Food retailers have big goals for their private label portfolios, according to the second installment of the 2022 “The Power of Private Brands” report from FMI – The Food Industry Association. These portfolios currently hold an average dollar share of 18.2% of total sales, and grocers and manufacturers have an ambitious goal of increasing those sales to 22.6% over the next two years.
“As the food industry looks to the future for private labels, it is setting bold goals based on strong consumer demand,” said Doug Baker, vice president of industry relations at FMI. “To achieve these goals, retailers and manufacturers are considering multiple tactics, including private brands outside of the U.S. that have higher shares for growth approaches including innovation, strategies to accelerate growth and the increased availability of e-commerce for private labels.”
[Read more: “Going Private: How to Succeed in Store-Brand Sector”]
Among the strategies that retailers and manufacturers are using to increase their private label market share, 81% of survey respondents highlighted innovation, while 69% see potential in private label premiumization. An additional 60% see simpler ingredient lists as key to higher share, 56% look for products that offer a high price or value in a category, and 42% think prepared meal solutions are important .
When it comes to accelerating the growth of their private brands, 71% of respondents plan to work with vendors to optimize pricing and availability, as many inflation-strapped consumers today choose brands in based on lower costs, offers or the perception of good value for money. Some 64% of retailers and manufacturers plan to improve consumer and trend information, while 64% will launch new products and 58% will improve packaging.
Another key growth strategy, IMF says, will be to offer full private label portfolios for purchase via e-commerce. Retailers surveyed said 60% of their private label assortment is currently available for online shopping, and 80% believe that search functionality prioritizing private label offerings will be an important next step for growth. A further 73% believe providing attractive product images is important, and 65% said tagging attributes in search, such as health, wellness and sustainability, is a good decision.
In addition to its latest report, and in accordance with the historical White House Conference on Hunger, Nutrition and HealthIMF revealed earlier this week ambitious commitments the food industry has achieved for 2023 and beyond to help find solutions to end hunger, improve nutrition and reduce diet-related disease across the country. Commitments include food donations, improving food access for underserved communities, leveraging food-as-medicine programs, and promoting consumer education and transparency.