Private-label implementation to eat up 50% of food share

NEW YORK — The share of private-label brands and products will double to 50% by 2025, thanks to a continued emphasis made by retailers.

In a new report released by Rabobank's Food and Agribusiness Research division, author Sebastiaan Schreijen noted that national brands and smaller, secondary brands (referred to as "A" and "B" brands, respectively) will prompt an intense price competition and therefore will cause the private-label market to become chock-full of higher-quality "B"-brand products at lower prices.

Additionally, Schreijen said, U.S. retailers only have hit the tip of the private-label iceberg; continued industry consolidation will be fueled by such initiatives as private-label implementation, as well as scale in logistics, procurement, marketing and store opening strategies, since a larger operating scale provides more opportunities to launch private labels, he said.

Many U.S. retailers already have taken note of this. Both CVS and Walgreens have entered the private-label business. CVS continues to boost its private-label portfolio with the official unveiling of its Just the Basics line — announced at the company's analyst meeting in October 2010 — while Walgreens highlighted its private-label line last month with an ad campaign and a new beer, sold under the name Big Flats 1901.

What's more, U.S. consumers have weathered a tough economy by opting to purchase private-label products. Many also have continued their recession-proof purchases as the economy has recovered, and even recommend such products to others.