Private label food and beverage products are seeing robust demand from consumers and investors, according to the Consumer Insider, an industry report released by Brown Gibbons Lang & Company (BGL), as growth outpaces national brands and market penetration reaches record highs. The historically recession-resilient category is growing beyond its value-oriented roots to premium status as changing retail strategies and demographics support accelerated growth and market penetration.
Retailers are embracing store brands as a key point of differentiation by offering greater diversity in their private label offerings and growing their premium product selection to win consumers in an increasingly competitive marketplace. Expansion is taking place across channels and formats with retailers investing significant capital in digital and physical footprints to capitalize on the growing market opportunity.
Millennials, now the largest segment of the U.S. population, purchase the most private label products of any demographic and are driving growth of premium store brands. Perceived value, clean ingredients, transparency, and legacy brand alternatives are influencing buying decisions.
Industry participants are pursuing acquisitions to more rapidly enter adjacent product categories and geographic markets and expand into specialty products. Thomas H. Lee Partners’ $875 million capitalization of 8th Avenue Food & Provisions with Post Holdings and Hearthside Food Solutions’ $1.1 billion acquisition of Greencore Group’s U.S. Operations are among the recent marquee transactions, underscoring an active deal environment and bullish outlook. Secular growth, healthy buyer appetite, and a strong capital markets environment are expected to support further M&A activity.