Private label growth: summary
- Private label unit share has risen across Europe for five years
- Private label reached record 50 percent unit share across major markets
- Low pricing and inflation pressure drive shoppers towards supermarket own brands
- Brands can respond through optimal pricing innovation and disciplined promotions
- Circana warns private label growth shows no signs of slowing
For each of the past five years, private label’s share of units sold has risen across Europe. For food and drink brands trying to stand out on shelf, that poses a real threat.
But this isn’t the moment to surrender. With smart strategies that leverage pricing, promotions and innovation, brands can fight back.
Why private label’s reaching record highs
In a blow to European food and drink brands, private label has, for the first time, captured a record 50% unit share across the six largest grocery markets: France, Germany, Italy, the Netherlands, Spain and the UK.
The threat is real. In several of these countries, supermarket own‑brand products already account for more than half of all units sold – a shift largely driven by price.
Supermarket labels are keeping their prices low. Amid renewed economic pressure resulting in rising food inflation, shoppers are voting with their wallets.
“Given that a normal shopping basket today costs the same as a premium basket did last year, price-conscious consumers are making hard decisions about which products to buy,” says Ananda Roy, senior VP of strategic growth insights at Circana.
And price isn’t the only reason private label is gaining on branded products. Supermarkets are also offering more premium products that tap into health and lifestyle trends, like the high-protein boom, and expanding audiences through clever social media strategies.
But it’s not game over for branded food and drink. In fact, some of private label’s own tactics can be leveraged to help regain that all-important market share. Here are three strategies to win.
1. Find the optimal price point - it’s an art
As purses tighten under the strain of rising food inflation, private label has surged. Supermarkets have succeeded in finding the optimal price point to win over shoppers, and brands have no choice but to do the same.
Pricing is a key lever of market growth, explains Circana’s Roy, and that won’t change anytime soon. “It’s expected to become even more crucial as we enter a period of macroeconomic volatility that will push up prices and contribute to the cost-of-living crisis returning.”
Unsurprisingly, determining how much shoppers are willing to pay isn’t about pulling a figure out of thin air. It’s a “science and an art”, says Roy, who recommends brands use price-elasticity studies to directly impact purchase behaviour.
“Pricing is about finding the optimal price point that reduces barriers, justifies value and drives choice and purchase in an active way.”
2. Innovate with profitability front of mind
Innovation presents another lever food and drink brands can pull to get into shoppers’ baskets.
Most brands benefit from having new product launches that meet evolving consumer needs, says the insights lead, with innovation a proven source of organic growth.
But again, there needs to be a well thought out strategy behind any launch. Market research can help ensure brands deliver the right product, in the right size, at the right price for the right consumer.
Known as Price Pack Architecture (PPA) in the business, Roy recommends brands use this kind of strategic framework to maximise profitability, sales volume and consumer appeal.
3. Lean into on-shelf promotions, but not too much
And then there’s on-shelf promotions, a strategy private label is absolutely leaning into – to varying degrees.
In fact, promotions, loyalty pricing and price-match strategies have intensified as part of a price war in recent times, reveals Circana data. But branded products are being discounted far more heavily than private labels.
Across Europe’s biggest grocery markets, 34% of branded unit sales were on promotion, compared with 14% for private label.
This suggests brands are at risk of over-promoting on shelves and driving up subsidisation rates, says Roy. “Instead, targeted promotions using loyalty data, retail media networks and shopper studies are the way forward.”
The private label and brand war: who will win?
The outlook shows no sign of private label growth easing. Throughout the rest of the year, rising inflation rates are likely to force brands to increase prices, while AI-driven shopping prioritises cheaper products that meet the same consumer needs.
The conflict in the Middle East, which is wreaking havoc on fuel and commodity prices, as well as food security, isn’t helping the situation.
But it’s not all doom and gloom for food and drink brands, which have been winning shoppers back in recent times and consequently, slowing the growth of private label. Moving forward, they’ll need to rely on more than just the reputation of their brand name or heavy discounts to tempt shoppers away, suggests Roy.
There is little time for hesitation. Without swift strategic change, private label will continue to strengthen its grip on the supermarket aisle.