Private Brands Continue to Capture Consumer Spending Amid Inflation

Private Brands Continue to Capture Consumer Spending Amid Inflation

As inflation pressures continue to impact household budgets, private brands are thriving, with sales surpassing $217 billion in the U.S., according to Circana’s latest market research. This shift toward private-label products is evident in the growth of dollar sales and unit sales in 2023, which increased by 6% and 0.9%, respectively. The rise in private-brand spending is largely driven by consumers looking for ways to stretch their budgets amidst rising prices on essential goods.

According to Circana’s CPG Private Brands Update, private-label sales saw a stronger increase in food and beverage categories (up 6.7%) compared to nonedible items (up 5.1%). In fact, private-brand products now account for 25.5% of total unit sales, up from 24.7% in 2022, reflecting a notable shift in consumer behavior.

The report highlights that households with children, as well as millennial and Gen X households without children, represent a significant portion of private-brand food and beverage purchases. These demographics are increasingly choosing store brands, not only in pantry staples but also in snack categories where name brands traditionally dominated. For instance, private brands of tortilla chips, pretzels, and potato chips experienced notable growth in 2023, with 2.0-2.2 percentage point increases in market share.

The continued growth of private brands signals a larger trend where consumers are becoming more strategic in their purchasing decisions, seeking quality at a better price point. Mary Ellen Lynch, principal of center store solutions at Circana, noted that private brands are capturing a larger share of the market due to consumers’ efforts to “stretch their dollars” in response to inflationary pressures.

Retailers looking to capitalize on this trend are advised to focus on innovation and promotions to encourage shopper trial and build trust with their private-label offerings. As consumers turn to store brands, creating deeper engagement through new product introductions and value-driven campaigns will be essential for retailers to secure long-term loyalty and sales growth in the evolving marketplace.

The shift to private brands highlights how consumers are adjusting to the changing economic landscape, and retailers who invest in expanding their store brand offerings stand to benefit from the ongoing preference for value-conscious products.