Value consumers see premium appeal in private label products: Mintel

06-Nov-2017 - Last updated on 09-Nov-2017 at 15:32 GMT

Premium beverages with added-value priced affordably are on the rise, according to Mintel. ©GettyImages/Antonio_Diaz

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While 43% of American consumers would describe their financial situation as “healthy”, price still remains the most important factor in food and beverage purchases for many shoppers, according to Mintel’s 2018 North American Consumer Trends report.

“Tighter budgets will cause many consumers to re-evaluate whether their go-to choices are worth the cost and brands need to be able to respond accordingly,” Carli Gernot, Mintel manager of trends for North America, said.

“Brands that engage with low spenders and develop low-cost alternatives are set to enjoy increased attention from those looking to save in the coming year.”

7-Eleven and premium beverage company, Jones Soda Co., partnered to create 7-Select brand premium carbonated beverages manufactured by Jones.

Premiumization of private label

“Taking ‘value’ at its most straight-forward definition, the US has seen a revival of high-quality private label,” Mintel global food and drink analyst, Jenny Zegler, told BeverageDaily.

According to Mintel, 42% of millennials agree store brand food products are more innovative than name brand products with more than one-third (37%) of US shoppers saying they prefer to buy store brand products over brand name ones.

Zegler pointed to private label companies such as Aldi, Lidl, and online retailer Brandless that sells all of its products including Fair Trade organic ground coffee for $3.

“This new generation of private label inside distances private label from the old stigma of generic ‘me too’ type of products and makes private label a competitor based on more than low price,” Zegler said.

Tiered portion offerings

To target the value consumer, Mintel has seen beverage companies offer a variety of portion sizes to accommodate different budgets (monetary and caloric).

“Many companies use tiers of packaging sizes and brands to provide a spectrum of products that can connect with consumers based on their budget as well as their need-state,” Zegler said.

“These tiered options, especially varying packaging sizes, help to make beverages affordable in areas that have taxes based on sugar content or packaging, while also providing consumers of all incomes with choices.”

Affordable products with ‘values’

Mintel found that 63% (and 70% of Millennials) shoppers agree private label is of higher quality than it used to be supported by the rise of “affordable products with ‘values’” such as transparency-related claims and Fair Trade.

“This helps more consumers be able to shop responsibly or ‘put their money where their morals are’ and support causes that are important to them through their purchases,” Zegler said.

Zegler added that the trend is likely to expand as recently merged Amazon and Whole Foods Market seek to make ‘high-quality, natural and organic food affordable to everyone.’

“These value-priced ‘values’ products allow consumers … to use their purchases for more than just consumption, but also social consciousness.”