The fastest-growing store brands
And now, without further ado, it’s time to announce the top product segment in the 2018 Store Brands’ Growth 100 —deemed as the fastest-growing sector in private brands, according to market researcher IRI.
A drum roll, please …
(Sound of envelope being torn open.)
And the No. 1 fastest-growing product segment in private brands is … multipurpose insect and rodent chemicals from the pest control category.
Multipurpose insect and rodent chemicals? Really?
Yup. Sales of private brand multipurpose insect and rodent chemicals are up a whopping 698 percent from July 15, 2017, through July 15, 2018, in the $5.2-million category. Take that, Ortho and Raid!
OK, maybe you were expecting something different in this new world of private brands, which places a premium on premium products. That said, even though the segment might not be captivating, we’re talking about “all-purpose” control of insects and rodents, which insinuates premium. Give someone a store brand insect spray that controls ants, mosquitoes, flies and bees (but not honeybees!), and that person will be one happy pest assassin.
Now, we know it’s a small product segment at just over $5 million, but a 698 percent growth rate is something to write home about. Unit sales are up more than 1 million, an increase of 942 percent from the previous period. The average price per unit is $4.90, down $1.49 from the previous year, which is a telltale sign of the category’s growth. And there’s still plenty of room for growth: private brands own only 3.2 percent of dollar share in the category.
Incidentally, our Store Brands’ Growth 100 list features product segments and categories where private brands post dollar sales and unit sales gains of 5 percent or more, and account for$5 million or more in total sales in the last year, according to data taken by IRI from supermarkets, drugstores, mass market retailers, military commissaries, and select club and dollar retail chains. The list draws from food, beverage and non-food categories.
Second on the 2018 Store Brands’ Growth 100 list is another small but burgeoning non-food segment: shampoo and conditioner combo packs, with sales of $5.8 million, a growth of 237 percent from the July to July time frame. Unit sales increased 256 percent and the average price per unit is $5.48, down 32 cents from the previous year.
While the smaller categories matter, especially the ones with significant growth, retailers are no doubt more interested in the larger dollar categories that also experienced substantial growth. Volume rules.
Consider refrigerated uncooked meats (not including poultry), the largest category in the top 100, which ranks ninth in the food category and 18th overall. The category soared nearly 52 percent in sales in the time period, with sales reaching $3.3 billion. Dollar share for private brands in the category increased to a meaty 66 percent, a 19 percent improvement from the previous year. Unit sales are up nearly 42 percent. Interestingly, the average price per unit increased 43 cents to $6.60.
Clearly, the statistic speaks largely to the emphasis more retailers are putting on private brand refrigerated, uncooked meats in the fresh section — and their promotional and merchandising tactics are working. Also, Americans still love red meat, despite an increased interest in plant-based “meat” products. Americans ate an average 55.6 pounds of beef in 2016, up from 54 pounds in 2015, according to the Department of Agriculture.
Another store brand fresh food category that experienced solid growth is eggs, with sales of $3.4 billion in the period, an increase of more than 25 percent. Unit sales increased 5.6 percent. Store brand fresh eggs now own 60 percent of market share in the category, an increase of nearly 4 percent. The average price per unit of eggs is up 34 cents to $2.17, another indication of the category recovering from deflation.
Refrigerated uncooked meats (not including poultry) and fresh eggs are the only billion-dollar private brand categories, with a 5 percent increase in unit sales.
At $886.3 million, the frozen fish/seafood segment is also thriving for private brands. Sales increased more than $38 percent and private brands now own about 40 percent of the market share in the category, an increase of more than 10 percent. Unit sales increased 34 percent.
The thinking here is that more single millennials are purchasing more store brand frozen fish/seafood because: one, they want healthier products; and, two, they want portion control. Retailers such as Aldi and Costco Wholesale are catering to that crowd with an array of frozen fish/seafood offerings. Aldi offers products under its Sea Queen private brand and Costco under its Kirkland Signature own brand.
The top-growing category in food, with sales of $53.6 million — an increase of 218 percent — is edible cake decorations from the baking needs category. Unit sales are up 217 percent. There probably isn’t a person in private brands who could have predicted this.
But why not edible cake decorations? It totally makes sense and private brands are capitalizing.
In beverage, the private brand wine category is gaining in recognition and growing in sales. That’s not surprising, considering the many retailers that have introduced their own wine labels in the past year. In addition, retailers like Costco, Trader Joe’s, The Kroger Co., Aldi and Lidl are setting a high standard by offering award-winning quality wines at reasonable prices.
The No. 1 growth item in private brand beverages was imported table/still wine, with $8.9 million in sales, an increase of 91 percent. Unit sales increased about 100 percent. The average price per unit is $8.28, down 43 cents from the previous year.
The No. 4 growth item in private brand beverage is domestic table/still wine, with sales of $5.2 million, a 44 percent increase. The average price per unit is $7.62, down 34 cents from the previous year.
The good news for store brand wine is its reputation is improving while its price is going down. Consumers clearly see the value — quality and price — in store brand wine. And because the segment owns low single-digit market share in the imported and domestic wine categories, it has plenty of room to grow. And it will.
In the how-things-change department, only one product category in the top 10 this year appeared in the top 10 last year — private brand baby care and safety accessories — which continues to soar. Sales rose to $33.8 million, an increase of 73 percent. Unit sales are about 3.9 million, an increase of 51 percent.
In last year’s report, sales of baby care and safety accessories were $16.8 million, an increase of 62 percent, for the 52 weeks from July 9, 2016, through July 9, 2017. It’s one hot category for private brands, but can it sustain that growth for a third year? We shall see.
For next year, we believe some of the trends we see now in food will continue, especially in the fresh department, where retailers are aiming to increase their private brand presence. In beverage, we believe private brand wines will continue to attract more consumers’ attention. In non-food, we expect anything to do with pets, especially cats and dogs, to gain more ground in store brands.
See the attached chart below for the top 100.