trend.

So why are people turning to private label products more and more? The products are often priced lower than comparable items from national brands. According to Nielsen data, private label sales outpaced national brands in early 2020, with price playing a big role. And it's clear why grocers are increasingly turning to private labels: a recent Food Industry Association report found that consumers consider private brands to be some of the most valued items for at-home cooking. A survey of food retailers found that 93% of them believed that private brands were either “very important” or “extremely important.”

Earlier this year the Private Label Manufacturers Association, using NielsenIQ’s calculation, found that private label sales made up 23.4% of total sales at U.S. supermarkets and similar retailers such as warehouse clubs and drugstore chains.

And when COVID drove shoppers online in 2020, store brand sales increased, rising 12% and holding steady with national brands. Today, almost everyone buys private-label products -- Nielsen data shows that 99% of households say they do! Both online and in-store, private labels have staked a claim they won't be giving up ground on anytime soon.

Big brands see their shares slipping.

So if private label sales are consistently rising, whose are falling? Big companies. According to the market research company IRI, large manufacturers have lost market share while private labels have gained for the last five consecutive years. IRI attributes some of the considerable gains private labels made in 2020 to online shopping prompted by the pandemic. So, as things normalize, large manufacturers should see something of a rebound with consumers returning to do more traditional retail shopping. That said, IRI still expects private-label players to pull sales away from bigger companies at a steady pace, and that the private-label sector will grow at a healthy rate.

Where will we be in 2022? If the trends hold, and all evidence suggests that they will, we can expect the mass-manufacturing Goliath to take even more bumps and bruises from the private-label David.