PLMA: Private brands uphold market share despite pandemic

Private brands tallied double-digit sales growth and strong unit volume in 2020 as the COVID-19 pandemic hoisted grocery sales, yet store-brand market share held steady as national brands kept pace, according to the Private Label Manufacturers Association (PLMA).

Last year, private-label dollar sales totaled $158.8 billion, up 11.6% from $142.3 billion in 2019, according to PLMA’s 2021 Private Label Yearbook, released Tuesday. National brands saw slightly higher growth, up 11.9% to $657.2 billion in 2020 from $587.4 billion the year before.

Unit sales for store brands in 2020 came in at 52.5 billion, up 7.2% from 49 billion in 2019. The growth rate was the same for national brands, with units climbing to 172.1 billion from 160.6 billion.

For both private label and national brands, market share held firm in dollars and units last year, PLMA said. In 2020, dollar share ended up at 19.5% for private brands and 80.5% for national brands, while unit share finished at 23.4% and 76.6%, respectively.

The 2021 PLMA yearbook is based on NielsenIQ food and nonfood sales data in the food, drug, mass, club and dollar retail channels for 52 weeks ended Dec. 26, 2020.

Store brands remain a shopper staple

New York-based PLMA noted that private label still accounts for about one out of every four consumer packaged goods (CPG) items sold in those retail channels and for roughly one in every $5 spent, despite sweeping changes brought by the coronavirus crisis.

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In 2020, COVID-related retail impacts ranged from shopper panic-buying in the early months — resulting in ongoing supply chain interruptions in high-demand categories — to socially distanced in-store shopping and a near doubling of online sales year over year, according to PLMA. Lockdowns and restaurant closures nationwide also triggered a major shift in consumer purchasing from foodservice to grocery, as Americans adapted their lifestyles to remote schooling and workplaces, and many households coped with lost employment.

Private brands remained a core choice for consumers as traditional restaurant and other foodservice dollars flowed into the grocery space — whether due to shutdowns of bars and restaurants, restrictions on eating out, cancelled vacations and travel, or the need to substitute at home for daily commuter and office meals and school lunches, PLMA explained. Shoppers also turned to store brands in curbside pickup and home delivery transactions as they reined in the number of store trips.

“Analysis needs to take these anomalies of the 2020 data into account,” PLMA President Peggy Davies said in a statement. “But comparisons to pre-pandemic trends and projections notwithstanding, store brands maintained their well-established position in the marketplace, as retailers and private-label manufacturers succeeded in supplying the country with critical food and essential nonfood products in the face of extreme volatility. The 2020 sales figures bear that out.”

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Restaurant and foodservice industry sales sank $240 billion last year from an expected level of $899 billion, and 110,000 eating and drinking establishments closed temporarily or permanently, according to data from the National Restaurant Association. Even though these diverted foodservice dollars are welcomed by the grocery sector, they present a huge challenge for the industry’s distribution systems, as shown by shopper stockpiling and overbuying early in the pandemic, PLMA pointed out.

Household panel data for 2020 show that private label is ingrained in U.S. consumer purchasing behavior, according to Kara Sheesley, vice president retail engagement and U.S. industry relations at Chicago-based NielsenIQ.

“Fully 99% of households told us they bought private label last year,” Sheesley said.

NielsenIQ’s panel research data pegged store-brand market share at 23% of all grocery dollars and 25% of units in 2020, including sales at retailers not counted within the point-of-sale scan data realm. The CPG market researcher added that those figures also include private-label sales of about $40 billion from shopper purchases at leading club, discount and other retailers with extensive own-brand programs.

Supermarkets experience private-label rebound

By retail channel, supermarkets saw the biggest gain in store-brand dollar sales for 2020, up 13.2% to $73.1 billion from $64.6 billion in 2019. Unit sales also showed robust growth, rising 7.1% to 27.3 billion from 25.5 billion. The gains represented a reversal of trends in the supermarket segment, which for a number of years had seen only moderate, mostly inflationary sales growth and declining unit volumes, PLMA noted.

National brands posted larger gains in the supermarket channel for 2020, up by 16.6% in dollars to $330.6 billion from $283.5 billion and by 10.1% in units to 95.1 billion from 86.4 billion, PLMA’s yearbook said. Consequently, national-brand market share in supermarkets advanced from 81.4% to 81.9% in dollars in 2020, while private-brand share fell from 18.6% to 18.1%. Likewise, unit volume for national brands grew from 77.2% to 77.7% and for store brands declined from 22.8% to 22.3%.

The total supermarket channel — private label and national brands — rose 16% in dollars to $403.6 billion and 9.4% in units to 122.4 billion.

Meanwhile, the mass retail channel — encompassing mass merchants, club and dollar stores — topped supermarkets in private-label unit volume growth for 2020, up 8.2% to 23.9 billion versus a 4.9% rise to 69.6 billion for national brands. On the dollar sales side, mass retail private brands climbed 11.7% to $77.8 billion, outpacing 8.5% growth by national brands to $284.9 billion. As a result, store-brand share in mass retail edged up 0.5% to 21.5% in dollars and 0.6% in units to 25.5%, while national brands saw corresponding decreases in dollar and unit volume.

Private-brand share in the drugstore channel dipped only slightly in 2020 — down 0.3% in dollars and flat in units — despite notable sales declines. Store-brand dollar volume in drug fell 1.6% to $7.9 billion versus a 0.8% gain to $41.7 billion for national brands. Drug channel unit sales dropped 6.2% to 1.4 billion in private label, but national brands experienced a similar decrease of 6.1% to 7.4 billion. At the end of 2020, private-brand share in drug stood at 15.9% in dollars and 15.7% in units, compared with 84.1% in dollars and 84.3% in units for national brands.

Paper goods lead top-selling categories

Across retail channels, household paper and plastics finished 2020 as the largest private-label category by dollar volume, at $10.7 billion with a 37.4% share of the total category, according to the PLMA yearbook. Few consumers and industry observers likely would be surprised with that result, given the run on bathroom tissue, paper towels, napkins, facial tissue, and disposable plates, cups and utensils early in the pandemic.

Rounding out the top 10 biggest store-brand segments were dairy cheese ($8.5 billion, 43.5% share of category), milk products ($7.5 billion, 56.8% share), fresh vegetables ($7.4 billion, 34.5% share), beverages ($6.5 billion, 11.3% share), fresh meat ($5.5 billion, 60% share), frozen seafood ($4.2 billion, 61% share), eggs ($3.8 billion, 57.6% share), vitamins and supplements ($2.7 billion, 24.5% share), and upper respiratory health products ($2.5 billion, 28.3% share).

Private brands totaled a 20% dollar share in food for all retail outlets, down 0.1% from 2019, PLMA reported. The only departments seeing store-brand share gains were produce ( 1.7%), seafood ( 1%) and frozen ( 0.7%), while dairy and alcohol were flat. In nonfood, private-label dollar was 18.3% for 2020, flat versus a year earlier, with the only increases being in general merchandise ( 0.4%) and tobacco and alternatives ( 0.2%).

Food posted a 23.4% private-brand unit share last year, no change from 2019, with increases in produce ( 1.6%), bakery ( 0.6%), frozen ( 0.6%), while dairy and alcohol stayed flat. Nonfood store-brand unit share stood at 23.5%, down 0.1% from 2019, with gains seen only in pet care ( 0.7%), general merchandise ( 0.6%) and tobacco and alternatives ( 0.1%).