Private Label is Winning: The End of the Pricing Runway for CPG Brands

Over the past few years, CPG brands have relied heavily on price increases to protect margins, using inflation as a backdrop to justify higher costs. However, this strategy has reached its limits. Consumers are pushing back, not only because they can’t afford these prices, but also because they’re unwilling to pay them. As a result, private labels are winning.

Private label products have seen global sales surge, accounting for 19% of U.S. consumer spending (NIQ) and dominating nearly 60% of UK supermarket sales (International Supermarket News). These brands are no longer perceived as “cheap alternatives,” but as credible competitors offering quality, value, and sometimes even premium experiences. In the U.S., private-label sales are expected to surpass $250 billion by 2024 (CoBank), and across Europe, private labels’ market share has climbed from 35% in 2020 to 38% in 2024 (Alix Partners).

For many CPG companies, this consumer shift has meant declining volumes and eroding loyalty. Yet, within this challenge lies a significant opportunity to redefine value and reconnect with consumers through meaningful innovation.

How Brands Can Win Back Consumers

Reclaiming lost market share isn’t about racing to the bottom with discounts. Instead, it’s about addressing consumer needs in ways that go beyond price. CPG brands must focus on innovating their value proposition, whether that means reformulating existing products or creating entirely new offerings that resonate with evolving priorities.

Consider the example of Coca-Cola Zero Sugar. Originally launched in 2005 as a healthier alternative to the classic Coca-Cola, the product underwent a reformulation in 2021 to bring its taste closer to the original flavour. Coca-Cola paired this with a bold marketing campaign, “Best Coke Ever?”, inviting consumers to try the product and decide for themselves. The result? 5% volume growth in 2023, more than double the growth rate of Coca-Cola’s overall portfolio (Marketing Week).

Or take Liquid Death, a brand that looked beyond functional needs and into the desires of younger, eco-conscious consumers. By combining sustainable aluminium cans with rebellious branding, the company created a product that felt aspirational, not just practical. By 2023, Liquid Death reached ￡263 million in revenue and expanded into 133,000 stores globally, proving that innovation rooted in consumer insight delivers results.

Private Labels Are Eating CPG’s Lunch

Private labels have mastered the art of balancing affordability and quality. They’ve become trusted options across categories, from essentials like groceries to discretionary items.

• In the UK, private labels now make up the majority of supermarket sales as cost-conscious consumers shift away from traditional brands (International Supermarket News).
• In the U.S., private label sales have grown by over a third since 2019 and are expected to keep growing well into 2024 (CoBank).
• Globally, 50% of consumers now buy more private label products than ever before, driven by their perception of value parity with branded goods (NIQ).

This trend has left branded goods vulnerable. For many categories, volumes are stagnating or declining, and brands that fail to innovate risk losing relevance. However, for those ready to adapt, there is an opportunity to challenge private labels head-on by addressing unmet needs and differentiating through innovation.

Navigating Market Complexity

The post-inflationary landscape is fragmented. Some CPG categories are experiencing steep declines, while others are showing resilience, especially those where brands are actively innovating.

Brands that have succeeded in this challenging environment have focused on premiumisation, functionality, and sustainability. For instance, premium products that address evolving priorities, such as health benefits, eco-consciousness, or enhanced convenience, are outperforming competitors, even in difficult conditions.

Looking Beyond the Obvious with Catalyx’s Innovation Triple Diamond? Framework

At Catalyx, we help brands tackle these challenges with our Innovation Triple Diamond? framework, a proven approach to developing solutions that deliver measurable success.

1. Identifying Consumer Desires: What do consumers truly want? This step focuses on uncovering unmet needs or desires that drive behaviour. In a post-inflation world, this often means blending affordability with enhanced functionality or sustainability.
2. Building the Recipe: Once these desires are clear, brands must translate them into actionable platforms. Is the solution a new product, a service, or a reimagined go-to-market strategy?
3. Creating the Product: Finally, solutions are rigorously tested and optimised to ensure they resonate with target audiences and deliver both emotional and functional value.

This structured yet flexible framework ensures every innovation is primed for success.

Case Study: Lavazza’s Ready-to-Drink Innovation

A great example of this approach in action is Lavazza. To meet growing demand for organic, premium, and convenient beverages, we partnered with Lavazza to develop their ready-to-drink cold brew range for the U.S. market.

By addressing consumer priorities, Lavazza’s ready-to-drink segment grew 39% faster than the overall packaged coffee market, strengthening its market position and expanding its brand footprint.

What’s Next?

CPG brands are at a crossroads. Continuing to rely on traditional strategies risks further losses, but those that embrace consumer-first innovation will find new avenues for growth.

At Catalyx, we go beyond surface-level insights to craft solutions that work. Using our Innovation Triple Diamond? framework, we help brands identify opportunities, create innovative solutions, and ensure every product is set up for success.

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