THE STORE BRANDS WIN SHARE IN '05

LUCIA MOSES

NEW YORK - Retailers are gaining scale through consolidation, and leveraging that scale with store-brand products that look and taste better than their predecessors.

Observers point to those factors to explain a slight gain by private brands vs. all other brands last year, when store-brand unit sales in supermarkets gained 0.2 percentage points to stand at 20.8% (see table). The rest of the market is divided as follows: national brands, about 40%-45% of the market, regional brands, 35%-40%.

Store brands shed unit volume in 2005, but lost less than national brands did (-1.1% vs. -2.4%), which led to store brands' slight gain in share, according to the Private Label Manufacturers Association's 2006 Yearbook, which was distributed June 19. The data come from Information Resources Inc.

In dollar sales, store brands increased, but at a slower rate than brands did (0.2% vs. 0.6%). As a result, store brands' dollar share slipped 0.1 percentage points, to 16.2%.

"More retailers are pushing their own brands than the year before or the year before that," said Brian Sharoff, PLMA shelves are showing more private label, and as a result, more consumers are buying it."

Stephen Sibert, group vice president of industry affairs and membership for the Grocery Manufacturers Association, said that as retailers get bigger, their store-brand efforts can shift overall share numbers. "When Walgreens or Wal-Mart or Wegmans decides to get into a category, it can have a fairly big impact," he said. "The battle between private label and brand has gotten stronger. That, and consumers are becoming more trusting of their brands."

Sharoff said it hasn't hurt that many manufacturers' brands have raised their products' prices in the past year, which he suspected has reinforced people's willingness to try private label.

According to PLMA calculations, the average price per unit for brands increased in 247 out of the 296 categories IRI tracks in supermarkets. In the 71 biggest supermarket categories, the estimated average price per unit increased 3.2% for national brands, 0.8% for private-label brands.

Looking at the supermarket by departments where Center Store products are found, store brands saw slight dollar and unit share gains in the edibles, nonedibles and frozen departments.

In supermarkets' biggest Center Store categories by dollar sales, private label had a mixed performance. Store brands gained dollar share in four of 11 categories (laundry detergent and dog food were tied for size): cold cereal, wine, soup and laundry detergent. Categories where private label lost dollar share included carbonated soft drinks, salty snacks, frozen entrees and cigarettes.

Center Store categories where private label saw its biggest unit share gains included household cleaner cloths (137.2%), frozen prepared vegetables (124.1%), dried meat snacks (31.8%), wine (30.2%) and aseptic aseptic juices (25.3%).

In the combined supermarket, drug and mass merchandiser channels (excluding Wal-Mart), private label gained in overall dollar volume, though less than the brands. In unit sales, private label declined, but less than national brands. As a result, store brands' unit market share increased to 19.8% from 19.5%, while dollar share was unchanged at 15.2%.

Sharoff pointed out that the data don't count sales in Wal-Mart as well as specialty stores like Whole Foods Market and Trader Joe's, which are private-label trendsetters.

"Those non-documented retailers are in effect setting the standard for everybody else," he said.

Sales Trend

Store brands' unit share is back to its highest

point of the past five years.

YearDollar SHARE UNIT SHARE

200116.2% 20.7%

200216.1% 20.8%

200316.1% 20.8%

200416.2% 20.6%

200516.1% 20.8%

Source: Information Resources Inc., via Private Label Manufacturers Association