Table of Contents
Executive Summary
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- The issues
- Slow growth projected
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- Figure 1: MULO sales and fan chart forecast of private label food and beverages, at current prices, 2010-20
- Store brand share of sales remains flat
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- Figure 2: Total and private label MULO food/beverage share of sales, at current prices, 2010-15
- Brand transparency is an issue for a majority of buyers
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- Figure 3: Attitudes toward store brand products – Transparency, November 2015
- The opportunities
- Targeting key buyers: Millennials, family households, Hispanics
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- Figure 4: Percentage of grocery spend on store brands, by key buyer groups, November 2015
- Millennials likely to gravitate toward brand stories that provide transparency
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- Figure 5: Attitudes toward store brand products – Transparency, by Millennials versus non-Millennials, November 2015
- BFY drives purchases
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- Figure 6: Factors that increase the likelihood of store brand purchase (any ranking) – Healthiness, November 2015
- What it means
The Market – What You Need To Know
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- Sales growth slow, driven mostly by price inflation
- Private label food accounts for more than 78% share
- Private label and total MULO grow at similar pace
- Improved quality, key demographics help drive sales
Market Size and Forecast
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- Slow growth projected, price inflation largely driving growth
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- Figure 7: MULO sales and fan chart forecast of private label food and beverages, at current prices, 2010-20
- Figure 8: MULO sales and forecast of private label food and beverages, at current prices, 2010-20
Market Breakdown
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- Private label food sales share far outweighs beverage sales share
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- Figure 9: MULO sales of private label food and beverages, by segment, 2015
- Private label food sales expected to gain more quickly than beverages
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- Figure 10: MULO sales of private label food and beverages, by segment, 2010-20
Market Perspective
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- Private label sales growth on par with total grocery; share change is flat
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- Figure 11: Total and private label MULO food/beverage sales and private label share of total, at current prices, 2010-15
- More product transparency could help store brands compete with national brands
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- Figure 12: Attitudes toward store brand products – Product transparency, November 2015
Market Factors
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- Private label quality and selection has improved
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- Figure 13: Attitudes toward store brand food products – Perceptions of quality, November 2015
- Millennials, Hispanics, and households high store brand buyers
- Millennials – the most populous generation – very likely to buy
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- Figure 14: US population by generation, 2010-20
- Hispanics likely to buy store brands, projected to grow significantly into 2020
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- Figure 15: US population by race and Hispanic origin, 2010-20
- Presence of children factors significantly; percentage of households with kids down
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- Figure 16: Households, by presence of own children, 2003-13
Key Players – What You Need to Know
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- Refocusing on value
- Mass, club, and supermarket chains adopt different strategies
- Private label sales down in many key categories
- Amazon to test own brands; Whole Foods ventures into value
What’s Working
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- Revisiting the basic value proposition
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- Figure 17: Walmart YouTube channel video, 2016
- Target’s tiered program appeals to budget- and quality-conscious buyers
- Costco’s Kirkland Signature helps drive sales and club membership
- Aldi pursues unique shopper engagement format with store brands
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- Figure 18: Aldi YouTube channel video, 2015
- Simple labeling can increase appeal
What’s Struggling?
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- Private label declining in key categories
What’s Next?
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- Amazon expected to join the private label food market
- Whole Foods to open six of its 365 discount concept stores in 2016
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- Figure 19: Whole Foods 365 Everyday Value YouTube channel video, 2016
- Fresh food trend likely to positively impact store brands
The Consumer – What You Need to Know
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- More than half of consumers are medium-high store brand buyers
- Frequent store brand purchasing at perimeter store departments
- Transparency, premium products, minimal ingredients important factors
- BFY, natural, minimal ingredients are important purchase factors
Percentage of Grocery Spend On Store Brands
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- More than half dedicate 50% or more share of cart to store brands
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- Figure 20: Percentage of grocery spend on store brands, November 2015
- Private label appeal for Millennials
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- Figure 21: Percentage of grocery spend on store brands, by Millennials versus non-Millennials, November 2015
- Presence of children means higher share of cart for store brands
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- Figure 22: Percentage of grocery spend on store brands, by presence of children, November 2015
- Hispanics significantly likely to dedicate share of cart to store brands
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- Figure 23: Percentage of grocery spend on store brands, by race/Hispanic origin, November 2015
- Opportunity in key categories
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- Figure 24: Percentage of grocery spend on store brands, by interest in more store brand offerings, November 2015
Retailers Used for Store Brand Grocery Purchases
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- Most buy store brands from supermarkets and mass stores
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- Figure 25: Retailers used for store brand grocery purchases, November 2015
- Millennials less apt than non-Millennials to use supermarkets
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- Figure 26: Retailers used for store brand grocery purchases, by Millennials versus non-Millennials, November 2015
- Households with kids likely to use mass stores over supermarkets
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- Figure 27: Retailers used for store brand grocery purchases, by presence of children, November 2015
- Hispanics opt for value and natural channels rather than supermarkets
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- Figure 28: Retailers used for store brand grocery purchases, by race/Hispanic origin, November 2015
Store Brand Purchasing Frequency
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- More frequent purchasing of store perimeter products
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- Figure 29: Store brand purchasing frequency, November 2015
- Millennials increase store brand purchases more than non-Millennials
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- Figure 30: Store brand purchasing frequency (the same amount or more), by Millennials versus non-Millennials, November 2015
Interest in More Store Brand Category Offerings
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- Relatively low interest in more of specific store brand category offerings
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- Figure 31: Interest in more store brand category offerings, November 2015
- Millennials more likely to want to see more store brands
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- Figure 32: Interest in more store brand category offerings, by Millennials versus non-Millennials, November 2015
- More store brand offerings likely to resonate with family households
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- Figure 33: Interest in more store brand category offerings, by presence of children, November 2015
- More store brand category offerings likely to appeal to Hispanics
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- Figure 34: Interest in more store brand category offerings, by race/Hispanic origin, November 2015
Attitudes toward Store Brand Products
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- Product transparency is important to vast majority of buyers
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- Figure 35: Attitudes toward store brand products – Transparency, November 2015
- Trust is a key issue in appealing to Millennials
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- Figure 36: Attitudes toward store brand products – Transparency, by Millennials versus non-Millennials, November 2015
- High interest in more premium store brands, but price may be an issue
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- Figure 37: Attitudes toward store brand products – Interest in premium products, November 2015
- Millennials very interested in premium; more than half willing to pay for it
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- Figure 38: Attitudes toward store brand products – Interest in premium products, by Millennials versus non-Millennials, November 2015
- High Hispanic interest in premium; more than four in 10 willing to pay
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- Figure 39: Attitudes toward store brand products – Interest in premium products, by race/Hispanic origin, November 2015
- Ingredients are vital to purchase decisions
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- Figure 40: Attitudes toward store brand products – Ingredients, November 2015
- Local sourcing, simple ingredients appeal to Millennials
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- Figure 41: Attitudes toward store brand products – Ingredients, by Millennials versus non-Millennials, November 2015
- Simple ingredients worth extra cost to more than six in 10 Hispanics
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- Figure 42: Attitudes toward store brand products – Ingredients, by race/Hispanic origin, November 2015
Factors That Increase the Likelihood of Store Brand Purchase
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- BFY, natural, minimal ingredients drive purchases
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- Figure 43: Factors that increase the likelihood of store brand purchase (any ranking) – Healthiness, November 2015
- Natural/organic appeal to Millennials more than non-Millennials
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- Figure 44: Factors that increase the likelihood of store brand purchase (any ranking) – Healthiness, by Millennials versus non-Millennials, November 2015
- Natural and organic influence family households to buy
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- Figure 45: Factors that increase the likelihood of store brand purchase (top three rank) – Healthiness, by presence of children, November 2015
- A third prefer local sourcing
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- Figure 46: Factors that increase the likelihood of store brand purchase (any ranking) – Product sourcing, November 2015
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Fan chart forecast
- Consumer survey data
- Abbreviations and terms
- Abbreviations
Appendix – Market
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- Figure 47: MULO sales and forecast of private label food and beverages, at inflation-adjusted prices, 2010-20
- Figure 48: MULO sales and forecast of private label food, at current prices, 2010-20
- Figure 49: MULO sales and forecast of private label food, at inflation-adjusted prices, 2010-20
- Figure 50: MULO sales and forecast of private label beverages, at current prices, 2010-20
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- Figure 51: MULO sales and forecast of private label beverages, at inflation-adjusted prices, 2010-20
- Figure 52: Total and private label MULO food sales, and private label share of total, at current prices, 2010-15
- Figure 53: Total and private label MULO beverage sales, and private label share of total, at current prices, 2010-15
- Market breakdown
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- Figure 54: MULO sales of private label food and beverages, by segment, at current prices, 2013 and 2015
- Retail channels
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- Figure 55: MULO sales of private label food and beverages, by retail channel, at current prices, 2010-15
- Figure 56: US supermarket sales of private label food and beverages, at current prices, 2010-15
- Figure 57: US other MULO channel sales of private label food and beverages, at current prices, 2010-15
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Appendix – Consumer
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- Experian Simmons analysis
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- Figure 58: Household use of various store brand products, July 2014-September 2015
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