For decades, private label was the afterthought in US grocery aisles – the packaged food products shoppers primarily bought when they had to, not when they wanted to. Cheaper? Sure. Good enough? Usually. Sexy? Never.
That’s over.
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Private label’s growth surge
Private-label dollar sales rose 4.4% for the six months ended 15 June versus the same period last year, and unit sales increased 0.4%, according to market data compiled for the Private Label Manufacturers Association (PLMA).
Additionally, private-label sales growth outpaced that of US national brands, which saw a dollar sales increase of 1.1% and a unit sales decrease of 0.6% during the six-month period.
Private-label brands also grew US market share in the first half of this year, with dollar market share reaching 21.2% and unit market share hitting 23.2%, both of which were all-time highs.
The success of store brands in the first half of the year has led the PLMA to project total private-label sales will approach $277bn in 2025, surpassing the 2024 record of $271bn, which was up nearly $9bn from 2023. Unit sales rose 1.1% in 2024, while many national brands saw flat or slightly negative volumes.
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By GlobalDataPrivate-label brands have now outpaced national brands in both dollar and unit sales growth for three consecutive years, which is a shift that isn’t solely about price but also about perception, quality and innovation.
For retailers, store brands have moved from side hustle to strategic pillar. For consumers, they’ve evolved from mostly compromise purchases to deliberate choices. And for national brands, they’ve become a real, sustained competitive threat.
Why private label is winning right now
The pandemic years trained consumers to experiment. Supply chain gaps pushed shoppers into unfamiliar brands – and many didn’t switch back. Add inflation into the mix, and the appeal of lower-cost, high-quality private-label brands has only grown.
Value that feels premium: Consumers still care about price, but they increasingly expect store brands to match, or surpass, the look, taste and packaging of national brands.
According to FMI’s (Food Marketing Institute) 2024 Power of Private Brands report, 71% of US shoppers believe private-label quality is equal to or better than national brands.
Trust in the retailer: Private-label quality perceptions rise in direct correlation with retailer trust. A shopper who loves Trader Joe’s overall experience is primed to embrace Trader Joe’s branded frozen meals and grocery products. This retailer halo effect is one of the category’s most powerful growth engines.
Retailer control: Private label gives retailers more pricing flexibility and margin protection. While national brand gross margins typically hover in the 25–35% range for grocers, private-label margins can exceed 40%. That math alone explains why retailers are doubling down on store brands.
The five big trends shaping private label
Premiumisation at scale
Once a rarity, upscale store brands are now table stakes. For example, Kroger’s Private Selection and Aldi’s Specially Selected packaged-foods lines lead with indulgent flavours, sophisticated packaging and restaurant-inspired formats. This is no longer about “good enough” – it’s about creating destination products that shoppers seek out.
Channel-led innovation
Retailers like Costco, Aldi, Trader Joe’s, Target, Whole Foods and some others are shaping entire categories through private label. Kirkland Signature now accounts for about 31-33% of Costco’s sales, according to Costco’s most recent annual report.
Target’s Good & Gather and Favorite Day brands are positioned as lifestyle choices rather than budget alternatives. And Aldi USA and Trader Joe’s – what I call “private label forward grocers” – are focused almost entirely (90% of the total SKU mix for both) on their own brands, which has become a proven differentiator and success formula for both chains.
The “dupe” effect
TikTok and Instagram have turbocharged the appeal of private-label “dupes” – near-identical versions of hot national-branded products at a fraction of the price. Whether it’s Trader Joe’s version of a cult snack or Aldi’s take on a premium ice-cream bar, the online buzz creates scarcity-driven demand that fuels repeat purchases.
Sustainability and transparency
Consumers increasingly expect private-label brands to meet the same (or higher) standards as national brands in areas like sustainability, sourcing and nutritional transparency. For example, Whole Foods’ 365 line is fully aligned with the grocer’s ingredient standards, and Walmart has rolled out traceability programmes for certain private-label produce lines.
Data-driven product development
With point-of-sale data, loyalty programmes and direct customer feedback, retailers have insight into shopper behaviour at a granularity many, if not most CPG brands, can only dream of. Walmart’s Luminate platform, for example, lets its merchandising teams spot flavour trends early and iterate quickly.
Consumer perception: The quality gap is closing
The old stigma – that private label meant lower quality – is fading. Advent International-owned NIQ’s 2024 Brand Score Study found that 60% of shoppers now trust store brands, and 71% rate them equal or better in quality compared to national brands.
Younger shoppers are even more open to private-label brands. Gen Z and Millennials, who’ve grown up in an era of highly designed retail brands, are less attached to legacy CPG names. Their purchasing decisions tend to weigh quality, price, packaging and ethics over brand nostalgia.
What this means for national brands
Lean into what’s hard to copy: Retailers can mimic flavours, formats and even packaging. But they can’t easily replicate deep R&D pipelines, proprietary technology or brand storytelling with decades of equity behind it.
Innovate faster: Private label’s speed-to-market advantage is narrowing the gap between trend and shelf. National brands need to shorten innovation cycles to avoid ceding new niches.
Defend your category leadership: When private label enters a space, the best defense is to elevate – not cheapen – your offering. A price war against your own customer (the retailer) is rarely a winning strategy.
Consider strategic co-manufacturing: Some brands quietly produce private-label products for retailers as a supplemental revenue stream. Done selectively (and don’t give away your margin) it can strengthen retailer relationships without gutting the brand’s core business.
Challenges and headwinds for private label
Despite the momentum, store brands aren’t immune to risk. Here are three key risks:
Economic shifts: Private-label share gains often flatten when consumer confidence and discretionary spending rebound.
Innovation reliance: Many private-label launches are reactive, responding to trends national brands create. This can leave retailers vulnerable if the trend pipeline slows.
Perception fragility: One bad experience can sour a shopper on an entire retailer’s private-label portfolio, not just a single product.
Change and the road ahead
Private label has moved from the background to the spotlight in the US grocery landscape. The category’s growth is being driven by quality parity, retailer trust, premium positioning and data-driven agility. For retailers, the rewards are obvious: stronger margins, deeper customer loyalty and greater brand control.
For national brands, the message is equally clear: adapt or lose shelf space. Private label is no longer a secondary threat – it’s a credible competitor across multiple tiers, from value to premium.
But while the trajectory is strong, it’s not unstoppable. Economic cycles, innovation gaps and perception risks remain when it comes to private label.
National big brands and smaller emerging brands still account for a solid majority of packaged foods sales in the US. But the trend over the last three years has private-label brands solidly gaining ground. That’s a key historic inflection point in the US packaged-goods brands and grocery retailing industries.
The brands – retailer or manufacturer – that win over the next five or so years will be those that keep one eye on margin and the other on meaning, delivering not just products but reasons for shoppers to believe. History is on the side of manufacturer brands but private-label brands are clearly catching up.
