Formerly synonymous with generic typeface and questionable quality, today’s private label goods are transforming categories and forever shaking up the consumer marketplace. In fact, 80% of all shoppers now believe that private label brands are equal to or better than national brands in terms of quality and packaging.
Over the last three years, sales of private label/store brands grew 18.2%, accounting for $111 billion in sales, according to Nielsen. That is more than twice the rate of growth for national brands – 7.9% to $529 billion – over the same period.
While not experiencing the same rate of growth, private label is a solid contender within the coffee industry. Given coffee’s fairly volatile and higher price point, private label brands can leverage lower cost, making the option appealing enough to rank among the segment’s leaders. In fact, for ground coffee household penetration, private label is nearly tied with Maxwell House for second place at 15.6% and 16.2%, respectively, led only by Folgers at 21.9%. And while it might be an occasional trade-down for some, 38% of households are brand loyal to private label coffee brands.
In terms of consumer perceptions, 42% perceive private label/store brand coffee as offering a better value than name brand coffee and 16% see no difference in taste.
To protect market share, national coffee brands will need to further leverage their core strengths and differentiate themselves to compete against private labels effectively and keep consumers’ loyalty.
Sources: Groceries Are Cleaning Up in Store-Brand Aisles. (October 1, 2013). The New York Times.
Single-cup coffee picks up steam. (July 12, 2013). Private Label Store Brands.