Traditional Grocers Losing Private Label Battle

A new Packaged Facts report reveals specialty food retailers have experienced the largest gains in private label food and beverage sales, far outpacing traditional supermarkets and discounters.

August 02, 2010

NEW YORK - Specialty food retailers, such as Trader Joe's and Whole Foods, have carved out more successful private-label food programs than traditional supermarkets, according to a new Packaged Facts report, "Private Label Food and Beverage in the U.S."

The report estimates that private-label food and beverage sales totaled $87 billion in 2009, representing 17 percent of the total food and beverage sales in the U.S., a six percent increase from 2008.

The report reveals that traditional supermarkets and grocery stores are losing private label market share to alternative stores, with compound annual growth rate (CAGR) among traditional food and beverage retailers a modest four percent between 2005 and 2009. This contrasts sharply with the growth of private label sales at specialty food stores Whole Foods and Trader Joe's, which grew at a CAGR of 14 percent during the same period. Supercenters Walmart and Target realized CAGR of nine percent, and warehouse stores, such as Costco and Sam's Club, grew at a CAGR of six percent.

Those experiencing the weakest category growth were discount supermarkets, including SuperValu, Aldi and Dollar General, with a CAGR of two percent.

"Private-label food and beverage have eclipsed their ignoble past of no name and generic products with the development of new flavor varieties, enhanced product packaging and different pack sizes, and the emergence of premium lines," said Don Montuori, publisher of Packaged Facts. "Plus private labels entered into new territory where the additional power of the retailer name and its inherent benefits are aiding private labels to emerge as brand name. Store reputation alone may be the driving force in the success of chains such as Trader Joe's and Whole Food Markets in attracting more affluent consumers to the category."
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