Times & Trends

PRIVATE LABEL 2009: GAME-CHANGING ECONOMY TAKING PRIVATE LABEL TO NEW HEIGHTS
EXECUTIVE OVERVIEW

IRI's Times & Trends highlights new developments and critical events across all major CPG categories and channels, providing powerful benchmarking data to help guide your strategic decisions. This report explores current and emerging private label trends as well as influencing factors that are reshaping the CPG industry. A free summary is also accessible via the GMA website at www.gmaonline.org.

INTRODUCTION

Consumer rituals have changed drastically over the past couple years, largely in response to adverse economic conditions.

The economic unrest is beginning to show signs of easing, but consumers remain steadfastly in savings mode. At the crux of many savings strategies is private label packaged goods products. For years U.S. retailers have been honing their private label arsenal in the name of differentiation. The timing of these efforts has been meticulous. Private label has been elevated to a whole new level.

Retailers continue to invest heavily in their brands. Innovation is increasing and promotional support is growing.

Economic recovery will likely be a long and arduous process. And, indications are that recession-induced ritual changes will remain long after the recession has officially ended.

For retail brands, it is time to shine. And for national brands, it is time to step-up competitive efforts. Both are happening already. Competition for share of CPG spending is intense.

This report explores current and emerging private label trends as well as influencing factors that are reshaping the CPG industry. Manufacturers and retailers with a clear understanding of these forces will be able to develop and execute competitive strategies for their brands which meet corporate goals while simultaneously delivering against consumer needs.

KEY FINDINGS

»Private label CPG, bolstered by a turbulent economy, is increasingly being embraced as mainstream products, with the familiarity and relevance as national brands in some categories.

Private label share of spending is highest in the grocery channel, but dollar and drug retailers are also seeing healthy share growth.

At-home food and healthcare rituals, coupled with consumers’ intense focus on low-cost CPG solutions, is driving private label share across healthcare and center store departments.

»Private Label Share of CPG Spending: All Outlet
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The average private label discount versus national brand is about 30%, but the average price gap varies markedly across departments.

Private Label Average Price Discount by Department: All Outlet
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Private label remains concentrated among a small segment of the population, with heavy buyers of private label accounting for 62% of private label sales.