How can CPG brands regain market share lost to private labels?

May 26, 2023

Inflated grocery prices have focused attention on the battle for market share between national and store brands.

Branded CPG manufacturers’ top strategies for competing with private labels include marketing the quality of their brands, cited by two-thirds as the top two strategies, followed by driving innovation (55 percent), according to Advantage Solutions’ “Manufacturer and Retailer Outlook Spring.” of 2023″ study.

CPG manufacturers are also looking to offset the threat of private label by increasing trade promotions, which 32 percent cited among their top two strategies. implementation of in-store shopper marketing programs, 27 percent; and everyday price reductions through list price reductions of five percent.

PLMA’s “2023 Private Label Report,” produced by IRI Unify, found private label sales to grow 11.3 percent in 2022, nearly double national brand growth of 6.1 percent.

The gains were attributed to consumers looking for savings amid “stubborn inflation.” Another driver was store brands being more transparent about their makeup, as post-pandemic consumers have become “more concerned about how products are made and what’s in them, from their raw materials and holistic health attributes and qualities to their sustainability.”

Store brand dollar volume grew 10.3 percent in the first quarter, nearly double the 5.6 percent for national brands, according to PLMA’s latest findings.

“The Q1 results are particularly impressive because they compare to 2022 sales figures that were historically high for US store brands,” said PLMA President Peggy Davis.

A recent Attest survey found that 74 percent of US consumers “definitely” or “likely” will continue to buy store brands after inflation eases.

CPG vendors, according to the Advantage Solutions study, were found to be less inclined to raise prices in the March survey compared to a December survey as inflation eased but also showed few signs of lower prices resetting.

According to the Advantage Solutions study, the top manufacturer’s tools for staying competitive on the shelf were (respondents chose three):

  • Wholesale trade, 55 percent;
  • Digital coupons, 45 percent;
  • Support for retail marketing programs, 42 percent;
  • More aggressive advertising price: 35 percent;
  • In-store shopper marketing programs, 27 percent;
  • More frequent temporary price cuts: 27 percent;
  • Promote multiple, 23 percent;
  • Daily price reduction, nine percent;
  • Shelf POP to match the brand’s marketing message, nine percent.

DISCUSSION QUESTIONS: Branded CPG manufacturers need a new playbook to reverse or slow the share losses of retail private brands. How do retailers determine the right mix of national and private brands?

Brain trust

“An emphasis on brand trust, quality and innovation helps CPG brands compete against private labels.”

“CPG players need a new playbook that acknowledges the limitations of mass marketing strategies and the viability of alternative branding strategies.”

“Ten years ago there was a clear gap in the level of quality, marketing and branding between private label and branded products, but not anymore.”



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