Late last month FMI—The Food Industry Association released its second installment of 2022 Power of Private Brands, which surveys food retailers and manufacturers about their private brand growth strategies. Retailers report having strong goals over the next two years for their private brand portfolio, with a current average dollar share of 18.2% and an ambitious goal of 22.6% in 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, “says FMI’s Vice President of Industry Relations Doug Baker. “To reach these goals, retailers and manufacturers 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 e-commerce availability for private brand.”
The Innovation Opportunity for Private Brands
Eighty-one percent of food retailers and manufacturers surveyed report innovation as the top strategy for achieving higher private brand market share. Specifically, industry respondents see potential for private brand premium products (69%), product options with simple ingredient lists (60%), products offering strong price/value in a category (56%), and prepared meal solutions (42%).
Strategies to Accelerate Private Brands Growth
Food retailers and manufacturers surveyed report a wide range of strategies to accelerate private brand growth. The majority (71%) plan on working with suppliers to optimize price and availability, which aligns with consumers mostly choosing private brands because of lower costs, deals, or perception of good value. Other top acceleration strategies mentioned include improving consumer insights and trends intelligence (64%), launching new products (64%), and improving packaging (58%).
Enhancing Private Brands Ecommerce
Currently, retailers report 60% of their private brand assortment is available on their e-commerce platform, so expanding availability is a key strategy for growth. Retailers and suppliers mentioned several other improvements for private brand e-commerce such as search functionality prioritizing private brand offerings (80%), providing compelling product images (73%), tagging attributes in search, such as health and well-being and sustainability (65%) and utilizing suggestive selling in search results (53%).