Digital CPG Blog

Want some evidence that private label store brands are becoming a huge threat to national CPG brands?  Look no further than Walmart’s recent efforts with its Great Value Brand.  According to a recent Ad Age article (subscription required) Great Value Brand sales are estimated to be larger than $10 billion.  $10 Billion.  As Jack Neff points out in the Ad Age piece, that means Great Value sales are:

• Nearly twice the worldwide revenue of Clorox Co. ($5.5 billion) or Hershey Co. ($5.1 billion).
• Bigger than the U.S. revenue of McDonald’s Corp. ($8.1 billion) or Kellogg Co. ($7.9 billion).
• More than the U.S. sales of Amazon (about $9.6 billion).
• Close to the sales of Dollar General Corp. ($10.5 billion).
• Approaching Procter & Gamble’s fiscal ’09 sales to Walmart Stores (about $11.9 billion, or 15% of P&G revenue).

The Great Value brand is out in front of a concerning trend for national CPG brands–Retailers are now full-blown branded manufacturers, and they are competing directly and effectively against you. In the U.S., private label CPG unit share has grown 1.2 percentage points to 22.8% and dollar share has grown 0.7 percentage points to 17.6%, according to this recent study by research firm IRI (via Retailer Daily).

The most concerning element of this growth? Private label brands are no longer cheap, generic versions of the national brands. In many cases, private label brands are working to lead the market with innovative products priced across a broad spectrum.  This is a huge, aggressive step for retailers.  As the folks at Integer Group pointed out in this recent post:

Branded consumer goods and private label have traditionally coexisted by way of segmenting the consumer population on perceptions of value. Those consumers who correlate value exclusively with price have been the rightful territory of private-label brands, whereas those consumers who use additional factors such as “performance” and “experience” have tended to lean toward branded goods.

Take-away: Retailers are no longer satisfied to be the bottom dwellers in the market.  They are going hard after the mainstream consumer and it is working.  It will be very interesting to see how the national brands respond.

Private label-circa 1980

Private label-2009