Why is the price gap between private labels and national brands narrowing?

Private label brands, otherwise known as supermarket-own brands, have long been seen as a cheaper alternative to national brands, the ‘big’ brands whose names you’re likely familiar with.

However, recent research from marketing insights company Circana suggests that the price gap between private label brands and national brands is narrowing.

Private-label growth

According to Circana’s data, which was collected across Europe’s six largest markets (France, Italy, Germany, Spain, the UK, and the Netherlands), private label sales are still growing. So far this year, national brands have shrunk, in volume sales, by 1%, whereas private labels have grown by 1.7%.

“Shoppers see comparable variety of products, taste and flavours, healthier and sustainable options, innovative new products and even local brands at better value for money – even though they are by no means less expensive,” Ananda Roy, senior vice president at Circana, told FoodNavigator.

“Private labels face the same inflationary pressures as national brands but are able to offer comparably better value.” But this ‘better value’ is getting steadily less the case.

Private label price increases  

While traditionally seen as the cheaper option, the gap between private label brands and national brands is narrowing. This, suggested Roy, is largely because retailers are facing the same pressure as large FMCGs companies.

“Brand manufacturers and retailers face significant wage growth to their own employees, volatile commodity prices and supplier costs (farmers, dairy farmers, energy, distribution and insurance), investment to make their supply chain less energy intensive, reduce waste and among retailers, reduce shoplifting.