The Private Label Food and Drink Consumer - US - December 2010

Private label food and drink products have garnered more attention in the media, as well as the business community, in recent years in part because of the impressive growth across multiple categories. Consumers are buying private label food and drink products in greater numbers, typically because these products represent better value irrespective of the price point at which the consumer is buying. While price is an important driver of private label performance, it is also evident that the quality of the products have improved in recent years, and consumers increasingly recognize that “store brands” are often of equal, or even superior quality, to comparable nationally branded products. Moreover, many retailers of private label products have developed elegant and intriguing packaging that has helped to position their products as premium, and perhaps alleviate—or even eliminate— the stigma associated with “generic” products.

Table of contents

Scope and Themes
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Advertising creative
Abbreviations and terms
Abbreviations
Terms
Executive Summary
Weak economy and improved quality of offerings drive growth
Innovation and value drive strong performance at some retailers
Private label strongest in staples
Many unable to differentiate between private label and national brands
Overall, most feel that private label quality is equal to national brand
Private labels increasing share of market
Baking, bread and bakery
Cheese, dairy and eggs
Canned foods
Fish and meat
Jams, jellies and refrigerated spreads
Oils, dressing and condiments
Frozen foods and frozen desserts
Rice, pasta, snacks, chips and nuts
Drinks
Insights and Opportunities
Offer in-store samples to demonstrate quality of private label products
Provide ways for customers to engage with the product
Provide products that help consumers achieve healthy living goals
Figure 1: Eating healthier than last year, by household income, October 2010
Provide recipes that include private label products to entice home chefs
Figure 2: Cooking more at home than last year, by household income, October 2010
Figure 3: Consumer Price Index for key consumer markets, June 2008-10
Highlight a money back guarantee on private label purchases
Inspire Insights
Trend: Experience is All
Market Size and Trends
Sales growth accelerates in response to recession
Figure 4: FDMx private label food and drink sales and forecast, at current prices, 2005-15
Figure 5: FDMx private label food and drink sales and forecast, at inflation-adjusted prices, 2005-15
Fan-chart forecast
Figure 6: FDMx private label food and drink sales and forecast at current prices, (2005-15) with worst and best cases
Bakery and dairy lag other sectors in PL growth
Figure 7: FDMx sales of private label food and drink, by category, 2004-10
Figure 8: Year-over-year change in FDMx sales of private label, by category, 2004-10
Figure 9: Indexed growth of FDMx sales of private label food and drink, by category, 2004-10
Market Drivers
Key points
Macroeconomic conditions contribute to demand for private label options
Figure 10: Unemployment and underemployment rate in the U.S., January 2007-November 2010
Figure 11: Median household income in inflation-adjusted dollars, 1999-2009
Figure 12: Spending more time looking for sales and bargains than last year, by household income, October 2010
Confidence wanes; most spending more time looking for bargains
Figure 13: Consumer Sentiment, January 2007-October 2010
Healthy living trend driving performance of some private labels
Figure 14: Incidence of presently watching/controlling diet, May 2004-March 2009
Figure 15: Attributes diet-watchers look for in food, 2006 and 2009
Private label products often seen as comparable to national brands
Marketing Strategies
Key points
Overview
Summary of in-store observations
Safeway: SELECT
Social media
Television
Figure 16: Safeway Thanksgiving television ad, 2010
Circulars
Figure 17: Safeway circular ad, meat, 2010
Figure 18: Safeway circular ad, bakery, 2010
Figure 19: Safeway circular ad, SELECT prepared meals, 2010
Figure 20: Safeway circular ad, SELECT chocolate bars, 2010
Target: Archer Farms
Customer quotes from target.com
Television
Figure 21: Target television ad, 2010
Figure 22: Target television ad, 2010
Whole Foods: 365 Everyday Value
Customer quotes from wholefoodsmarket.com
Kmart: Smart Sense
Kmart solicits customer feedback
Leading Companies — Who’s Getting It Right?
Key points
Combination of innovative premium and value-oriented labels drive growth
Safeway: SELECT
Whole Foods: 365 Everyday Value
Trader Joe’s
Costco: Kirkland Signature
Private label activity
Costco on Facebook
Target: Archer Farms
Walmart: Great Value
Supervalu: Shopper’s Value
Consumer Likelihood of Buying Private Label Products
Key points
Many purchase private label bread, dairy and packaged meal elements
Figure 23: Likelihood of buying store brands, by food category, September 2010
Figure 24: Likelihood of buying store brands, by drink type, September 2010
Private label purchase incidence compared to last year
Figure 25: Private label purchase incidence compared to last year, by product category, September 2010
Baking, Bread and Bakery
Key points
Products baked on premises among most popular private label products
Figure 26: Incidence of household use of name brand vs. store brand, baking, bread and bakery, April 2009-June 2010
Figure 27: Trends in household use of store brand baking, bread and bakery, 2003-10
Sales of sweeteners skyrocketed between 2005 and 2010
Figure 28: FDMx sales of baking, bread and bakery, by private label and national brand, with share and growth of private label share, 2010*
The demographics of buying store brand baking, bread and bakery
Figure 29: Incidence of usually buying store brand baking, bread and bakery, by household income, September 2010
Flavored oatmeal becoming more common; Family Dollar going gourmet
Cheese, Dairy and Eggs
Key points
Majority show preference for private label eggs
Figure 30: Incidence of household use of name brand vs store brand, cheese, dairy and eggs, April 2009-June 2010
Increased usage of private label cheese drives significant sales gains
Figure 31: Trends in household use of store brand cheese, dairy and eggs, 2003-10
Figure 32: FDMx sales of cheese, dairy and eggs, by private label and national brand, with share and growth of private label share, 2010*
The demographics of buying store brand cheese and other dairy
Figure 33: Incidence of usually buying store brand cheese and other dairy, by age, September 2010
Figure 34: Incidence of usually buying store brand cheese and other dairy, by household income, September 2010
Variety of new dairy products coming online
Canned Foods
Key points
Many still hesitant to use private label canned products
Figure 35: Incidence of household use of name brand vs store brand, canned foods, April 2009-June 2010
Increased use of canned tomatoes and broth reflects cooking trend, drives sales
Figure 36: Trends in household use of store brand canned foods, 2003-10
Figure 37: FDMx sales of canned foods, by private label and national brand, with share and growth of private label share, 2010*
Demographics of private label soup, packaged fruit and vegetable users
Figure 38: Incidence of usually buying store brand soup, packaged fruit and vegetables, by key demographics, September 2010
More premium soups with aseptic packaging
Fish and Meat
Key points
Private label meat and seafood sales are rising
Figure 39: Incidence of household use of name brand vs store brand, fish and meat, April 2009-June 2010
Private label seafood sales on the rise as sales of frankfurters decline
Figure 40: FDMx sales of fish and meat, by private label and national brand, with share and growth of private label share, 2010*
Few significant differences between demographic segments
Figure 41: Incidence of usually buying store brand fish, meat and poultry, by key demographics, September 2010
Value-priced premium options becoming more common
Jams, Jellies and Refrigerated Spreads
Key point
Consumers stick with name brand peanut butter, even during recession
Figure 42: Incidence of household use of name brand vs store brand, jams, jellies and refrigerated spreads, April 2009-June 2010
Figure 43: Trends in household use of store brand jams, jellies and refrigerated spreads, 2003-2010
Figure 44: FDMx sales of jams, jellies and refrigerated spreads, by private label and national brand, with share and growth of private label share, 2010*
Lower income and older consumers more likely to buy private label
Figure 45: Incidence of usually buying store brand peanut butter, jams, jellies and preserves, by key demographics, September 2010
More standard and premium options introduced in 2010
Oils, Dressing and Condiments
Key points
Though brand name ketchup use quite high, many use store brands
Figure 46: Incidence of household use of name brand vs store brand, oils, dressing and condiments, April 2009-June 2010
Most consumers remained loyal to brand names during recession
Figure 47: Incidence of usually buying store brand mayonnaise and dressing, by key demographics, September 2010
FDMx sales growth driven by cooking trend
Figure 48: Trends in household use of store brand oils, dressing and condiments, 2003-2010
Figure 49: FDMx sales of oils, dressing and condiments, by private label and national brand, with share and growth of private label share, 2010*
New products designed for those making inexpensive meals at home
Frozen Foods and Frozen Desserts
Key points
Ice cream and frozen vegetables popular private label frozen foods
Figure 50: Incidence of household use of name brand vs. store brand, frozen foods and desserts, April 2009-June 2010
Figure 51: FDMx sales of frozen foods and frozen desserts, by private label and national brand, with share and growth of private label share, 2010*
Low income households key for PL frozen
Figure 52: Incidence of usually buying store brand frozen foods and desserts, by household income, September 2010
More premium and ethnic SKUs come online in 2009 and 2010
Rice, Pasta, Snacks, Chips and Nuts
Key points
One in four buy private label pasta
Figure 53: Incidence of household use of name brand vs store brand, rice, pasta, snacks, chips and nuts, April 2009-June 2010
Staples used to cook meals at home drive category growth
Figure 54: Trends in household use of store brand rice, pasta, snacks, chips and nuts, 2003-10
Figure 55: FDMx sales of rice, pasta, snacks, chips and nuts, by private label and national brand, with share and growth of private label share, 2010*
Private label appeals most to households with incomes below $50K
Figure 56: Incidence of usually buying store brand rice, pasta, snacks, chips and nuts, by household income, September 2010
Retailers introduced more enriched pasta and premium snacks in 2010
Drinks
Key points
Drinks among the least popular private label category
Figure 57: Incidence of household use of name brand vs. store brand, drinks, April 2009-June 2010
BFY options could drive sales growth
Figure 58: FDMx sales of drinks, by private label and national brand, with share and growth of private label share, 2010*
Private label drinks most popular with low and middle income shoppers
Figure 59: Incidence of usually buying store brand drinks, by household income, September 2010
Most private label drinks appear value-oriented, non-premium
Ability to Identify Private Label and Name Brands
Key point
Most are unsure whether private labels are store brands or national brands
Figure 60: Ability to identify store vs. name brands, September 2010
Higher income consumers more familiar with brand types
Figure 61: Identification of store brands as store brand/name brand, by household income, September 2010
Figure 62: Identification of name brands as store brand/name brand, by household income, September 2010
Attitudes and Beliefs Regarding Store Brands
Key points
Consumers generally view private label and national brands as equals
Figure 63: Perceptions of quality, store brand vs. name brand, by product category, September 2010
55+ segment most likely to hold favorable attitudes toward private label
Figure 64: Attitudes and beliefs regarding store brands, by age, September 2010
Affluents generally favorable towards private labels
Figure 65: Attitudes and beliefs regarding store brands, by household income, September 2010
Most open to trying new products
Figure 66: Influencers of and interest in new products, by age, September 2010
Cluster Analysis
Moderate Users
Demographics
Characteristics
Opportunity
Brandies
Demographics
Characteristics
Opportunity
Proclaimers
Demographics
Characteristics
Opportunity
Cluster characteristics
Figure 67: Private label clusters, September 2010
Figure 68: Attitudes and beliefs regarding store brands, by private label clusters, September 2010
Figure 69: Perceptions of quality, store brand vs name brand, consider name brand as better quality, by product category, by private label clusters, September 2010
Figure 70: Perceptions of quality, store brand vs name brand, consider no difference between name brand and private label, by product category, by private label clusters, September 2010
Figure 71: Influencers of and interest in new products, by private label clusters, September 2010
Cluster demographics
Figure 72: Private label clusters, by gender, September 2010
Figure 73: Private label clusters, by age, September 2010
Figure 74: Private label clusters, by household income, September 2010
Figure 75: Private label clusters, by race/Hispanic origin, September 2010
Cluster methodology
Appendix: Additional Consumer Tables
Gender
Figure 76: Identification of store brands as store brand/name brand, by gender, September 2010
Figure 77: Attitudes and beliefs regarding store brands, by gender, September 2010
Figure 78: Influencers of and interest in new products, by gender, September 2010
Age
Figure 79: Incidence of usually buying store brand baking, bread and bakery, by age, September 2010
Figure 80: Incidence of usually buying store brand frozen foods and desserts, by age, September 2010
Figure 81: Incidence of usually buying store brand rice, pasta, snacks, chips and nuts, by age, September 2010
Figure 82: Incidence of usually buying store brand drinks, by age, September 2010
Figure 83: Identification of name brands as store brand/name brand, by age, September 2010
Figure 84: Identification of store brands as store brand/name brand, by age, September 2010
Household income
Figure 85: Influencers of and interest in new products, by household income, September 2010
Race and Hispanic origin
Figure 86: Attitudes and beliefs regarding store brands, by race/Hispanic origin, September 2010
Figure 87: Influencers of and interest in new products, by race/Hispanic origin, September 2010
Region
Figure 88: Incidence of usually buying store brand baking, bread and bakery, by region and urban status, September 2010
Figure 89: Incidence of usually buying store brand cheese and other dairy, by region and urban status, September 2010
Figure 90: Incidence of usually buying store brand frozen foods and desserts, by region and urban status, September 2010
Figure 91: Incidence of usually buying store brand rice, pasta, snacks, chips and nuts, by region and urban status, September 2010
Figure 92: Incidence of usually buying store brand drinks, by region and urban status, September 2010
Figure 93: Attitudes and beliefs regarding store brands, by region, September 2010
Presence of children
Figure 94: Incidence of usually buying store brand cheese and other dairy, by gender and presence of children, September 2010
Figure 95: Incidence of usually buying store brand frozen foods and desserts, by gender and presence of children, September 2010
Figure 96: Incidence of usually buying store brand rice, pasta, snacks, chips and nuts, by gender and presence of children, September 2010
Figure 97: Incidence of usually buying store brand drinks, by gender and presence of children, September 2010
Figure 98: Identification of store brands as store brand/name brand, by presence and number of children, September 2010
Figure 99: Identification of name brands as store brand/name brand, by presence and number of children, September 2010
Figure 100: Attitudes and beliefs regarding store brands, by presence and number of children, September 2010
Figure 101: Influencers of and interest in new products, by number and presence of children, September 2010
Purchase of private label personal care and household products
Figure 102: Likelihood of buying store brands, by personal care category, September 2010
Figure 103: Likelihood of buying store brands, by household goods category, September 2010
Appendix: FDMx Category Sales Forecast
Bakery
Figure 104: FDMx private label bakery sales, at current prices, 2005-15
Figure 105: FDMx private label bakery sales, at inflation-adjusted prices, 2005-15
Dairy
Figure 106: FDMx private label dairy sales, at current prices, 2005-15
Figure 107: FDMx private label dairy sales, at inflation-adjusted prices, 2005-15
Deli
Figure 108: FDMx private label deli sales, at current prices, 2005-15
Figure 109: FDMx private label deli sales, at inflation-adjusted prices, 2005-15
Edible
Figure 110: FDMx private label edible sales, at current prices, 2005-15
Figure 111: FDMx private label edible sales, at inflation-adjusted prices, 2005-15
Frozen
Figure 112: FDMx private label frozen sales, at current prices, 2005-15
Figure 113: FDMx private label frozen sales, at inflation-adjusted prices, 2005-15
Appendix: Additional FDMx Sales Estimates
Baking, bread and bakery
Figure 114: FDMx sales of baking, bread and bakery, 2005-10*
Figure 115: FDMx sales of private label baking, bread and bakery, 2005-10*
Cheese, dairy and eggs
Figure 116: FDMx sales of cheese, dairy and eggs, 2005-10*
Figure 117: FDMx sales of private label cheese, dairy and eggs, 2005-10*
Canned foods
Figure 118: FDMx sales of canned foods, 2005-10*
Figure 119: FDMx sales of private label canned foods, 2005-10
Fish and meat
Figure 120: FDMx sales of fish and meat, 2005-10*
Figure 121: FDMx sales of private label fish and meat, 2005-10*
Jams, jellies and refrigerated spreads
Figure 122: FDMx sales of jams, jellies and refrigerated spreads, 2005-10*
Figure 123: FDMx sales of private label jams, jellies and refrigerated spreads, 2005-10*
Oils, dressing and condiments
Figure 124: FDMx sales of oils, dressing and condiments 2005-10*
Figure 125: FDMx sales of private label oils, dressing and condiments 2005-10*
Frozen foods and frozen desserts
Figure 126: FDMx sales of frozen foods and frozen desserts, 2005-10*
Figure 127: FDMx sales of private label frozen foods and frozen desserts, 2005-10*
Rice, pasta, snacks, chips and nuts
Figure 128: FDMx sales of rice, pasta, snacks, chips and nuts, 2005-10*
Figure 129: FDMx sales of private label rice, pasta, snacks, chips and nuts, 2005-10*
Drinks
Figure 130: FDMx sales of drinks, 2005-10*
Figure 131: FDMx sales of private label drinks, 2005-10*
Appendix: Trade Associations

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