Sprouts Private Label Products Play Vital Role In Overall Growth

Sales at Sprouts Farmers Market continue to grow and the grocer’s private label assortment continues to play a significant role in driving revenue growth.

In the first quarter, which saw sales rise 9% to $1.9 billion, and comparable store sales grow 4%, Sprouts Brand products continued to outpace total company performance, contributing 21% of its total sales for the quarter, said Jack Sinclair, chief executive officer of Sprouts.

“The success of our foraging program has continued as sales in our innovation center continue to grow, and we believe we have become the destination for exciting entrepreneurial food companies to introduce their unique products to the marketplace,” he said during a company investor conference call to discuss first quarter results. “This innovative spirit lives within our Sprouts Brand and culinary teams as they continue to add hundreds of new items like hot honey chicken tenders, non-dairy frozen desserts, and flavored cauliflower rice.”

As Sprouts continues to expand its private label assortment, it is doing so with a mindset that differs from the traditional pathway many retailers have used when developing own brand products.

“We’re not in the world of private label where it’s about trading down or commoditizing against brands. We’re very clear about what our proposition is here,” Sinclair said. “We’re going to have innovative, differentiated Sprouts Brand (products), and the new items that the team has done have been very encouraging.”

The grocer’s growing private label penetration rate, jumping from 16% to 21% in recent years, has been driven by differentiation, he said, as the company strives to differentiate its assortment from competitors.

The Sprouts CEO was also asked about Walmart’s recent launch of bettergoods, the retailer’s most significant private label food launch in two decades. The new line includes 300 items across a host of categories with most priced at less than $5.

Sinclair said he feels the nation’s largest retailer is using the new private label brand as part of a tiered branding strategy to get customers to trade up. 

“It feels more like a tiering exercise than it does a health and attribute-based exercise, although there will be some things in there that oat milk, this, and something like that,” he said. “Our Sprouts Brand business is very much focused on being differentiated, not about trading up people on the same thing. And so it's not going to change what we're going to do.”