With the economy in stall, consumers are turning to budget food items, but not necessarily sacrificing quality to do so.
According to Mintel GNPD, nearly 1,800 new US private-label foods have appeared on retail store shelves thus far in 2009, which is 27 per cent of all new food products. In 2005, private-label foods comprised only 13 per cent of food product launches.
As the recession causes more Americans to cut down on food spending, private-label companies are benefiting, Mintel says. The US private-label market grew 9.3 per cent in 2008 (compared to 4.5 per cent for branded food sales). Mintel forecasts the category will grow another 8.1 per cent by the end of 2009.
These new labels are providing not just cheaper alternatives to national brands; they are luring shoppers with premium ingredients, portability and health benefits, Mintel explains.
"Not only have private-label introductions increased, but product innovation is reaching unprecedented highs," said Krista Faron, senior analyst at Mintel. "What has been fascinating to see is that private-label brands are now coming up with creative food innovations before the major branded labels are - not what typically has happened."
Historically, it is the 'me-too' phenomenon that has driven private-label product launches, Faron explained. Only when a new product concept, launched by a major brand, reached critical mass did a private-label company pick up on it. "This is really the first time we have seen innovation and trail-blazing by private-label companies," Faron said. "It's very exciting."
Considerations of health and nutrition are increasingly influencing this product development, Faron said. For example, Safeway's Lucerne Foods label unveiled a brand called Eating Right in 2007, and in 2008 the company added several notable healthy products, including kids' Whole Wheat Mini Ravioli with fibre and protein, plant sterol-fortified Apple Cinnamon Granola, and Light Ice Cream Cups containing probiotics.
Target and its Archer Farms label, as well as Trader Joe's, are two more examples of increasingly innovative and health-focused retail companies, Faron says.
In the Americas over all, private-label food launches were strong in 2008, but down slightly from the previous year. In North America, 4,957 products were launched in 2008, vs 5,307 in 2007. In Latin America, 1,193 private-label food products were launched in 2008, vs 1,343 in 2007.