Shoppers leaned into private-label brands in the first year of the pandemic – driven in no small part by shortages of their regular brand favorites.
And even though store shelves have (mostly) returned to normal, private-label brands managed to keep the growth streak alive, with sales hitting a record $199 billion across all U.S. retail channels in 2021, according to the “2022 Private Label Report,” published by the Private Label Manufacturers Association (PLMA) and IRI. While the record sales numbers represent just 1% growth – which appears modest, it followed an outlier (2020) that saw an unprecedented jump of private label sales of more than 12%.
“We’re gratified, but not surprised, with the final tally of store brand dollar sales in 2021,” PLMA President Peggy Davies said in the report. “We monitored the monthly numbers closely, thanks to IRI, and noted that store brands were holding their own most of the year and even increased to the 5% to 6% range in the latter months of 2021. It’s affirmation that retailer brands are an important piece of the U.S. grocery business, especially in these challenging times. We believe store brands will be a key consumer ally during this current inflationary period and going forward by providing high-quality, high-value products in every category.”
Consequently, private-label dollar share crept up to 17.7%, while unit share grew to 19.6%.
The data portrayed what a schizophrenic year 2021 turned out to be for private labels, with sales riding the pandemic wave for the first two months of the year before falling dramatically between March and May. The industry rebounded in the second half of the year powered by a robust fourth-quarter surge.
Private label brands grew in six of the largest categories IRI reported on:
- Produce: 11.4%.
- Beverages: 2.7%.
- General merchandise: 1.7%.
- Frozen: 0.8%.
- Refrigerated foods: 0.7%.
- Health care products: 0.2%.
On a related note, separate IRI research – conducted with Boston Consulting Group – found that large and smaller consumer packaged goods (CPG) companies captured market share from the mid-sized companies in 2021. Specifically, IRI’s data showed that larger operators took advantage of pricing leverage to pick up market share for the first time in more than five years. On the other hand, smaller operators managed to get a leg up by largely circumventing the supply chain problems that plagued their competition.
“One of the most interesting trends we saw emerge in this year’s growth leader lists was that large CPG manufacturers grew share for the first time in five years — and nine out of 10 large growth leaders grew volume despite lapping significantly elevated volumes from 2020,” Boston Consulting Group managing director and partner Aman Gupta explained. “We expect CPGs with flexible and dynamic supply chains, strong omnichannel capabilities, enhanced productivity solutions, and the ability to adapt their portfolio to respond to consumer trends will be best positioned to win in 2022 and beyond.”