Private labels: Market, outlook and opportunities

© unsplash | Alexandru Tugui

Private labels in the food trade are a success story. Their triumphal march has clearly picked up speed in recent years. But there are sometimes significant differences depending on the product group – and not all suppliers benefit equally. The corona pandemic has also recently led to interesting changes – and consumer demand for private labels continues to rise. We analyse what private labels need to consider in order to continue to be successful. We look at the biggest growth opportunities and what the future holds for the private label market.


Private labels have existed in the German food trade for over 100 years. While consumers used to consider private labels to be of lower quality, this picture has changed significantly in recent years. Since then, food private labels can look back on a real triumphal procession. The success of private labels has been made possible by the good image they have been able to build up over the years.


Attractive and high-quality

For consumers, private label offers an opportunity to regularly buy high-quality food and non-food products at a favourable price compared to manufacturer brands. There is no need to wait for special offers.

Private label articles usually consist of ingredients of the same quality as the branded articles. At the same time, the retailer’s name or symbol on the packaging acts as a kind of brand. The consumer can thus be sure that the product meets the retailer’s quality standards and specifications.


Facts about private labels in the food sector

  • While the share of private labels in Germany was still 12 percent in 1973, a market share of 43.1 percent was already recorded in 2020.
  • According to KPMG’s Consumer Barometer, nine out of ten consumers consider the products of retail chains to be good value for money.
  • The market research company Ipsos found in a 2020 survey that 96 percent of Germans buy private labels. 66 percent rate retail and manufacturer brands as equally trustworthy.
  • However, there are clear differences in the market shares of private labels in different product groups. In the dairy products segment it is almost 55 percent, but in baby food it is just 11 percent.
  • It may come as a surprise that the only suppliers with a decreasing share of private labels are the discount supermarkets Aldi and Lidl. This is due to the increased offer of branded articles. The declining numbers of private labels are put into perspective when one sees that their share at Aldi is still over 80 percent.


Consequences of Corona and the Ukraine War

The Corona pandemic has led to consumers increasingly reaching for branded goods again. According to figures from the market research institute GfK, households in Germany spent an average of about 10 percent more money on branded goods in the Corona year 2020 compared to 2019.

It should be taken into account, however, that the economic impacts of the pandemic – and the war in Ukraine as well as the sharp rise in inflation – is only now really reaching most households.

As many households will have less money available for shopping in the near future, the consumption of cheaper private labels is likely to increase again.


Demands (for packaging)

There is no time for private labels to rest on their laurels. Because consumer expectations continue to rise. This also applies to packaging, as the Ipsos Private Label Monitor 2020 shows. There, 78 percent of the respondents demand that private labels must meet the same standards as manufacturer brands when it comes to packaging.


Topics, markets and opportunities of the future

Private labels can certainly look to the future with optimism. We name a few aspects that deserve special attention.

  • Freshness, regionality and health are the most important topics for consumers. They must also be taken into account by private labels in order to continue their success.
  • As mentioned above, the price sensitivity of consumers is likely to increase. The market research institute Nielsen has determined that 59 percent pay attention to special offers and reduced products in view of rising food prices. Private labels should benefit from this.
  • There are a number of European markets with accumulated needs and growth potential for private labels. One example is Italy, where the share is still a comparatively narrow 22.6 percent. In most Eastern European countries, too, the share of private labels is below 35 percent, which offers potential for the future.
  • The online segment is likely to become of particular importance for private labels. A clear indication of this forecast is the continued introduction of private labels by e-commerce generalist Amazon, but also by smaller niche online retailers. Amazon’s private label share was just 2 percent in 2017. It is not surprising that the company has decidedly anchored the continuous development of its private label products in its strategy.


All in all, the triumph of private labels will continue in the next few years, according to our forecast. Especially in the online segment, private labels are likely to become a much more important factor.


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