Dive Brief:
- Generation Z and millennial consumers combined accounted for 81% of year-over-year gains in private label spending for the 52 weeks ending June 14, according to research released Tuesday by data firm Spins.
- Gen Z accounted for 43% of the boost in private brand dollars, followed by millennials at 38% and Gen X at 19%, according to Circana data shared in the report.
- Spins noted that future private brand growth is increasingly reliant on younger shoppers.
Dive Insight:
As the growth rate for private brand sales continues to outpace that of name brands, private brands offer grocers a prime opportunity to innovate and cater to different shopper trends, Spins found.
Spins noted that 40% of surveyed millennials and Gen Zers follow a specific diet, such as high protein or low carb. Younger shoppers are also seeking out globally inspired food, with 86% of Gen Z and millennial respondents saying they consume Hispanic and South American cuisine and 83% consuming East Asian food.
Spins recommended that grocers focus on expanding private brands in categories with both a high penetration among young shoppers and low private label share. This includes categories such as energy drinks, carbonated beverages, juices, pizza and cold cereal.
Spins also suggested that retailers touch on several trends when launching private label items, giving the example of a frozen entree that caters to “intentional eating,” global flavors and nutrient density.
A key advantage for private brands is that their average retail price has increased at a slower rate than that of name brands, giving them a better value proposition amid consumers’ grocery inflation concerns.
Spins noted that refrigerated categories, in particular, have a major impact on private brand performance. Store brand refrigerated meat and seafood recorded the largest dollar gain among private brands, up 41%. In comparison, fresh meat and seafood for name brands only saw sales increase 11%.
The report is based on a survey of just over 1,000 consumers in January as well as Circana data.
