Store Brands - May 2018 - 8

VIEWPOINT

By
Jordan Rost

FOR PRIVATE BRANDS, IT
PAYS TO BE PREMIUM
In 2018, a premium store brand
product is no longer an oxymoron,
but instead a growing norm within
the overall fast-rising private
brands category. According to
Nielsen's latest "Total Consumer Report
(2017)," sales of private brands eclipsed
$125 billion across traditional retail,
thriving at plus 3 percent in dollar sales
year-over-year with premium private
brands bringing double-digit (10
percent) dollar growth. Retailer-branded
products have surmounted stigmas of
value and quality and, as a result, have
seen a complete reversal in growth
trajectory compared to manufacturer
branded items. Compared with the
closing quarter of 2016, when private
brands were trending negatively, store
brands were posting dollar growth
of more than three times the rate of
branded products by the end of 2017.
Behind this change is the
metamorphosis of the meaning of value
- where consumers no longer view
value to simply mean cheap. Instead,
value has grown to reflect a sliding scale
of interchangeable attributes that are
uniquely important and personal to the
consumer, including characteristics such
as quality of ingredients, sustainability,
durability and price. With this
paradigm shift, consumers have shown
a willingness to pay a little extra for
products that meet their needs, and a
swell of high-quality and high-value
store brand products have emerged.
Not all store brand products are
driving growth at the same rate, and not
all branded products are experiencing
declining sales. When dissected by
price tier, it's clear that premium
products are winning across the board.
Analyzing individual UPC price
points, Nielsen created and analyzed
a five-tier distribution that isolates the

8

Store Brands / May 2018 / www.storebrands.com

most premium- and discount-oriented groups of
products. Through this analysis, it became clear
where opportunities lie for both manufacturers
and retailers. For store brands, discount offerings
represent over 60 percent of revenue; however, the
most value-oriented products have struggled to
keep pace. In fact, the lowest discount tier saw a 2.3
percent decline in dollar growth in 2017. Across
branded product sales, premium tiers sustained
more than one-third of dollar volume and drove
8 percent dollar growth in 2017.
Within the premium pricing tier, there are
areas of opportunity for manufacturers and
retailers to recognize. We are also seeing the
continued premiumization of store brand
products specifically in food where health,
wellness and food safety are driving consumer
demand. More and more, when it comes to food
purchases and nutrition labels, consumers want it
one way: Clean. In fact, 67 percent of Americans
will be prioritizing healthy or socially conscious
food purchases in 2018.
With this movement, clean-label products are
on the rise with brands of all sizes. Within Nielsen
tracked channels, total sales of clean-label products
in 2017 were $131 billion and private brands
accounted for 17 percent of dollar share.
The candy category is another area of opportunity
worth exploring. Currently, private-branded candy
only accounts for 4 percent dollar share of the $15
billion dollar total candy market. Looking at the
distribution of price points across branded candy
UPCs, the highest, premium price point saw 3.7
percent dollar growth and mid-tier premium brands
drove the greatest returns for the category last year
with 4.4 percent dollar growth.
Where manufacturers of private brands can cater
to consumer demand for gourmet and grandiose
products, they can hit the sweet spot where the
lowest-cost brands are missing the mark. SB
Jordan Rost is vice president of consumer insights
for Nielsen. His work explores emerging trends and
shifting buying and media consumption behaviors
and helps manufacturers and retailers make more
informed business decisions.


http://www.storebrands.com

Table of Contents for the Digital Edition of Store Brands - May 2018

Contents
Store Brands - May 2018 - Cover1
Store Brands - May 2018 - Cover2
Store Brands - May 2018 - 3
Store Brands - May 2018 - Contents
Store Brands - May 2018 - 5
Store Brands - May 2018 - 6
Store Brands - May 2018 - 7
Store Brands - May 2018 - 8
Store Brands - May 2018 - 9
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Store Brands - May 2018 - Cover3
Store Brands - May 2018 - Cover4
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201902
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201901
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201812
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201811
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201810
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201809
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201808
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201807
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201806
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_bestpractice
https://www.nxtbook.com/nxtbooks/ensembleiq/storebrands_201805
https://www.nxtbookmedia.com