Q&A: Yogurt Prices Help Drive Private Label Penetration
Earlier this month, Catalina released its Q1 2023 Shopping Basket Index, showing the food categories that have seen the highest price increases year-over-year in the United States and several European countries.
The date showed that yogurt, frozen foods and cereal were among the categories that saw the most inflation, with yogurt prices rising the most in Q1 of 2023, up 18%, closely followed by frozen food (+17%) and frozen vegetables (+16%). In the U.S. specifically, yogurt and cereal prices both rose 21% year-over-year, followed by soft drinks & water (+19%), frozen foods (+17%), hand & bath soaps (+17%) frozen vegetables (+19%) and coffee (+16%).
Sean Murphy, chief data & analytics officer at Catalina, spoke with Store Brands about what’s behind the price increases in the yogurt category, and how private label sales are being impacted by the rising prices.
STORE BRANDS: What explains the high inflation in the yogurt category? Are other dairy categories also seeing high inflation?
Sean Murphy: Several factors are likely contributing to higher yogurt prices overall, including increased operating expenses incurred by dairy farmers to care for their herds. This is driving the escalating costs for milk and whey, two key ingredients of yogurt.
Note: When looking at the average retail price of private label yogurt across all categories over the six months ending 4/30/23 vs. the same period in 2022, prices increased at a higher rate (+31.7%) than the average increase of 15.5% across all categories.
Other private label dairy categories also seeing higher prices include fluid milk (+8.3%), butter (+35.2%), cream (+31.7%) and sour cream (+29.8%).
SB: Is this impacting the sale of these items, and are shoppers moving more towards private brands as a result of the higher prices?
SM: Yes. Generally speaking, shopper penetration figures show that higher prices have driven more shoppers into the private label yogurt space. Yogurt categories like fruit-on-the-bottom showed a dollar share increase of 15.7% for private label sales. This can be attributed to a 23% increase in retail prices and trip frequency rising 35.7%.
However, the light, low-carb category showed a 2.2% decrease of dollar share driven by retail price increases of 31.3% and trip frequency declining 34.6% (consumers purchasing less frequently).
SB: What can a strong assortment of private label dairy products mean for a retailer?
SM: Retailers with strong private label assortments typically experience strong sales and growth of their private label portfolio, especially during challenging economic times. One caution is that this can cannibalize sales of branded items.