Private label growth driven by innovation, says Mintel

By Caroline Scott-Thomas

- Last updated on GMT

Related tags: Private label, Recession, Nutrition, Private label manufacturers association, Mintel

Private label product innovation has reached unprecedented highs and market share has rocketed as a result, according to market research organization Mintel.

In the US, private label foods have accounted for 27 percent of food introductions so far this year – or nearly 1,800 new food products, according to Mintel’s Global New Products Database. This is up from a 13 percent share in 2005.

The rising level of consumer acceptance for private label foods has widely been seen as a result of the global economic downturn, but although previous recessions have proved a boon to the sector, Mintel claims that this time is different: Consumers’ expectations of store brands have changed and so have the products.

Senior analyst at Mintel Krista Faron said: "Not only have private label introductions increased, but product innovation is reaching unprecedented highs. Retailers no longer only launch 'me-too' products to compete against major national brands. Instead, private label lines are hotbeds of creativity, driving markets and establishing themselves as trend leaders."

Health and wellness

Unlike other recessionary periods, the private label products now on offer are not just cheap imitations of familiar brands. Store brands are striving not only to keep up with, but also to surpass, their branded rivals in terms of innovation, bringing a new focus on ingredients for health and wellness in particular.

"Private label manufacturers realize 'value' means more than 'low price' to consumers, so they're wisely creating new products that deliver on some of today's most exciting food trends,"​ said Faron.

The organization gives Lucerne’s Eating Right line of private label foods as an example. The range includes Whole Wheat Mini Ravioli for kids, with fiber and protein; Apple Cinnamon Granola, fortified with plant sterols; and Light Ice Cream Cups, with probiotics.

‘Premium’ private label

Apart from private label products competing on the health and wellness ingredients front, the recession has had a big effect on other forms of innovation in the sector. This is not simply because shoppers are ‘trading down’ from their favorite brands, but because they are buying more premium in-home meals as they cut down on eating out, and buying more lunch products for eating in the office, such as private label soups. And private label is increasingly providing upscale products that promise quality ingredients.

Mintel forecasts that the private label sector will grow by 8.1 percent before the end of the year. In 2008, the US market grew by 9.3 percent, compared to just 4.5 percent for branded foods, the organization said.

Private label products account for more than $81bn in the US, with health and wellness claims including no trans fats, no saturated fats, multi-grains and antioxidants among the strongest-growing categories.

In the 2001-2003 recession, private label’s unit market share climbed from 20 percent to 21.8 percent, according to the Private Label Manufacturers Association. And in the 1990-1991 recession, unit share for retailer brands moved up from 17.6 percent to 20 percent.

Related topics: Markets

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