Natural Foods Merchandiser

Dubious consumers stick to private label

Budget-conscious consumers don’t see the economy improving and as a result are remaining committed to in-store brands, according to research recently released by the Private Label Manufacturers Association.

In the PMLA report, “Recession Recovery & Store Brands: What consumers are saying now,” which polled 800 grocery shoppers, 62-percent said they plan to purchase more private label products in the future.

“There’s been a lot of chatter in the Consumer Packaged Goods research community about the market share gains of private label as a result of the latest 'great recession,' said Patrick Rea, publisher and editorial director for Nutrition Business Journal. “Only time will tell the final result, but if you analyze the gains in private label during past recessions, you see that these share gains stick with consumers, one recession-driven chunk at a time.”

According to SPINS, a market research and consulting firm for the natural products industry, organic private label posted more than $1.3 billion in sales in 2009, showing 11.1 percent growth in the naturals channel.

Overall, Nielsen reports that private label sales have increased by 12% in supermarkets, drug chains and mass merchandisers since last summer. Total sales for the year reached $85 billion and unit market share rose to more than 23%.

The PMLA report by GfK Custom Research North America, based in New York, shows more shoppers are becoming loyal to in-store brands. Ninety-seven percent compared store brands to their previous national brands “favorably,” and about 49 percent said their new store brands compared “very favorably.” This is a dramatic increase from a June 2009 study when only 26 percent earned a “favorable” rating.

Additionally, shoppers who identify themselves as frequent buyers of store brands are at an all-time high. More than 57 percent said they buy private label products “frequently” compared to 55 percent last year.

Largely driving purchasing decisions was what respondents considered a weak economy despite indications of improvement. Of those surveyed, 40 percent said over the past few months conditions are worse while 42 percent said things have stayed the same. Only one in five felt the economy was getting better.

“One thing we found particularly surprising I think are the number of people who still feel they’re being negatively affected by the economy--especially coming out at time when we’re getting reports from certain economic indicators that things are improving,” said Dane Twining, director of public relations.

Twining said the PMLA plans to conduct two more similar studies later this year.

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