CHICAGO — Although the number of U.S. consumers consuming private label food and beverage products continues to increase, consumers are losing their enthusiasm for these value-oriented options, according to The NPD Group.
Private label’s share of household servings was 18% in 2000 and reached 27% in 2011, NPD’s food and beverage market research report found. But the satisfaction with private label foods meeting consumers’ needs has dropped to 24% in 2012 from 32% in 2009.
In recent years, increased consumption of private label foods and beverages may have been more a matter of necessity due to the economy and higher grocery prices than deliberate intention. In 2009, 34% of adults said they intended to purchase more private label foods versus one year ago, but that percentage has declined to less than one quarter of adults in 2012, according to the study, titled “The Evolution of Private Label – Does Brand Name Really Matter.” However, NPD said this does not mean private label products have failed to make progress over the last decade. The study showed two-thirds of adults said store-brand quality is much better today than it was five years ago.
Consumers’ store brand name awareness and identification remain quite low as 25% of shoppers are unable to identify the top-selling store brand as a store brand, the study said.
Although more private label end dishes are being served, consumers’ loyalty to private label is still strongest in categories mostly used as ingredients, such as flour and butter, which top the list of private label-loyal categories. Categories where there is a stronger loyalty to name brands are likely to display the brand to the user, frozen dinners/entrées, yogurt and carbonated soft drinks are examples of these categories.
“The question is if food inflation declines and at the same time the economy improves, will consumers return to the name brands they know and trust,” said Darren Seifer, NPD food and beverage industry analyst and author of the study. “This could become a reality if retailers don’t respond to declining satisfaction and if name brand manufacturers continue to aggressively build loyalty. On the flip side, name brands need to be aware that private label usage continues to increase and the quality perception is improving.”