Grocers, Manufacturers Plan Big Investments for Private Brands

FMI report sheds light on latest strategies for growth

9/29/2022

Grocers and manufacturers plan to increase their private brand market share nearly 4% in the next two years.

Food retailers have big goals for their private brand portfolios, according to the second installment of "The Power of Private Brands" 2022 report from FMI - The Food Industry Association. Those portfolios currently hold an average dollar share of 18.2% of total sales, and grocers and manufacturers have an ambitious goal of raising those sales to 22.6% over the next two years.

“As the food industry looks toward the future for private brands, they are setting bold targets based on high demand from consumers,” said Doug Baker, FMI’s VP of industry relations. “To reach these goals, retailers and manufactures are looking at several tactics including private brands outside the U.S. that have higher shares for approaches to growth, including innovation, strategies to accelerate growth and enhanced ecommerce availability for private brands.”

Among the strategies retailers and manufacturers are using to achieve higher private brand market share, 81% of survey respondents pointed to innovation, while 69% see potential in premiumization of private brands. Another 60% see simpler ingredient lists as the key to higher share, 56% are looking at products that offer strong price or value in a category and 42% believe prepared meal solutions are important.

As for accelerating the growth of their private brands, 71% of respondents plan to work with suppliers to optimize price and availability since many of today’s inflation-strapped consumers choose brands based on lower costs, deals or perception of a good value. Some 64% of retailers and manufacturers plan to improve consumer insights and trends intelligence, while another 64% will launch new products and 58% will improve packaging.

Another key strategy for growth will be making full portfolios of private brands available to purchase via e-commerce, according to FMI. Retailers surveyed said 60% of their private brands assortment is currently available for online purchases, and 80% believe search functionality prioritizing private brands offerings will be an important next step for growth. Another 73% believe providing compelling product images is important, and 65% said tagging attributes in search, such as health and well-being and sustainability, is a good move.

In addition to its latest report, and in line with the historic White House Conference on Hunger, Nutrition and Health, FMI earlier this week revealed ambitious commitments that the grocery industry has made for 2023 and beyond to help find solutions to ending hunger, improving nutrition and reducing diet-related diseases across the country. Commitments include food donations, improving food access for underserved communities, leveraging food-as-medicine programs, and promoting consumer education and transparency.