March 18, 2025 – The private label market is growing, driven by rising inflation, consumer price sensitivity, and a growing preference for value among younger shoppers. This trend is reflected across both Europe and the United States, with private label products making significant inroads in the grocery sector. Innova Market Insights research highlights the drivers in the private label category and what the trends are.
This article is based on Innova’s Developments in Private Label – Global report. This report is available to purchase or with an Innova Reports subscription. Reach out to find out more
Consumer Insights in Global Private Label Trends
The growing popularity of private label products highlights a shift in consumer behavior. As consumers become more selective, they are increasingly prioritizing value, quality, and sustainability in their purchasing decisions. This private label trend is partly driven by rising living costs and a greater awareness of sustainability issues, prompting consumers to make more informed choices about their spending.
Private label brands are successfully catering to these evolving consumer needs by offering quality products at competitive prices while emphasizing ethical sourcing and sustainability. They are no longer viewed merely as lower-cost alternatives; instead, they represent a broader change in consumer priorities.
Private Label Category Driver
Several factors are driving private label growth. Firstly, there is a rising demand for value as consumers increasingly seek affordable options, especially during economic uncertainty. This private label trend has led to greater adoption of private label products. Additionally, the quality and variety of private label products have significantly improved, making them a strong alternative to recognizable brands.
Retailers are also playing a big role in this growth, as major supermarkets invest in the development of private labels and enhance their marketing efforts to attract more shoppers. Furthermore, consumer trust in retailer-owned brands has grown, particularly in categories such as food and household goods, where the quality of these products has notably increased.
Increased Private Label Share
Private label sales in the retail grocery market have become increasingly prevalent in many countries. In countries like the Netherlands and the UK, private label represents half of all grocery sales. Meanwhile, in the United States, discount retailers like Aldi and Lidl have notably influenced the rise of private label products, leading major grocery chains like Kroger to adapt.
Above-inflation price increases for branded groceries and stagnating consumer income growth are driving the shift towards private labels. Notably, 8% of consumers perceive private label products to be equal to or of better quality than their branded counterparts.
Growth Fueled by Consumers’ Value Focus
Consumers are becoming increasingly price-sensitive and are actively seeking alternatives, including private label products, in response to rising prices in the fast-moving electrical goods (FMEG) sector. This shift is influenced by discount retailers and limited-line outlets, such as Aldi, which are contributing to the growing private label market.
In the UK, the emergence of high-quality private label offerings from retailers like Waitrose and M&S has further highlighted the trend. Gen Z stands out as the demographic most likely to purchase private label products, with 64% of them buying these items consistently or frequently.
Expansion into New Categories
Retailers are increasingly broadening their private label offerings beyond the conventional categories. This private label trend is reflected by private label products gaining popularity in areas such as dairy, deli, meat, frozen produce, and even non-food items.
The most significant growth in private label value sales is in categories like baby food, pet food, and confectionery. As a result, private label products are emerging as a key component of grocery volume growth, especially amid the ongoing cost-of-living crisis.
A Private Label Powerhouse Across Europe
Private label products account for a significant portion of grocery sales, with some countries like the UK and the Netherlands seeing private label products represent almost half of all grocery purchases. This private label trend is attributed in part to the presence of large-scale private label-led operators such as Aldi and Lidl, which have expanded their reach across Europe and the US. These retailers leverage their own-brand products as a key differentiator, offering value-conscious consumers quality products at competitive prices. The impact of inflation on consumer spending has further fueled the growth of private labels.
Private Label Gaining Momentum in the US
In the US, private labels are also experiencing a surge in popularity, particularly among major discount chains. While private label products have long been a staple, their appeal has broadened in recent years, with mainstream stores also offering a wider range of private label options across various categories.
This shift is driven by the growing preference for value among American consumers, who increasingly seek ways to save on grocery bills. The rise of private label brands like Kroger’s “Smart Way” and Walmart’s “Great Value” has further contributed to the trend. Private label manufacturers are also innovating and introducing more premium and specialized private label products, further blurring the lines between private label and branded options.
What’s Next in Private Label?
The private label market is evolving significantly and is set to play a crucial role in the future of retail. With positive consumer perceptions, private label sales in Europe are expected to continue growing. In the United States, retailers are expanding their own-brand offerings beyond traditional categories, with Generation Z leading this private label trend. This demographic is particularly price-conscious and open to private labels, viewing them as a cost-effective alternative that doesn’t compromise on quality.
Retailers are responding by investing in innovative products and packaging for their private labels, and the expansion into new categories will likely persist.
This article is based on Innova’s Developments in Private Label – Global report. This report is available to purchase or with an Innova Reports subscription. Reach out to find out more
