Private-label products, sometimes known as private brands or store brands, have enjoyed steady growth since even before the COVID-19 pandemic. And dollar sales continue to grow. In 2023, total dollar sales rose 6%, while units sold grew 0.9% compared to the prior year.
Often presented as the lower-cost option, high inflation has helped the private-label market, which is valued at more than $217 billion, according to a report from Chicago-based market research firm Circana.
Although the price tag of private-label products is typically lower, quality is often judged as equal to or better than national brands, according to the Institute of Packaging Professionals. So, with quality viewed positively and inflationary pressure on the consumer wallet, more than one-third of the core pantry spend now goes to private brands. Private brands outsell name brands in 11 out of 14 categories in the dairy segment, Circana reveals.
Shoppers who favor store brands enjoy shopping and hunting for the lowest prices. A substantial number pay attention to nutrition and ingredient labels. As with national brands, product promotion is vital. The Circana report recommends private-label brand owners: “Promote points of differentiation, innovation, and the many ways consumers define value: value for the dollar, meals that can be stretched, convenience, and indulgence or reward.”
Private-label dairy products also must address consumer attitudes regarding sustainability, food waste, and health and wellness concerns.
Many of these objectives can be achieved via packaging, although most store brands and national brands house dairy products in similar primary packaging formats: high-density polyethylene bottles; polyethylene terephthalate bottles; gabletop cartons with reclosable plastic closures; aseptic cartons; plastic cups with film, paper, or foil laminate lidstock; paperboard or plastic tubs with friction-fit lids; flexible packaging (often with an easy-open/reclose feature); paper or foil laminate wraps; and paperboard cartons and multipack carriers.
Although rigid plastic packaging continues to dominate in the dairy category, flexible packaging formats are registering a higher growth rate, according to the PMMI, The Association for Packaging and Processing Technologies “Dairy Industry Report.”
The appeal of flexible packaging stems partly from its favorable sustainability profile. The lighter weight versus rigid packaging means a smaller carbon footprint. However, many consumers look for other sustainable options and seek recyclable packaging materials that contain recycled content and/or are derived from renewable sources like wood fiber or sugarcane. In fact, 53% of millennials and 44% of baby boomers say that reducing the environmental impact is important when deciding what dairy product to buy, PMMI research states.
Beyond sustainability profile and price point, private-label brand owners position their products to compete with the national brands by designing eye-catching graphics emphasizing differentiating features such as shelf life, award-winning quality/flavor, natural ingredients, wholesomeness, unique flavors, convenience, and other characteristics.
However, label real estate is limited, particularly on popular single-serve containers. So, to augment label information and engage consumers more personally, private-label brands increasingly include a QR code on their packaging. With a scan by a smartphone, this two-dimensional code can deliver instant access to product information beyond what will fit on the label, including product origins, recipes, and promotions.
The QR code scan can also allow consumers to provide feedback about the product. In addition to the opportunity to gather product feedback, QR code scans can generate metrics private-label brand owners can use to monitor and analyze sales.
