FMI: Second Half of 2023 Expected to See Continued Private Label Gains

Private label food products continued to be a “go-to” for consumers in Q2 and are expected to be so for the foreseeable future with a recession potentially looming, according to Doug Baker, VP of Industry Relations at FMI- The Food Industry Association.

Baker recently joined Store Brands Executive Editor Greg Sleter for the Third Quarter Private Brands State of the Industry Report, where the two discussed the state of the private brand industry heading into the second half of 2023.

“Total edible private brand dollar sales increased 8% in the first half of 2023 compared to a year ago, and that continued growth rate surpassed what was previously 5.7% in national brand sales,” said Baker, citing statistics from Circana. “Brands across the whole store shed units, there’s no doubt about that, but private brand units only decreased .5% over the first half of 2023, which is another positive sign versus last year.”

Baker said that the data confirms that consumers are continuing to opt for private brands to stretch their food dollar after a record-setting 2022 for the sector. While inflation fell to 3% in June, a 6.1% decrease year-over-year (YoY), consumers are still expected to continue buying private label products moving forward. 

Baker said that in FMI’s most recent survey, 75% of private brand shoppers said they planned to buy more private label products this year than they did last year, and retailers are taking note and planning accordingly.

“Given that about 60% of respondents in FMI’s Power of Private Brands 2023 survey of retailers say that their organizations are ‘somewhat far along’ in their innovation efforts related to private brands, this is considerable success,” he said. “It also tells me that there is room for growth.”

Looking ahead to Q3 and Q4, Baker urged retailers to “keep the customer centered” when preparing new private label releases or promotions.

“The customer is changing day-in and day-out, and some of that is affected by inflation,” he said. “We’re seeing a lot of discussion around labor and workforce in the news. People are going to be making decisions, and if they’re already in a situation where economically they’re having to stretch their dollar, they’re going to make decisions pretty quickly.”

The full webinar event can be viewed on-demand here.