The private label boom: Why some grocers are betting on their own brands

As private-label sales soar, grocery retailers chase higher margins and consumer trust—transforming store shelves in the process.

I've been buying private label for decades, only I don't call it private label. I just call it cheaper. And I always make the purchases—over-the-counter decongestants, pain relievers and so on—in drugstores.

For me, at least, buying the drug store-branded products remains an easy sell. They cost less.

But things are much more complex and nuanced in grocery. If I love Amy's Kitchen's Organic Chunky Tomato Bisque, am I willing to snag a more affordable, similar store-branded product? Could be. But the decision is not as straightforward as the one regarding which container of ibuprofen to buy.

I'm not alone here. Most shoppers weigh a diversity of factors during their treks down grocery aisles—including whether to pick up the store-branded version of a favorite soup. Nevertheless, grocery retailers today are pursuing private label strategies with keen intensity. And the reasons for the trend revolve around more than price.

In 2024, sales of private-label brands grew by 3.9%, beating national brands' growth of 1%, according to data from Circana. More telling, private-label market share in terms of sales expanded from 20% in 2023 to 24% in 2024, according to data from Numerator. Every percentage point of private-label growth comes at the expense of national and local brands.

Affordability—the marrow of my drug store purchasing decision—does stand as one of the foundations of the category's ascent. In the age of ongoing inflation, consumers increasingly hunt for value. They often find it with private-label products—and retailers are working to continue meeting that demand.

C&S Wholesale Grocers, an industry leader that provides private label services, credited inflation, in part, for the company's ongoing private label growth, according to Mark Gilliand, leader of the company's Our Brands private label offering. "Consumers now view Our Brands not just as alternatives to national brands, but as a brand they trust for quality and affordability throughout the entire store, " he says.

Another engine behind the growth—margins. Sales of branded canned soups like those from Amy's Kitchen don't bring in a lot of money for retailers. Margins can dwell at around 5%. But private-label margins can reach as high as 40%. "People tend to forget the reality of retailer economics," says Diana Leza Sheehan, founder at PDG Insights, a grocery consultancy. Rather than boosting profits through margins with national branded products, she says, retailers instead make money through trade spends—money brands pay to retailers to promote their products, secure shelf space and more. This includes discounts, in-store promotions, slotting fees, advertising and other incentives.

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