Private brands are reshaping the grocery store experience. According to Cadent Consulting, private label dollar share could reach 25.7% by 2027, growing more than eight percentage points from where it is today.
The volume of private labels being sold at mass retailers, club stores and dollar stores rose 33.2% over the past five years, while national brands rose less than 1%, per a study from the Private Label Manufacturers Association using data from Nielsen.
By and large, private brand purchasers are typically value-conscious buyers. Yet, there is still the perception of sacrificing quality, and retailers are struggling to overcome this decades-old assumption for two reasons.
First, the value proposition remains primarily focused on price, and consumers have been trained to expect lower quality in exchange for lower price regardless of industry.
Further, marketing budgets for private brands are much smaller on a per-product basis than leading national brands. This helps them go to market at a lower price point, as there is not a multimillion-dollar budget for a single product, but also restricts the degree to which they can broadly advertise product benefits beyond price. Their influence in this area is limited within the vast pool of messages consumers receive regarding quality.
Starting with this public hypothesis that low price may not equate to high taste quality, after nearly two decades of evaluating national brands, the ChefsBest team began putting private label products through our proprietary Sensory Attribute Quality Analysis — a rigorous tasting evaluation conducted by our team consisting of an expert moderator and executive-level chefs trained as Certified Master Tasters. What we found was that it is not fair to assume that private brand products are of lower quality, and that products need to be judged and independently evaluated. Through our testing, we saw that private brand products exceed or surpass quality standards at a very similar rate as national brands.
We tested Walmart’s Great Value Peanut Butter to determine whether or not it met or surpassed standards of a high-quality peanut butter. First, our Certified Master Tasters, led by the moderator, defined quality for the category and developed a quality definition. The quality definition specified ideal features of a peanut butter, including appearance, aroma, texture, flavor profile and sweetness intensity, among others. Following a blind taste test measured to the 21 attributes defined in the quality definition, the panel of executive-level chefs scored the products, ultimately concluding that Walmart’s Great Value Peanut Butter is at parity with one national leading peanut butter brand and superior to another.
In 2016, we tested Kroger medium salsa versus two leading national brands among the ready-to-eat salsa category. We found that the private brand product was rated highest in overall quality. As such, the product would be eligible for the ChefsBest Excellence Award along with substantiation of associated advertising claims, and being statistically superior — which the other leading brands would not have been eligible for.
Once seen strictly as price fighters with lower quality, it’s clear why private brand growth has surged in recent years. Proceeding with the “high quality” messaging that a select few of them (and virtually all longstanding national brands) have built their consumer confidence around will alleviate concerns that consumers may harbor regarding the relationship between quality and price. Alternately, national brands — whether legacy products or ones just entering the market — will need to work a little harder on informing customers about what distinguishes them from other options in what is still the most important message in food and beverage: taste.
Chris Faridniya is the director of sales and marketing for ChefsBest.