Private-label retail products are muscling in on big brands; total private label sales topped $108bn last year. Growth of private-label product sales is far outpacing brand-name items, and by 2025, one in three items sold in retail stores will be a private-label product.
Suley Muratoglu, vice president of marketing and product management for Tetra Pak USA and Canada, told FoodProductionDaily.com that the continued increase in private label’s market share in food, beverage, dairy and other categories comes in part thanks to a generational gap in how such products are perceived.
“The way that younger consumers look at private-label products is different than older buyers,” Muratoglu said. “The category is no longer seen as compromising quality for price; in many cases, the quality of private label items is seen as superior to brand-name counterparts.”
He added that some consumers are seeking out and showing loyalty to private-label products, in the same way that others exhibit allegiance to big brands.
Retailers growing private-label presence
Moratoglu told FPD that retailers and other private-label clients are looking to increase their market share by expanding their store-brand offerings in their food aisles and other departments. Packaging partners like Tetra Pak can help them accelerate their goals by offering services that help them generate new products and packaging, and get them to market more quickly.
“The theme of our booth is ‘From Idea to Execution,’” he said. “We offer a range of services—consumer insights, product design, formulation, and more—designed to help make the process of creating and launching a new product go more smoothly.”
Differentiation is crucial
Another key to private-label success is differentiating a product from the other items crowding the shelves. Moratoglu explained that Tetra Pak cartons can aid can offer differentiation that grabs retailers (items are easier to stock, more product fits on shelves) as well as consumers (stronger shelf presence, more apparent product convenience).
In the soup aisle, private-label cartons are increasingly present. Retailers like Target offer soups in Tetra Pak cartons, standing shoulder to shoulder and competing for shoppers' attention with brand names like General Mills' Progresso line (some of which also are now housed in Tetra Pak cartons).
Launching new products
In addition to lending private-label clients a hand with product ideation, Tetra Pak offers up its ‘expertise center’ in Denton, Texas, and a pilot plant. There, customers can road-test production of a particular asceptic or retortable product without going through the considerable effort and expense of actual production.
“This helps retailers put a product to the test, without having to invest in the full infrastructure necessary for a launch,” he said.
Tetra Pak also has a network of partnering contract packaging operations that can help retailers flip the switch on a new product. These companies also can help retailers get a product to market more rapidly, and enable food firms to test the waters before having to make an equipment investment.