The 2019 Private Label Trade Show, put on by the Private Label Manufacturers Association (PLMA) took place from 17-19th November at the Donald E. Stephens Convention Center in Rosemont, IL. The show had more than 2,500 exhibit booths with private label manufacturers ranging from food and beverages to household cleaning product specialists. The trade show put an emphasis on innovation, boasting an “Idea Supermarket & New Products Expo”, highlighting the newest products and packaging in store brands today. Euromonitor Shopping Preferences survey data shows that in 2019, 27% of US consumers regularly seek private label and low-cost products. Euromonitor Future Spending Habits survey data goes a step further, showing consistent growth in the past few years of the US private label consumer base planning to increase spending on private label products in the next 12 months, up from 17% in 2017 to 19% in 2019. As private label’s already strong base is set to see growth, here are some takeaways from the show:
Household CPG Continues to Grow
As brand loyalty continues to decline in home care products, the increasing quality of private label options has helped these brands’ case to the consumer, as they consistently beat larger brands on price. As consumers trust store brands more and more, they are increasingly willing to try new private label products, helping store brand household CPG products to grow across the category. Like many other categories, the forefront of growth for household CPG products is online – namely the first page of results on a given website. E-commerce has helped to increase retail consolidation, driving the expansion of private label, putting new pressures on large brands to maintain top positions. Conference speaker Ali Dibadj of AllianceBernstein points out that consumers are searching for household CPG products online predominantly by category, not brand – for instance, searching “paper towels” instead of “Bounty”. Large players are adjusting their online advertising strategies accordingly, paying more to stay on the first page of results.
CBD aiming to take on private label
With its own section on the trade floor, hemp-derived CBD continues to be one of the hottest additives across food, beauty, and personal care categories. Multiple manufacturers of CBD were present at the PLMA conference with each touting their own ability to participate in FMCG as well as tailor their solutions to brands’ innovative needs. From standalone to full spectrum products, the popularity of CBD amongst consumers has led to a proliferation of the compound’s presence in many FMCG categories across an increasing number of chain retailers in the US.
However, the absence of a regulatory framework for CBD from the FDA remains a hurdle for companies currently in the market and those interested in entering. Without proper regulatory guidance, CBD’s proper dosage remains an unknown, testing standards vary across manufacturers, and claims of product function often carry on unsubstantiated. While the FDA deliberates CBD’s regulatory status, consumers of CBD will remain confused on its purpose and dosage without proper product information.
Beverages in private label
Within the beverages market, private label has done exceptionally well at capturing a winning share of bottled water. It comes as no surprise that the beverages side of the PLMA show was dominated by bottled water manufacturers. While still bottled water has been driving growth, private label options have been focusing on flavored and carbonated bottled water offerings in order to keep up with consumer trends. Packaging was a big topic, with manufacturers presenting recycled and canned alternatives to plastic bottles. On the hot drinks side, coffee producers and suppliers also had a strong presence. Products ranging from plant-based RTD coffees to cold brew were a common sight, while hot coffee producers focused on ethically sourced, high quality beans. Lastly, the most common alcoholic drink offering was wine. Private label wine has been steadily gaining share in the market, defying expectations and successfully providing high quality wines at competitive prices. As more and more stores expand their wine offerings, producers have jumped at the chance to supply private label brands with varietals ranging from reds to sparkling rosés.