Sales of private brands jumped by double digits in the 2020 first quarter as U.S. consumers stocked up on groceries and daily essentials during the initial phase of the coronavirus pandemic, according to data from the Private Label Manufacturers Association (PLMA) and Nielsen.
Store brands’ performance in the quarter surpassed the strong momentum from 2019, when private-label dollar sales climbed by 4.1% and unit sales by 2.3% across all U.S. retail outlets. And for the second year, the mass retail channel — mass merchants, warehouse clubs and dollar stores — topped supermarkets in private-brand dollar sales. (Charts courtesy of PLMA/Nielsen.)
In the 2020 first quarter, dollar sales of private-label products for all retail outlets surged by $4.9 billion, a nearly 15% year-over-year gain, Nielsen reported. Unit volume rose almost 13%, marking an increase of approximately 1.5 billion products sold. Overall store-brand sales in the quarter were $38.4 billion in dollars and 13.2 billion in units.
PLMA noted that private label eclipsed national brands in growth during the quarter, adding about one-third more in both dollar and unit sales. Across retail outlets, store brand sales grew 14.6% in dollars and 12.8% in units, compared with increases of 11.5% in dollars and 9.2% in units for their national-brand counterparts.
“There’s no doubt that shopper behavior was highly influenced by consumer fears,” PLMA President Brian Sharoff said in a statement. “Nonetheless, the statistics point to greater acceptance of retailer brands as the coronavirus crisis evolves.”
To meet soaring consumer demand amid the COVID-19 outbreak, private-label manufacturers have stepped up production and made some operational changes, according to PLMA.
For example, in categories seeing elevated volume — such as paper goods, over-the counter medicines and hand sanitizer — factories are operating on a 24/7 basis, the association said. Some manufacturers and suppliers also are creating fair-share allocations for high-demand products, simplifying SKUs, extending lead times to build up inventories, and retooling for more efficient e-commerce operations.
By retail channel, mass retailers turned in the largest gains in the first quarter, with store brands rising 16.6% in dollar sales and 16.5% in unit sales versus national-brand gains of 10.1% in dollars and 7.3% in units. Private-label market share in the mass channel advanced 1.2 points year over year to 21.7% in dollars and 1.5 points to 25.8% in units.
Supermarkets also saw strong private-brand growth for the quarter, with dollars sales up 12.7% and unit sales up 9.7%. However, PLMA said, national brands turned in a slightly better performance, with increases of 15% in dollars and 11.4% in units. Grocery store private-label share held firm at 18% in dollars and 22.3% in units.
At drug stores, where consumer packaged goods (CPG) sales growth has lagged in recent years, store brands put in a good showing, with dollar sales up 13% and unit sales up 12.4%, PLMA reported. Those figures easily bested national brands, which posted gains of 7% in dollars and 1% in units. And compared with a year ago, drugstore first-quarter market share in private brands grew about one full point to 17% in dollars and 15.9% in units.
Private label grows share in 2019
Across retail outlets, private-brand sales totaled $136.5 billion in 2019, up 4.1% from $131.1 billion a year earlier, according to PLMA/Nielsen data in the PLMA 2020 Private Label Yearbook. That growth outpaced the overall CPG market, which saw dollar sales rise 2% to $711.9 billion last year from $698.1 billion in 2018. National brand sales came in at $575.4 billion for 2019, up 1.5% from $567 billion.
Private label achieved unit sales growth in 2019, unlike the overall market and national brands. Store-brand unit volume rose 2.3% to 47.6 billion from 46.6 billion, while national brands fell 0.9% in units to 158.7 billion from 160.2 billion. Total CPG unit volume dipped 0.2% to 206.3 billion last year from 206.8 billion in 2018.
Likewise, store brands saw 0.4% growth in dollar market share to 19.2% in 2019 from 18.8% in 2018, whereas national-brand share tailed off by 0.4% to 80.8% from 81.2%. Results were similar in units, as private-label volume gained 0.6% to 23.1% from 22.5%, and national brands had a 0.6% decrease to 76.9% from 77.5%.
“Store brands continued to post impressive gains, extending a multi-year trend, as the distribution of total sales among the largest U.S.retailing channels continued to shift in favor of mass retail outlets,” PLMA said in its 2020 Yearbook.
Mass again bests supermarkets
Supermarket store-brand sales edged up 0.4% in 2019 to $60.5 billion from $60.2 billion. Mass retailers beat supermarkets in private-label dollar sales for the first time in 2018 and again did so last year with a gain of 8.3% to $68 billion from $62.8 billion. The drug channel continued its decline in private-brand sales, down 1.2% to $8 billion in 2019 from $8.1 billion in 2018.
“In short, store brands powered significantly the success of mass retailers, with an increase of 8.3% in dollar volume coinciding with the ongoing migration of units from supermarkets and drug chains to mass, club and dollar channels,” explained PLMA.
Private-label market share finished at 18% in dollars and 22.3% in units for supermarkets in 2019, PLMA’s Yearbook said. Mass/club/dollar stores snared 20.9% share in dollars and 24.9% share in units, while drug chains saw a 16.1% share in dollars and 15,8% in units. For the total CPG market, private brands tallied a 19.2% share in dollars and 23.1% share in units.
“Serving as a bellwether of store brands’ success over the years, unit market share across all outlets combined was pushed to a record 23.1% by end-of-year 2019 from 22.5% a year ago. Dollar market share hit a new high of 19.2%, up from 18.8%. But in the fast-growing mass channel, unit market share jumped +1.5 points to 24.9%, and dollar market share added +1.1 points to reach 20.9%,” the PLMA Yearbook said. “It should be noted some prominent players — Aldi, Amazon, Costco and Trader Joe’s among them — are not currently sharing sales figures via Nielsen or other industry data syndication services.”
Top gainers at supermarkets
In the 15 departments in supermarkets measured by Nielsen, the performance by store brands (as well as national brands) was mixed last year, according to PLMA. Dollar volume gained in all nine food departments and half of the six nonfood departments, while by unit sales losses prevailed, with deli, produce seafood and alcohol the only departments posting increases.
The top dollar volume gainers at supermarkets for private brands were produce (+$365 million), fresh meat (+$110 million), deli (+$50 million) and frozen food (+$45 million), PLMA reported. By percentage, produce (+7.8%), fresh seafood (+6.2%), alcohol (+4.6%), baby care (+2.1%) and pet care (+1.2%) had the biggest increases.
“Notably, in the produce department, which accounts for $22 billion of total channel sales, store brands’ growth was more than double that of other brands in dollars as well as units,” noted PLMA. “The other departments where store brands’ dollar sales outperformed were fresh seafood, fresh meat, alcohol, baby care, and tobacco and tobacco alternatives.”
By unit volume, store brands bested national brands in several departments at supermarkets despite trending negative in the overall channel. Private-label share of total units rose in fresh seafood (+1.1 point to 20.1%), produce (+0.6 point to 22.2%), fresh meat (+0.4 point to 20.5%), baby care (+0.4 point to 11.6%), general merchandise (+0.4 point to 17.6%), pet care (+0.1 point to 9.8%), and tobacco/tobacco alternatives (+0.1 point to 1.1%).
Unit share, meanwhile, held firm in dairy (35.1%), household care (30.5%), frozen food (22.9%) and alcohol (0.5%). PLMA said just three supermarket departments had unit share declines: health and beauty (-0.2 point to 17.2%), grocery (-0.3 point to 18.8%) and bakery (-1.3 points to 63%).
“While overall sales compared to 2018 were virtually flat, store brands nonetheless accounted for a record $60.5 billion in U.S. supermarket sales and contributed nearly $350 million, or 6.5%, to the channel’s gains. However, market shares at year-end showed marginal declines. Private-label dollar share was 18%, down two-tenths of a point from a year ago. Unit share lost one-tenth of a point to end at 22.3% for 2019,” the PLMA Yearbook said. “While the channel as a whole posted modest sales volume increases of 1.6% during each of the past two years, according to Nielsen reports, the direction for unit volume in the supermarket channel was increasingly negative, falling off by 700 million units (-0.6%) in 2018 and yet another 1.2 billion units (-1.1%) in 2019.”
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