According to market research firm Circana, sales of own-brand grocery products could “further accelerate” as rising inflation causes brands to increase prices.
Private label products, which are own-brand products manufactured for retailers, have reached a 50% unit share across the UK, France, Germany, Italy, Spain and the Netherlands, with Circana highlighting that European households are buying more own-brand products as a result of feeling cost-of-living pressures.
According to Circana’s analysis of the market, the share of own-brand units sold has increased every year since 2021, rising by more than 3% over the period and with further growth expected in 2026. In the UK, own-brand unit share has also risen to 52%.
The analysis also found that supermarkets were keeping “prices low and quality high” by following health and lifestyle trends, offering more premium own-label offers and new product launches than national brands. Circana observed a rise in retailers targeting social media content towards younger, less brand-loyal shoppers, which, it said, played a “key role” in driving demand.
Retailers provide lower-cost alternatives to branded products
Higher food inflation following the conflict in the Middle East could lead to another rise in the sale of retailers’ own-brand products, the firm said, while online and AI-driven shopping is expected to give supermarkets another boost as shoppers order more groceries online.
Ananda Roy, senior vice president of strategic growth insights at Circana, commented: “Supermarket private label brands have spent the last decade becoming powerful brands in their own right. Given that a normal shopping basket today costs the same as a premium basket did last year, price-conscious consumers are making hard decisions about which products to buy.
“Retailers’ product ranges include cheap basics, premium treats, healthy and high-protein foods, and trendy lifestyle items which are proving a trusted and attractive alternative to national brands and changing how people shop all over the world.
“Retailers are also targeting younger generations who are less loyal to big brands with TikTok shops and viral moments, discounters are opening more stores and AI makes it easier than ever before to compare products on price and function alone. National brands will need to rely on more than just the reputation of their brand name or heavy discounts to tempt shoppers away.
“The cost of living crisis is expected to intensify in the second half of the year as the war in Iran increases the prices of fertilisers, transport, distribution and ingredients. This is likely to give retailers another boost, with private labels growing quickly again as households look for ways to save money.”
“National brands will need to take a deep dive into shopper and loyalty data, as well as pricing and promotion strategies if they are to compete and survive.”
Circana also found that on-shelf promotions, loyalty pricing and price-match strategies have “intensified as part of a price war” across the sector, but branded products are being discounted more than private labels. A total of 34% of branded unit sales were on promotion, compared with 14% for private label, across Europe’s six biggest grocery markets.
Roy added: “With margins already squeezed, national brands will need to take a deep dive into shopper and loyalty data, as well as pricing and promotion strategies if they are to compete and survive. Saturating the market with promotions is not a long-term survival tactic.”
