Across much of the world, private label products are increasing their share in the grocery market. In the richer areas like Western Europe, it already accounts for 40%, according to NIQ, with private label in countries like the US and Australia coming in at about half that share.
Other parts of the world tend towards single digit percentages. But the global nature of the cost-of-living crisis has made private label more attractive to a growing number of consumers and therefore retailers.
With reduced costs of marketing, branding and middlemen, private label offers grocers the chance to undercut the competition – and perhaps even take a share of the premium tier and lead the way on innovative product development.
The state of US private label F&B
Perhaps unsurprisingly, much of the manufacturing for private label remains close to the markets that they serve. That much is true of the US which, because of its size, has the largest market for private label food and drink sales, estimated by the US Department of Agriculture at $282.8bn in 2025.
Some of this is driven by well known retailers. Aldi’s range, as in Europe, is overwhelmingly private label. Trader Joe’s, a US chain, claims that 80% of the store products are private label. And leviathans like Walmart also see private label sales that account for 20-25% of total grocery sales.
Behind these retailers are a plethora of private label manufacturers unknown to the average consumer. Among them are TreeHouse Foods which makes everything from crackers to pickles, the dairy specialist Shreiber, and Maker’s Pride which produces baked goods, snack bars and granola.
There are significant advantages for US retailers who chose to rely on domestic own label manufacturers, argues Valentin Chelnokov, President and CEO of Zina’s Fine Foods. The prepared food manufacturer is based in New Jersey, supplying more than 7,000 stores across 40 States in the US with salads and ready meals.
“A domestic, agile manufacturer can turn a reformulation around in weeks rather than a season, and retailers use that,” says Chelnokov. “A category manager will come back three times before a launch to move the protein number, drop the sodium, change the pack size. That kind of iteration is hard to run across the ocean.”
The scale of the US, with the population estimated by the government at 343 million, means the grocery market is big enough to support own label manufacturing in narrow categories. “You can build a plant that does one thing well and still fill it,” Chelnokov says. “In smaller markets you end up making five unrelated things to keep the lines running, and quality might suffer.”
That internal focus of food manufacturing is especially pronounced in the fresh and chilled aisles. Chelokov argues that attempting to preserve fresh food will tend to damage the texture, for example by using high-pressure processing (HPP).
“Going from frozen back to fresh usually means giving up something on the ingredients, since freezing changes how the product holds moisture and how salt and seasoning behave once it thaws,” he says.
“The options are either natural preservation, adjusting pH and using natural antimicrobials like cultured dextrose, rosemary and garlic extract, or conventional preservatives like benzoates and sorbates, which have a limit and aren’t likely to survive more than a few weeks.”
But it’s not all about self-sufficiency. Canada is a popular destination for US own label food, chiefly due to proximity. Costco’s Kirkland Signature brand, which covers many categories, is sold across the border in huge quantities, to give one example.
Europe’s private label F&B manufacture
Another feature of US food manufacturing is importing products and adding some final touches.
Europe is a common partner because of common consumer tastes and high food safety standards.
Greece is one perhaps surprising example highlighted by Chelokov, favoured in part because labour costs “run cheaper than Polish ones, a real shift from a decade or so ago when the two were competing head to head”. Nor do such manufacturers stick to feta and olives; canned goods and wheat-based products are other popular choices.
This speaks to Europe’s own strong manufacturing base in private label food and drink. Partly this is because of the high proportion of groceries sold that are private label, especially when you focus on particular countries.
In April this year, data provider Circana reported that Spanish private label had a 59% unit share in supermarkets, while Netherlands clocked in at 56%. This fact was attributed to the maturity of the countries’ discounter supermarkets, although private label had also achieved strong penetration in the other leading European grocery markets, accounting for 52% of units in Germany and the UK, 46% in France and 36% in Italy.
“Supermarket private label brands have spent the last decade becoming powerful brands in their own right,” said Ananda Roy, SVP of strategic growth insights at Circana. “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.”
One distinction between the US and European markets is that the latter is necessarily more fragmented, with different countries specialising in different categories. However, the continent’s smaller size and the alignment of regulations, particularly within the EU, still facilitates a thriving cross-border trade.
Examples of national strengths include convenient food to go, with Greencore the leading private label supplier in the UK. Danish Crown is an example of a large private label meat processor, and the continent also has many dairy companies which participate in the private label market, such as Arla.
Many of these companies are firmly established in their respective markets. However, rising energy prices, labour costs and regulatory burdens are making outsourcing to manufacturers further afield more enticing.
Private label F&B manufacture in China
One potential source of imports is of course China, which boasts one of the world’s largest manufacturing bases for food and drink. While private label penetration in the Chinese market is often estimated at 5% or below, it is still a considerable customer base when considering the population exceeds 1.4 billion.
What is most striking is that the cost-of-living crisis is incentivising foreign markets to move away from importing food and drink products, instead buying up original manufacturing equipment (OEM) to enable local production, says Karo Tovmasyan. He works as a procurement consultant for Asian Trade in Dongguan, a south eastern Chinese city that is often regarded as the world’s manufacturing capital.
“Traditionally, many of our regional beverage clients would contract entire end-to-end private label complex productions, whether cold brews, RTD coffee or carbonated soft drinks, directly to large co-packers in China,” he says. “They’d outsource every step of the process, from the ingredients to the final canned goods.”
The downsides of this approach have become increasingly apparent amid global supply chain disruption. Tovmasyan’s beverage clients are increasingly moving away from importing liquid-filled goods, and instead purchasing industrial freeze-drying (sublimation) machinery, automated bottling lines, and processing equipment.
“The approach is to import the efficiency equipment once, use local abundance of resources such as local fruits, vegetables and botanicals, and manufacture in-house,” he says. “It completely cuts the waste cycle of sourcing and shipping raw materials to China only to then ship finished goods in dense packaging back to home markets.”
In the case of regional markets like Armenia, one of the areas that Tovmasyan specialises in, government subsidies, leasing and other financing options are used to ease the costs of enabling domestic manufacturing. Chinese technicians are also sometimes brought across for initial setup and training.
For local governments, the growth of domestic manufacturing capacity can have the additional benefits of increasing local food production, growing the economy, increasing food security, and acting as a consumer draw when local sourcing is highlighted on product packaging.
Of course, it’s not practical to bring every part of beverage manufacturing back on shore. So for food and drink products and ingredients that still need to be imported, “there’s an intense focus on lightweight, innovative eco-packaging and high-barrier concentrates to significantly reduce freight volume”, Tovmasyan says.
“If the focus is on saving money in today’s marketplace, one does not save on ingredients, rather one designs for weight in packaging and moves heavy industrial production closer to the customer.”
Private label F&B manufacture in Thailand
China is therefore an attractive place for retailers seeking to grow their private label range. But increased geopolitical volatility has pushed many importers towards the China plus one strategy. This entails diversifying imports to an extra country, mitigating the political and economic risks of China while tapping into the advantages of its neighbours.
“Southeast Asia is well positioned to benefit from this shift because it combines competitive manufacturing costs, strong agricultural supply chains, improving technical capabilities and a network of free trade agreements,” says Thao Pham, a country manager at the exporting consultancy Intralink.
She predicts that regional diversification will boost own label food and drink manufacturing in the region, as well as the closely related OEM sector. Customers will hope to utilise the production capacity, as well as strengths in development, formulation, packaging design, regulatory support and sustainability.
Leading the charge is Thailand, says Pham. “It has the region’s broadest and most mature food-processing base, supported by strong agricultural and fisheries supply chains, experienced manufacturers, established export infrastructure and a long track record of supplying international markets,” she adds.
Thai manufacturing stretches across a wide array of categories, including processed seafood and poultry, canned goods, frozen foods, sauces, ready meals, beverages, snacks and tropical fruit. Low production costs are buttressed by experience in meeting the food safety, quality and certification needs of international customers.
One prominent company in the sector is Thai Union, which specialises in seafood under its own brand as an own label manufacturer. NR Instant Produce manufactures sauces, seasonings, and ready meals, while Tipco F&B focuses on soft drinks.
Private label F&B manufacture in Malaysia and Vietnam
Pham also points to Malaysia as “an important regional hub”, responsible for confectionery, beverages, and instant foods that are exported across Asia, Europe and North America.
The country is particularly notable for its strength in halal-certified foods in frozen, snacking, ingredients and drinks. Muslims account for two-thirds of the country’s population, with Islam being the official state religion.
“Its halal certification ecosystem, good infrastructure and proximity to Singapore make it an attractive manufacturing location for companies targeting Muslim consumers in Southeast Asia, the Middle East and other international markets,” Pham explains
Among the key private label manufacturers is Otafuku Sauce Malaysia produces sauces, seasonings and vinegar products, “with a significant share of its output manufactured through [original design manufacturer] arrangements”, Pham says. LKT Food Industries manufactures frozen flatbreads, pastries, ice cream and convenience foods, while Dong Sing Group makes frozen dim sum, Chinese prepared foods and festive products.
The other significant country highlighted by Pham is Vietnam. The country has a strong line in coffee, seafood and tropical fruit, as well as rice-based foods, noodles and sauces.
“Vietnam is developing rapidly and is competitive in categories connected to its domestic agricultural and fisheries resources,” she says. “Its private label industry includes both large export manufacturers and specialist producers.”
Some of its notable private label manufacturers include Tan Do Beverage, which makes fruit drinks, coconut water, coffee, tea and energy drinks. Nafoods focuses on juices and fresh fruit, as well as related foodstuffs, while Rita Food & Drink is a large export-oriented beverage maker.
The future of global private label F&B manufacture
Pham predicts that Thailand will retain its regional leadership in Southeast Asia, even while labour, energy and compliance costs increase. She expects Malaysia to retain its growth in halal foods, frozen convenience and functional beverages. But Vietnam may well grow the quickest of the three.
“Investment in modern processing, cold chain infrastructure, packaging and food safety systems should allow manufacturers to move from exporting commodities and basic processed products towards higher-value consumer goods,” she says about Vietnam. “Its free trade agreements and competitive cost base support this development.”
It’s a warning to their peers around the world that developing countries could soon be competing not merely on budget lines, but the premium tiers that have become increasingly attractive to customers trading down from hospitality. Either way, private label manufacturing is only slated to grow, wherever it is in the world.