Private label popularity: it's not universal

The year 2009 was fabulous for store brands.

The year 2009 was fabulous for store brands. Heavy PL operators like Aldi and Trader Joe's were seen as savings saviors. Tesco emphasized its own products within the innovative Fresh & Easy convenience format, and Walmart and others followed. Safeway took sales of its O Organics line to more non-competing chains in many parts of the United States. Operators from Kroger on down converted shoppers from name-brand to store-brand buyers in many categories, as the need to save money drove trial, and retailers marketed to them with more appealing packages, formulas, names and prices.

We expect at F3 that much of the recession-induced private-label buying will stick in the years to come, as long as quality standards remain high and price gaps continue to impress. Trading partners will long debate the value of name-brand innovation and other category-building initiatives vs. the private label opportunism imperiling the #3, #4 and #5 brands in so many categories today. Retailers are hooked on the higher margins of store brands and the repeat traffic they could attract.

There's much fanfare about private label buying in this economy. It's understandable - especially in tense times between retailers who want lower name-brand prices and CPG that give them promotional events instead (in order to maintain their baseline price integrity). There are parts of the sales floor, however, where store brands haven't penetrated well - due either to the strength and uniqueness of leading brands or the relative newness of categories.

Here is the list of F3's Eleven Highest food and beverage categories for market share dominance by name brands, based on Nielsen unit movement data in U.S. food, drug and mass merchandiser stores (including Walmart) of prepackaged, UPC-coded products only for the 52 weeks ended October 3, 2009:

• Frozen meal starters. PL share 0.0%. More than 13.4 million branded units sold vs. fewer than 3,000 in store brands.
• Beer. PL share 0.2%. More than 1.2 billion branded units sold vs. 2.6 million in store brands.
• Gum. PL share 0.5%. More than 1.3 billion branded units sold vs. slightly more than 6 million in store brands.
• Wine. PL share 0.9%. More than 830 million branded units sold vs. fewer than 8 million in store brands.
• Refrigerated meal starters. PL share 1.7%. More than 5.5 million branded units sold vs. fewer than 100,000 in store brands.
• Baby food. PL share 2.8%. Nearly 1.4 billion branded units sold vs. fewer than 40 million in store brands.
• Liquor. PL share 3.6%. More than 253 million branded units sold vs. fewer than 10 million in store brands.
• Candy. PL share 5.1%. More than 6.2 billion branded units sold vs. fewer than 340 million in store brands.
• Refrigerated puddings/desserts. PL share 5.1%. More than 182 million branded units sold vs. fewer than 9.9 million in store brands.
• Frozen prepared foods. PL share 6.2%. Almost 3.9 billion branded units sold vs. nearly 255 million in store brands.
• Baking mixes. PL share 6.5%. Nearly 1.2 billion branded units sold vs. a bit more than 81 million in store brands.
  
  Other popular categories in which private label has barely mustered a 10% share include:
• Snacks. PL share 10.1%.
• Frozen pizza/snacks. PL share 10.2%.
• Tea. PL share 10.8%.