FMI's Baker: Inflation Drives Private Brand Growth in Q1

Through the first three months of 2023, consumers are continuing to spend more on groceries as inflation remains high in most food categories.

At Store Brands’ recent Second Quarter Private Label State of the Industry Webinar, Doug Baker, VP of Industry Relations at FMI - The Food Industry Association, joined Store Brands’ Executive Editor/Associate Publisher Greg Sleter to discuss the first quarter of 2023 and how the private label industry has performed so far.

“Two-thirds or almost 68% of shoppers are saying they’re spending more on groceries than they did a year ago, which is up from 65% in 2022,” said Baker. “I don’t think that that would surprise a whole lot of people just because inflation has remained elevated.”

Baker said that the average shopping basket has risen roughly $3 compared to Q1 2022, reaching about $164 per week, adding that the increased prices are continuing to benefit private brands. FMI data shows that 41% of shoppers say that higher prices led them to buy more private brands.

“Price increases have cooled, but some of the supply chain challenges that are being experienced have not improved,” he said. “But it does all benefit private brands… grocers do have an alternative for those customers, because they are savvy shoppers. About 63% of private brand shoppers consider private brands to be good value, and 55% buy them because they are less expensive, but there are additional factors including quality, taste, sustainability, health and well-being.”

Baker added that not all categories are created equal when it comes to gaining customer share and getting consumers to purchase private brands, citing increased penetration in the alcohol, meat & seafood and prepared food categories.

“There’s categories where there’s easy convergence, and there’s categories where there’s less penetration and where it’s harder to convert consumers,” he said. “Now you really have to start peeling the onion back and identifying where that 41% is at.”

The full webinar can be viewed on-demand here.