Once mainly associated with budget products, private labels are increasingly seen by consumers as a viable alternative to branded products. Once associated with lower quality and simpler products, they now represent a rapidly growing market segment, covering a wide range of products from basic groceries to premium products.
Private label offers benefits to both retailers and manufacturers. For retailers, they are a way to reduce operating costs, increase margins and build customer loyalty. For manufacturers, it is an opportunity to broaden their offering and create additional revenue streams by partnering with retailers. Global economic changes such as rising inflation or changing consumer preferences, as well as the development of new production and distribution technologies, are making private labels increasingly attractive in markets around the world.
The rise in popularity of private label products, especially in an era of growing consumer awareness and the need to save money, is no coincidence. The modern FMCG market increasingly values the high quality of these products, which are becoming more technologically advanced and adapted to global trends such as healthy food, organic products and premium offerings. In addition, retailers have invested in creating strong, recognisable brands that offer a wide range of products to meet the diverse needs of consumers.
The future of the private label market looks promising, especially in the context of the development of e-commerce, the growing importance of ESG (environmental, social and governance) products, and the continued increase in interest in premium products. The private label market is not only growing in strength, it is also changing its face, adapting to the expectations of the modern consumer.
The rise of private labels in retail
Private labels are playing an increasingly important role in the retail sector, driven by changing consumer preferences and retailer strategies. Retailers have recognised them not only as a way to reduce costs and increase margins, but also as a tool to build customer loyalty and strengthen their market position. In the past, they were mainly associated with lower prices and lower quality. Today, thanks to investment in development, innovation and unique recipes, they can compete with, and often outperform, branded products.
Rising inflation and the cost of living are driving consumers to look for savings without compromising on quality. Private label fills this gap by offering products that are competitive on both price and value. By cutting out the middleman, retailers can better control quality, tailor their offer to customer expectations and introduce premium products in the private label segment. Private labels are increasingly offering products that are organic, gluten-free, vegan or bio, in response to growing consumer health and environmental awareness.
For retailers, the development of private label also means greater independence from brand manufacturers and the ability to better manage the supply chain. Increased investment in research, new production technologies and innovative distribution methods means that private label products are increasingly being chosen by customers not only for their price, but also for their high quality. As a result, retail chains are building long-term relationships with consumers, who are more likely to return to stores that offer proven and attractively priced private label products.
As a result, private label has become a key element of many retailers’ sales strategy. Their growing popularity is the result of a market evolution in which quality, innovation and price must co-exist to effectively attract and retain customers.
Regional differences in the popularity of private labels
The development of private label in the FMCG market varies from region to region due to many factors such as consumer culture, shopping preferences, purchasing power and the level of development of the retail sector in a given country. In Western Europe, private label has achieved a strong position, particularly in countries such as the UK, Germany, France and Spain, where it is an important part of the store offer. In the UK, private labels account for 40-50% of the FMCG market, and consumers treat them as a fully-fledged alternative to premium brands. High quality, innovation and product variety make British shoppers eager to choose private label products.
In Germany, private label, especially in chains such as Aldi and Lidl, is synonymous with good quality at an affordable price. These chains dominate the market and offer private label products as a basic part of their range. German consumers value products that combine simplicity, quality and value for money, and private label fully meets these needs.
In southern European countries such as Spain and Italy, private labels are also widely available and growing in popularity, but the situation is still different from Western Europe. Spain, thanks to chains such as Carrefour and E.Leclerc, offers a wide range of private label products, characterised by competitive prices and quality.
Italy, with its strong culinary traditions, prefers branded products, especially in categories such as wine, delicatessen and food related to local culture.
The American private label market is growing faster than in the past, but it still lags behind Europe. In the US, despite their presence in most stores such as Walmart and Costco, private label products are still seen as a cheap alternative rather than a premium choice, especially in the food, beverage and luxury goods segments. However, private label is gaining ground in segments such as health, organic and beauty.
In developing countries such as China, India and Brazil, the private label segment is gaining momentum. As purchasing power increases and the retail sector develops, private label products are beginning to be seen as a cheaper but equally valuable alternative to more expensive branded products. In China and India, where e-commerce is growing in popularity, private label is an attractive option for consumers looking to save money. In Brazil, private label is gaining popularity as more consumers focus on saving money, although its market presence is still smaller than in developed countries.
In developed countries such as Canada and Australia, private label is growing in popularity due to the wide range of organic and natural products available. Retailers such as Loblaw in Canada and Coles and Woolworths in Australia are continually expanding their private label ranges to meet the growing demand for healthy, organic and environmentally friendly products. In countries with smaller markets, such as New Zealand, the presence of private label is growing, particularly among younger consumers who are more likely to opt for cheaper but higher quality products.
Differences in the popularity of private labels are due to many factors, including local preferences, purchasing power, consumer culture and the level of development of retail chains. In developed countries, private labels are an integral part of the FMCG market, while in developing countries their popularity is growing, indicating further potential for development in the coming years.
Retail chains developing private labels
The development of private labels in the FMCG sector is reflected in the strategies of many global and local retail chains, which have recognised the opportunity to reduce costs, increase customer loyalty and differentiate their offering. Private label is now one of the key elements of commercial strategies, both in discount chains and in supermarkets and premium stores. Examples of selected retail chains that are successfully developing their own brands illustrate this trend perfectly.
In Poland, retail chains such as Biedronka (Jeronimo Martins) dominate the private label market, offering a wide range of products including both food and everyday items. Biedronka develops many private label brands such as Dada (baby products), Pilos (dairy products), Go Vege (vegetarian products) and Świeże Smaki (sausages and ready meals). These products are very popular because they are competitively priced and of good quality.
Biedronka is also investing in the development of premium lines, offering brands such as Jeronimo Martins - a line of premium products that meets the growing expectations of consumers looking for higher quality food.
Another chain that is consistently developing its own brands in Poland is Lidl, an international leader in the discount segment. In Poland, Lidl develops not only economy brands, but also premium lines. Examples include the Deluxe brand, which offers higher quality food products, as well as Alesto (snacks and delicacies) and Cien (cosmetics). With these brands, Lidl attracts customers who are looking for high-quality products at affordable prices. In addition, the chain is intensively developing the organic and natural products segment in response to the growing trend towards a healthy lifestyle.
In Europe, many chains have also invested heavily in developing their own brands, each tailoring their offer to the specific needs of the market. German discount giant Aldi is one of the pioneers of private label in Europe. The chain offers almost 100% private label products, the quality of which is highly appreciated by consumers. Aldi has brands such as Moser Roth (chocolate) and Lacura (cosmetics), which have become synonymous with high quality at a competitive price. Thanks to innovative approaches to production and distribution, Aldi is able to offer its customers attractive prices without compromising on quality.
Another European leader in private label is Tesco in the UK, which has an extensive range of private label products. The Tesco brand is divided into three main lines: Tesco Value (value products), Tesco Standard (standard products) and Tesco Finest (premium products). This allows Tesco to reach a wide range of consumers by offering both value for money everyday items and exclusive food. The chain is also expanding its organic food range in response to the growing demand for healthy food.
In the US market, one of the leaders in private label is Walmart, which offers a wide range of private label products. Brands such as Great Value (groceries) and Equate (toiletries and cosmetics) are synonymous with low prices and good quality. Walmart has gained recognition from consumers who are happy to choose private label products without compromising on quality. In addition, Walmart, like other chains in the US, is focusing on developing organic and healthy products in response to the growing health trend in the country.
Costco, a chain that has become very popular thanks to its wholesale model, is developing its own brand, Kirkland Signature. This brand covers a wide range of products, from groceries to household chemicals and cosmetics. Kirkland Signature products are particularly popular because of their high quality and attractive prices. Costco successfully combines its own brands with attractive prices, which attracts many loyal customers, especially those who want to save money by buying in bulk.
Canada is not lagging behind when it comes to private label development. Canadian retailer Loblaw offers the President’s Choice brand, which includes both premium and standard products. President’s Choice is particularly popular with consumers who value high quality at reasonable prices. Products are available in many categories, including food, beverage and cosmetics, and the chain continues to expand its offering with innovative solutions such as organic and plant-based foods.
In Australia, Coles and Woolworths are developing their own brands to meet the needs of consumers looking for high quality, healthy and environmentally friendly products. Both chains offer a wide range of products, including organic foods, cosmetics and cleaning products. The chains’ own brands are highly regarded and are perceived as competitive with traditional brands.
Drivers of private label growth
The development of private labels in the FMCG sector is the result of many factors influencing retailers’ strategies and changing consumer preferences. Initially perceived mainly as a cheaper alternative to branded products, private label is now becoming a full-fledged competitor in almost all market segments - from economy to premium, organic and health products.
One of the key factors accelerating the development of private label is changing consumer behaviour. Today’s shoppers are increasingly aware of both product composition and value for money. Many people no longer focus solely on brand loyalty, but rather base their choice on an analysis of the composition, origin, nutritional value or transparency of production. Private labels are successfully responding to these expectations by offering high quality at an affordable price, attracting a growing number of conscious consumers.
Another important factor influencing the development of private labels is inflationary pressure and the rising cost of living. Faced with rising prices, consumers are increasingly looking for cheaper alternatives to branded products, especially if they offer comparable quality. By cutting out the middleman, retail chains can significantly reduce production costs and offer more attractive prices. In countries with high inflation, such as some European markets and Latin America, private label products have gained in popularity and have become the first choice for many families looking to save money without compromising on quality.
Another important aspect of private label development is innovation and the development of the premium segment. Until recently, private label products were mainly associated with cheaper substitutes for branded products. Today, retail chains are increasingly investing in quality and innovation. They are launching premium, organic, gluten-free and functional lines that compete with the most prestigious brands. Consumers looking for healthy and value-for-money products are increasingly turning to private label products, which often offer a better composition than their branded counterparts, making them even more attractive.
Consumers’ growing environmental awareness is also important. More and more people are paying attention to the origin of products, their carbon footprint, packaging and production methods. Retail chains are developing their own brands with sustainability in mind to meet these expectations. They offer products in biodegradable packaging, sourced from certified farms or produced in an environmentally friendly way. Ecological solutions are becoming a key factor in purchasing decisions, especially among younger consumers, who are increasingly choosing brands that offer planet-friendly products.
Changing production strategies and working with suppliers is another important element. Contrary to popular belief, private labels are not produced by anonymous factories. Retail chains often work with reputable manufacturers to produce products under their own brands. In addition, retailers are increasingly forming strategic partnerships with suppliers to develop unique recipes and products that are not available from competitors. Thanks to these partnerships, private labels can differentiate themselves from traditional brands by offering, for example, exclusive cosmetics lines, innovative food products or functional items tailored to specific consumer needs.
The development of e-commerce has also had a huge impact on the growth of private labels. More and more retail chains are choosing to sell their products online, allowing them to reach a wide range of customers, especially those who prefer to shop online. The increase in private label sales through e-commerce platforms, as well as the development of the subscription model, makes these products more accessible and competitive in the market. In some cases, retailers are even developing dedicated online stores exclusively for their private labels, allowing them to build stronger relationships with their customers and respond even better to their needs.
In summary, the development of private labels in the FMCG sector is the result of changing consumer habits, economic pressures, innovation, growing environmental awareness and the development of online retailing. This means that private labels are no longer just a cheaper alternative, but are becoming full-fledged market players, adapting to the changing expectations of the modern consumer.
Working with manufacturers
The myth that private labels are produced by anonymous, low-quality companies is false. In fact, many private label products are made in the factories of reputable manufacturers who produce goods for premium brands. Working with reputable companies helps to improve the quality of private label products, enabling them to compete effectively in the FMCG market. As a result, private labels are growing in popularity and becoming full-fledged players in many market segments.
For brand manufacturers, cooperation with retail chains in the production of private labels is profitable. It allows for better utilisation of production capacity, increased profitability and the provision of stable, long-term contracts. For large companies, private label production can be an important part of their strategy, allowing them to diversify their revenues and hedge against fluctuations in demand for their branded products.
Retailers benefit by being able to offer their customers high quality products made in factories that meet the highest production standards. This collaboration allows them to introduce innovative products that match and sometimes exceed the quality of their branded counterparts. By eliminating the costs associated with brand awareness and promotion, retailers can offer products at more attractive prices, making them more competitive.
The cooperation between chains and manufacturers does not end with the production of standard products under their own brand. Retailers are involved in the creation of unique recipes that make their offer stand out in the market. Exclusive cosmetics lines, organic, vegan and functional foods, as well as dietary supplements and protein-rich foods are becoming more common. Many chains are also investing in research and development, working with laboratories and research centres to develop innovative products that meet the growing needs of consumers.
Sustainability is becoming another key element of this collaboration. Retail chains are increasingly focusing on transparency, informing customers about the origin of their private label products. Some are highlighting the fact that their products come from reputable manufacturers on the packaging, building consumer trust and loyalty. In addition, some chains are introducing certification and quality control schemes to assure consumers of the highest standard of goods on offer.
Working with branded manufacturers is becoming a key element in the success of private label, allowing them not only to grow in popularity, but also to develop increasingly advanced and innovative products. As a result, private label is setting new standards in the FMCG market and adapting to changing consumer expectations.
The future of private label
The private label market will continue to grow dynamically as retailers and manufacturers adapt their strategies to changing consumer expectations and global market trends. The growing importance of private label is already evident in many countries, and the segment is forecast to strengthen its position in food and other FMCG categories. The desire to meet the growing needs of consumers who expect high quality products at attractive prices, as well as increasing market competition, will drive the development of private labels.
One of the main directions of development will be their further premiumisation. Retail chains are increasingly offering private label products that can compete with premium brands in terms of taste, quality of ingredients and attractiveness of packaging. Consumers are becoming more demanding and expect not only a good price but also unique recipes, natural ingredients and modern design. In response to these demands, many private labels are expanding their portfolios to include exclusive delicatessen, organic, vegan and functional product lines that meet the growing interest in healthy lifestyles.
The development of e-commerce and digitalisation is another key trend for the future of the private label market. The rise of online shopping, especially post-pandemic, is changing the way consumers make purchasing decisions. Retailers are investing in the development of online platforms and mobile applications that facilitate the sale of private label products. In addition, the use of advanced data analytics and artificial intelligence makes it possible to personalise the offer and recommend private label products to consumers based on their previous purchases. This allows online stores to be more responsive to customer needs and private label brands to reach a wider range of consumers.
Another important trend is sustainability, which is becoming a priority for both manufacturers and consumers. Consumers are becoming more environmentally aware, which means that private label brands need to adapt their offerings to meet environmental requirements. Retail chains are investing in environmentally friendly packaging, eliminating plastic and improving supply chain transparency. Private label products are increasingly being certified as organic, vegan, GMO-free and sustainable in production and transport. Consumers, who are increasingly guided by sustainability values when making purchases, expect private labels to offer products that are not only good quality, but also ethical and environmentally friendly.
In terms of innovation, private labels are not limited to basic products such as food and beverages, but are also developing segments related to health, beauty and nutritional supplements. Retail chains are investing in research into new product categories such as plant-based foods, meat alternatives, functional foods and dietary supplements. In addition, retailers are starting to introduce technological innovations such as smart packaging, which extends the shelf life of products and enables better freshness management, which is very important in the food industry.
The globalisation of the private label market is leading to increased competition between retailers and global brand manufacturers. As retail chains become stronger, they will increasingly compete with traditional FMCG manufacturers not only on price, but also on quality and innovation. Private label brands, once associated mainly with cheaper alternatives, are also beginning to attract consumers with their exceptional quality and unique products. In the future, many private label brands can be exported to new international markets, enabling further growth for retailers who are becoming strong players in the global market.
It is also worth noting that the future of the private label market is segmented: from budget products to exclusive premium lines. Consumers can choose from private label brands tailored to their preferences - from affordable products to those with exceptional quality, composition and packaging. The development of the organic, plant-based and health segments is a response to changing market needs, but also an active shaping of new trends set by retailers.
In the context of technological innovation, the personalisation of offers through artificial intelligence, the introduction of smart packaging, the development of online sales and the implementation of sustainable solutions will be crucial for the future of the private label market. Consumers are increasingly choosing products that are not only cheaper, but also reflect their environmental and ethical values. In the coming years, private labels have the opportunity to grow and strengthen their position as a major player in the FMCG market.
No longer just an alternative to branded products, private labels are becoming consumers’ first choice, especially in the context of rising inflation, changing shopping habits and growing environmental awareness. Their future is therefore very promising, and their success will depend on their ability to adapt to changing market trends and consumer expectations.
Magdalena Chajzler
Editor
Private label offers benefits to both retailers and manufacturers. For retailers, they are a way to reduce operating costs, increase margins and build customer loyalty. For manufacturers, it is an opportunity to broaden their offering and create additional revenue streams by partnering with retailers. Global economic changes such as rising inflation or changing consumer preferences, as well as the development of new production and distribution technologies, are making private labels increasingly attractive in markets around the world.
The rise in popularity of private label products, especially in an era of growing consumer awareness and the need to save money, is no coincidence. The modern FMCG market increasingly values the high quality of these products, which are becoming more technologically advanced and adapted to global trends such as healthy food, organic products and premium offerings. In addition, retailers have invested in creating strong, recognisable brands that offer a wide range of products to meet the diverse needs of consumers.
The future of the private label market looks promising, especially in the context of the development of e-commerce, the growing importance of ESG (environmental, social and governance) products, and the continued increase in interest in premium products. The private label market is not only growing in strength, it is also changing its face, adapting to the expectations of the modern consumer.
The rise of private labels in retail
Private labels are playing an increasingly important role in the retail sector, driven by changing consumer preferences and retailer strategies. Retailers have recognised them not only as a way to reduce costs and increase margins, but also as a tool to build customer loyalty and strengthen their market position. In the past, they were mainly associated with lower prices and lower quality. Today, thanks to investment in development, innovation and unique recipes, they can compete with, and often outperform, branded products.
Rising inflation and the cost of living are driving consumers to look for savings without compromising on quality. Private label fills this gap by offering products that are competitive on both price and value. By cutting out the middleman, retailers can better control quality, tailor their offer to customer expectations and introduce premium products in the private label segment. Private labels are increasingly offering products that are organic, gluten-free, vegan or bio, in response to growing consumer health and environmental awareness.
For retailers, the development of private label also means greater independence from brand manufacturers and the ability to better manage the supply chain. Increased investment in research, new production technologies and innovative distribution methods means that private label products are increasingly being chosen by customers not only for their price, but also for their high quality. As a result, retail chains are building long-term relationships with consumers, who are more likely to return to stores that offer proven and attractively priced private label products.
As a result, private label has become a key element of many retailers’ sales strategy. Their growing popularity is the result of a market evolution in which quality, innovation and price must co-exist to effectively attract and retain customers.
Regional differences in the popularity of private labels
The development of private label in the FMCG market varies from region to region due to many factors such as consumer culture, shopping preferences, purchasing power and the level of development of the retail sector in a given country. In Western Europe, private label has achieved a strong position, particularly in countries such as the UK, Germany, France and Spain, where it is an important part of the store offer. In the UK, private labels account for 40-50% of the FMCG market, and consumers treat them as a fully-fledged alternative to premium brands. High quality, innovation and product variety make British shoppers eager to choose private label products.
In Germany, private label, especially in chains such as Aldi and Lidl, is synonymous with good quality at an affordable price. These chains dominate the market and offer private label products as a basic part of their range. German consumers value products that combine simplicity, quality and value for money, and private label fully meets these needs.
In southern European countries such as Spain and Italy, private labels are also widely available and growing in popularity, but the situation is still different from Western Europe. Spain, thanks to chains such as Carrefour and E.Leclerc, offers a wide range of private label products, characterised by competitive prices and quality.
Italy, with its strong culinary traditions, prefers branded products, especially in categories such as wine, delicatessen and food related to local culture.
The American private label market is growing faster than in the past, but it still lags behind Europe. In the US, despite their presence in most stores such as Walmart and Costco, private label products are still seen as a cheap alternative rather than a premium choice, especially in the food, beverage and luxury goods segments. However, private label is gaining ground in segments such as health, organic and beauty.
In developing countries such as China, India and Brazil, the private label segment is gaining momentum. As purchasing power increases and the retail sector develops, private label products are beginning to be seen as a cheaper but equally valuable alternative to more expensive branded products. In China and India, where e-commerce is growing in popularity, private label is an attractive option for consumers looking to save money. In Brazil, private label is gaining popularity as more consumers focus on saving money, although its market presence is still smaller than in developed countries.
In developed countries such as Canada and Australia, private label is growing in popularity due to the wide range of organic and natural products available. Retailers such as Loblaw in Canada and Coles and Woolworths in Australia are continually expanding their private label ranges to meet the growing demand for healthy, organic and environmentally friendly products. In countries with smaller markets, such as New Zealand, the presence of private label is growing, particularly among younger consumers who are more likely to opt for cheaper but higher quality products.
Differences in the popularity of private labels are due to many factors, including local preferences, purchasing power, consumer culture and the level of development of retail chains. In developed countries, private labels are an integral part of the FMCG market, while in developing countries their popularity is growing, indicating further potential for development in the coming years.
Retail chains developing private labels
The development of private labels in the FMCG sector is reflected in the strategies of many global and local retail chains, which have recognised the opportunity to reduce costs, increase customer loyalty and differentiate their offering. Private label is now one of the key elements of commercial strategies, both in discount chains and in supermarkets and premium stores. Examples of selected retail chains that are successfully developing their own brands illustrate this trend perfectly.
In Poland, retail chains such as Biedronka (Jeronimo Martins) dominate the private label market, offering a wide range of products including both food and everyday items. Biedronka develops many private label brands such as Dada (baby products), Pilos (dairy products), Go Vege (vegetarian products) and Świeże Smaki (sausages and ready meals). These products are very popular because they are competitively priced and of good quality.
Biedronka is also investing in the development of premium lines, offering brands such as Jeronimo Martins - a line of premium products that meets the growing expectations of consumers looking for higher quality food.
Another chain that is consistently developing its own brands in Poland is Lidl, an international leader in the discount segment. In Poland, Lidl develops not only economy brands, but also premium lines. Examples include the Deluxe brand, which offers higher quality food products, as well as Alesto (snacks and delicacies) and Cien (cosmetics). With these brands, Lidl attracts customers who are looking for high-quality products at affordable prices. In addition, the chain is intensively developing the organic and natural products segment in response to the growing trend towards a healthy lifestyle.
In Europe, many chains have also invested heavily in developing their own brands, each tailoring their offer to the specific needs of the market. German discount giant Aldi is one of the pioneers of private label in Europe. The chain offers almost 100% private label products, the quality of which is highly appreciated by consumers. Aldi has brands such as Moser Roth (chocolate) and Lacura (cosmetics), which have become synonymous with high quality at a competitive price. Thanks to innovative approaches to production and distribution, Aldi is able to offer its customers attractive prices without compromising on quality.
Another European leader in private label is Tesco in the UK, which has an extensive range of private label products. The Tesco brand is divided into three main lines: Tesco Value (value products), Tesco Standard (standard products) and Tesco Finest (premium products). This allows Tesco to reach a wide range of consumers by offering both value for money everyday items and exclusive food. The chain is also expanding its organic food range in response to the growing demand for healthy food.
In the US market, one of the leaders in private label is Walmart, which offers a wide range of private label products. Brands such as Great Value (groceries) and Equate (toiletries and cosmetics) are synonymous with low prices and good quality. Walmart has gained recognition from consumers who are happy to choose private label products without compromising on quality. In addition, Walmart, like other chains in the US, is focusing on developing organic and healthy products in response to the growing health trend in the country.
Costco, a chain that has become very popular thanks to its wholesale model, is developing its own brand, Kirkland Signature. This brand covers a wide range of products, from groceries to household chemicals and cosmetics. Kirkland Signature products are particularly popular because of their high quality and attractive prices. Costco successfully combines its own brands with attractive prices, which attracts many loyal customers, especially those who want to save money by buying in bulk.
Canada is not lagging behind when it comes to private label development. Canadian retailer Loblaw offers the President’s Choice brand, which includes both premium and standard products. President’s Choice is particularly popular with consumers who value high quality at reasonable prices. Products are available in many categories, including food, beverage and cosmetics, and the chain continues to expand its offering with innovative solutions such as organic and plant-based foods.
In Australia, Coles and Woolworths are developing their own brands to meet the needs of consumers looking for high quality, healthy and environmentally friendly products. Both chains offer a wide range of products, including organic foods, cosmetics and cleaning products. The chains’ own brands are highly regarded and are perceived as competitive with traditional brands.
Drivers of private label growth
The development of private labels in the FMCG sector is the result of many factors influencing retailers’ strategies and changing consumer preferences. Initially perceived mainly as a cheaper alternative to branded products, private label is now becoming a full-fledged competitor in almost all market segments - from economy to premium, organic and health products.
One of the key factors accelerating the development of private label is changing consumer behaviour. Today’s shoppers are increasingly aware of both product composition and value for money. Many people no longer focus solely on brand loyalty, but rather base their choice on an analysis of the composition, origin, nutritional value or transparency of production. Private labels are successfully responding to these expectations by offering high quality at an affordable price, attracting a growing number of conscious consumers.
Another important factor influencing the development of private labels is inflationary pressure and the rising cost of living. Faced with rising prices, consumers are increasingly looking for cheaper alternatives to branded products, especially if they offer comparable quality. By cutting out the middleman, retail chains can significantly reduce production costs and offer more attractive prices. In countries with high inflation, such as some European markets and Latin America, private label products have gained in popularity and have become the first choice for many families looking to save money without compromising on quality.
Another important aspect of private label development is innovation and the development of the premium segment. Until recently, private label products were mainly associated with cheaper substitutes for branded products. Today, retail chains are increasingly investing in quality and innovation. They are launching premium, organic, gluten-free and functional lines that compete with the most prestigious brands. Consumers looking for healthy and value-for-money products are increasingly turning to private label products, which often offer a better composition than their branded counterparts, making them even more attractive.
Consumers’ growing environmental awareness is also important. More and more people are paying attention to the origin of products, their carbon footprint, packaging and production methods. Retail chains are developing their own brands with sustainability in mind to meet these expectations. They offer products in biodegradable packaging, sourced from certified farms or produced in an environmentally friendly way. Ecological solutions are becoming a key factor in purchasing decisions, especially among younger consumers, who are increasingly choosing brands that offer planet-friendly products.
Changing production strategies and working with suppliers is another important element. Contrary to popular belief, private labels are not produced by anonymous factories. Retail chains often work with reputable manufacturers to produce products under their own brands. In addition, retailers are increasingly forming strategic partnerships with suppliers to develop unique recipes and products that are not available from competitors. Thanks to these partnerships, private labels can differentiate themselves from traditional brands by offering, for example, exclusive cosmetics lines, innovative food products or functional items tailored to specific consumer needs.
The development of e-commerce has also had a huge impact on the growth of private labels. More and more retail chains are choosing to sell their products online, allowing them to reach a wide range of customers, especially those who prefer to shop online. The increase in private label sales through e-commerce platforms, as well as the development of the subscription model, makes these products more accessible and competitive in the market. In some cases, retailers are even developing dedicated online stores exclusively for their private labels, allowing them to build stronger relationships with their customers and respond even better to their needs.
In summary, the development of private labels in the FMCG sector is the result of changing consumer habits, economic pressures, innovation, growing environmental awareness and the development of online retailing. This means that private labels are no longer just a cheaper alternative, but are becoming full-fledged market players, adapting to the changing expectations of the modern consumer.
Working with manufacturers
The myth that private labels are produced by anonymous, low-quality companies is false. In fact, many private label products are made in the factories of reputable manufacturers who produce goods for premium brands. Working with reputable companies helps to improve the quality of private label products, enabling them to compete effectively in the FMCG market. As a result, private labels are growing in popularity and becoming full-fledged players in many market segments.
For brand manufacturers, cooperation with retail chains in the production of private labels is profitable. It allows for better utilisation of production capacity, increased profitability and the provision of stable, long-term contracts. For large companies, private label production can be an important part of their strategy, allowing them to diversify their revenues and hedge against fluctuations in demand for their branded products.
Retailers benefit by being able to offer their customers high quality products made in factories that meet the highest production standards. This collaboration allows them to introduce innovative products that match and sometimes exceed the quality of their branded counterparts. By eliminating the costs associated with brand awareness and promotion, retailers can offer products at more attractive prices, making them more competitive.
The cooperation between chains and manufacturers does not end with the production of standard products under their own brand. Retailers are involved in the creation of unique recipes that make their offer stand out in the market. Exclusive cosmetics lines, organic, vegan and functional foods, as well as dietary supplements and protein-rich foods are becoming more common. Many chains are also investing in research and development, working with laboratories and research centres to develop innovative products that meet the growing needs of consumers.
Sustainability is becoming another key element of this collaboration. Retail chains are increasingly focusing on transparency, informing customers about the origin of their private label products. Some are highlighting the fact that their products come from reputable manufacturers on the packaging, building consumer trust and loyalty. In addition, some chains are introducing certification and quality control schemes to assure consumers of the highest standard of goods on offer.
Working with branded manufacturers is becoming a key element in the success of private label, allowing them not only to grow in popularity, but also to develop increasingly advanced and innovative products. As a result, private label is setting new standards in the FMCG market and adapting to changing consumer expectations.
The future of private label
The private label market will continue to grow dynamically as retailers and manufacturers adapt their strategies to changing consumer expectations and global market trends. The growing importance of private label is already evident in many countries, and the segment is forecast to strengthen its position in food and other FMCG categories. The desire to meet the growing needs of consumers who expect high quality products at attractive prices, as well as increasing market competition, will drive the development of private labels.
One of the main directions of development will be their further premiumisation. Retail chains are increasingly offering private label products that can compete with premium brands in terms of taste, quality of ingredients and attractiveness of packaging. Consumers are becoming more demanding and expect not only a good price but also unique recipes, natural ingredients and modern design. In response to these demands, many private labels are expanding their portfolios to include exclusive delicatessen, organic, vegan and functional product lines that meet the growing interest in healthy lifestyles.
The development of e-commerce and digitalisation is another key trend for the future of the private label market. The rise of online shopping, especially post-pandemic, is changing the way consumers make purchasing decisions. Retailers are investing in the development of online platforms and mobile applications that facilitate the sale of private label products. In addition, the use of advanced data analytics and artificial intelligence makes it possible to personalise the offer and recommend private label products to consumers based on their previous purchases. This allows online stores to be more responsive to customer needs and private label brands to reach a wider range of consumers.
Another important trend is sustainability, which is becoming a priority for both manufacturers and consumers. Consumers are becoming more environmentally aware, which means that private label brands need to adapt their offerings to meet environmental requirements. Retail chains are investing in environmentally friendly packaging, eliminating plastic and improving supply chain transparency. Private label products are increasingly being certified as organic, vegan, GMO-free and sustainable in production and transport. Consumers, who are increasingly guided by sustainability values when making purchases, expect private labels to offer products that are not only good quality, but also ethical and environmentally friendly.
In terms of innovation, private labels are not limited to basic products such as food and beverages, but are also developing segments related to health, beauty and nutritional supplements. Retail chains are investing in research into new product categories such as plant-based foods, meat alternatives, functional foods and dietary supplements. In addition, retailers are starting to introduce technological innovations such as smart packaging, which extends the shelf life of products and enables better freshness management, which is very important in the food industry.
The globalisation of the private label market is leading to increased competition between retailers and global brand manufacturers. As retail chains become stronger, they will increasingly compete with traditional FMCG manufacturers not only on price, but also on quality and innovation. Private label brands, once associated mainly with cheaper alternatives, are also beginning to attract consumers with their exceptional quality and unique products. In the future, many private label brands can be exported to new international markets, enabling further growth for retailers who are becoming strong players in the global market.
It is also worth noting that the future of the private label market is segmented: from budget products to exclusive premium lines. Consumers can choose from private label brands tailored to their preferences - from affordable products to those with exceptional quality, composition and packaging. The development of the organic, plant-based and health segments is a response to changing market needs, but also an active shaping of new trends set by retailers.
In the context of technological innovation, the personalisation of offers through artificial intelligence, the introduction of smart packaging, the development of online sales and the implementation of sustainable solutions will be crucial for the future of the private label market. Consumers are increasingly choosing products that are not only cheaper, but also reflect their environmental and ethical values. In the coming years, private labels have the opportunity to grow and strengthen their position as a major player in the FMCG market.
No longer just an alternative to branded products, private labels are becoming consumers’ first choice, especially in the context of rising inflation, changing shopping habits and growing environmental awareness. Their future is therefore very promising, and their success will depend on their ability to adapt to changing market trends and consumer expectations.
Magdalena Chajzler
Editor
