Private Label Revolution: Trends Reshaping Consumer Choices in 2025

I'm sure you remember how popular private-label goods became at grocery and mass retailers during the COVID-19 pandemic. With their high availability and low prices, these products have become quite appealing to many shoppers. Now, will consumers still lean toward private label products in 2025? If you're a retailer, how can you attract more shoppers to your private label offerings? You'll find some great insights in this article.

Private Label Value Increase

What is a Private Label?

A private brand, or private label, is a product made for and sold under the name of a specific retailer, going up against brand-name items. It’s also called a "store brand," and the prices for these private labels are usually lower than those of big-name brands. One reason private label sales have been growing so fast is how people’s views have changed. Initially, they were seen as a backup for shoppers looking for products that weren't impacted by supply chain problems during the pandemic, but retailers have done a great job of keeping that trust and loyalty from shoppers in the years since.

The Growth Rate of Private Label

NIQ RMS data from Q2 2024 revealed that private labels saw a 5.6% increase in value sales over the past year. With higher inflation playing a role, the Middle East & Africa and Latin America experienced the quickest growth, with private label product sales jumping by 34.3% and 14.2% respectively. While the global value share growth was a bit more subdued, it still backs up the idea that shoppers are grabbing more private label products than ever before.

Factors Driving Private Label Sales Growth

First thing is cost saving. In a year when 36% of shoppers are worse off than before, 77% of which are affected by the increased cost of living, price is now the key driver for many shoppers, creating space for private label to flourish, according to NIQ Global Consumer Outlook 2024.

Customized products have a huge appeal to consumers. A McKinsey study established that 71% of customers expect brands to offer personalized interactions. On the other hand, Dynata research points out that 80% of customers are more likely to buy from retailers offering personalized engagements. Retailers handling private label products can create customized experiences matching customer needs and preferences.

Private label brands offer higher profit margins for retailers. According to CB Insights, retailers partnering with private-label brands experience up to 35% profits, compared to 26% for national brands.

Categories of Private Labels Thrive

Private label sales and market share are on the rise in general foods, shelf-stable drinks, refrigerated items, and beauty and home products. When it comes to food and beverages, private brands are really outshining the big-name ones. Overall, household staples are the top categories where shoppers are looking for private label options, with over half of people in the U.S. buying private brand canned goods, drinks, dairy, paper products, and bread and bakery items, according to research from consulting firm PDG Insights.

Consumer Behaviors on Private Label Products

Market Share in Different Regions

In 2023, private label made up 19.4% of total FMCG value sales worldwide, and that jumps to 26% when we focus on Western Europe. Actually, Western Europe is at the forefront of private label growth in market share, hitting a total of 36%. Now, let’s check out private label sales in the rest of the world.

The value share growth of private label in APAC is climbing to 4.2%. Even with this steady growth, there's still plenty of room for opportunity. In APAC, where consumers tend to be more loyal to brands, private label shares are noticeably lower compared to the global average.

Historically, Europe has been leading the charge on private label adoption. A survey by NIQ in August 2024 showed that German respondents topped the list, with about 61% saying they buy more private label products than ever. In Europe, over 80% of consumers think the quality of those private brands is on par with or even better than the branded stuff.

The US market is the big player in North America. Almost one in five consumer goods products sold in the US is a private label. Over the past five years, the market share for private brands in US consumer goods has steadily grown, jumping from 17.7% in 2019 to nearly 19% by 2023. McKinsey’s recent research indicates that more than 80% of US consumers believe the quality of private-brand food products is just as good or better than national brands, and nearly 90% think private brands offer similar or better value.

According to the Private Label Study in Latin America by NielsenIQ Consumer Panel Services (CPS), right now, 9% of total consumer spending in the region goes to private labels, and 2 out of 10 purchases include at least one product from these brands. This growth is thanks to the quality and value they offer, making them a great choice for those wanting to save without losing out on quality. Private labels have already made huge strides in several countries, reaching almost total penetration: 99.7% of households in Puerto Rico, 99.6% in Mexico, 99.4% in Chile, 99.2% in Colombia, and 48% in Brazil. Colombia stands out as the strongest market in terms of spending on private labels, dedicating over 20% of annual spending to these products, while Brazil only spends about 1% on them.

When it comes to fast-moving consumer goods (FMCG) private label product sales, the African and Middle East markets together have contributed 6.1% of the market share.

Preference Across Different Generations

Consulting firm PDG’s findings show that family shoppers are buying more private label goods than younger consumers, with consumers aged 35 to 54 and aged 55 and older purchasing private label items across an average of 8.9 and 8.4 categories, respectively. Consumers aged 18 to 35 purchase private label from an average of 7.3 categories. As purchasing frequency for private label increases with age, so does the perception that private label provides good value, Sheehan found.?88% of shoppers 55 and older, for example, agree with the statement, “Private label provides a good value,” compared to 75% of consumers in the 18 to 34 age group, PDG’s research found. However, when it comes to brand loyalty, younger consumers do not perform as well as older age groups, with a high willingness to try new brands among 18 to 34 and 35 to 44-year-olds, with 67% and 73% of the group preferring to try a new in-house brand, respectively, while this percentage drops to 48% among the 55+ age group.

E-commerce and Online Channels

More than 22% of private label shoppers now plan to hit the store after placing an online order. They're also making use of mobile shopping sites to check out products while they’re in-store—70% of shoppers (Google/Purchased Data) use their phones to research items before or during their shopping trips. Omnichannel sales of private label have been on the rise for years, but the pandemic really ramped things up. So, over one in five (22%) shoppers are now combining their online orders with in-store visits.

Innovative Strategies for Private Label

In a stagnant economy, private label has a bright future ahead of it. We hope the following strategies will help you develop your private label business.

Omnichannel Retailing

Having seamless integration across different channels is super important for private label brands that want to give their customers a smooth shopping experience. By keeping things consistent with product availability, pricing, and promotions in stores, online, and through mobile apps, these brands can really cater to the varied preferences and shopping habits of today’s consumers. This kind of integration not only makes shopping more convenient but also builds brand loyalty since customers can easily switch between channels without running into any hiccups or surprises.

Keep Premium Quality and Differentiation of Products

These brands offer innovative formulations, top-notch ingredients, and careful craftsmanship, making sure they meet or even surpass what consumers expect. By focusing on quality, private label brands can build trust and loyalty among shoppers, who now see their products as solid and valuable options. Differentiation is also a big strategy for Private label brands, helping them stand out in a busy market. With unique packaging, exclusive formulations, and tailored product offerings, these brands can appeal to niche markets and specific consumer tastes.

Focus on Health & Wellbeing

According to NIQ’s 2023 Consumer Outlook, 46% of people said that physical or mental wellness is one of their top priorities. Plus, with 47% of Americans having at least one of three risk factors for heart disease, it makes sense that private label brands are aligning their products with the health and wellness trend. You can really see this shift with the launch of items that are organic, non-GMO, gluten-free, and free from artificial additives and preservatives. By providing these healthier options, private label brands are meeting the needs of health-conscious consumers who are careful about what they eat. This shift not only meets what shoppers are looking for but also helps position private label brands as responsible and forward-thinking players in the market.

Active Development of Sustainable Products

Private label brands are putting a bigger focus on sustainability initiatives as part of their main strategies, responding to the growing demand for eco-friendly products. In fact, 69% of consumers say that sustainability matters to them more now than it did two years ago. This change is clear in how brands are adopting sustainable sourcing practices, using eco-friendly packaging, and committing to reducing their overall carbon footprint. They’re sourcing ingredients that are certified organic, fair trade, and responsibly harvested, making sure their products not only meet shopper expectations but also have a positive impact on the environment. This approach addresses the environmental concerns that consumers have today and also positions Private label brands as frontrunners in the push for more sustainable shopping habits.

References

7 Reasons Why Private Label Brands Enjoy Sustained Success. TraceGains

Beyond Value: How Private Label is Winning Over Consumers. PDG Insights

The rise of private labels: A global perspective on growth and consumer trends. Nielsen IQ

Private Brand: Also Known as Store Brand, Meaning and Examples. Investopedia

A turning point for private brands: How retailers can seize the opportunity. McKinsey

Private Labels Grow Faster in Latin America vs. Global. Nielsen IQ

The state of private labels in the United States. Nielsen IQ

Private Label Brand Growth: Key Innovations. Nielsen IQ

Branded vs. Private Label – who is going to come out on top? Nielsen IQ