Sales of store brands, or private label products, began to spike in 2007 just as we were seeing the first signs of an economic downturn. At first, these private label sales were driven by higher commodity prices, but volume growth began to catch up with dollar growth in mid-2008. As the economy continues to struggle, more and more consumers are replacing their branded products with private label equivalents. Store brands are up 10% to $84.4 billion in annual sales across categories reported by The Nielsen Company. Talking to Consumer Packaged Goods marketing professionals across the country, there is a consensus that these private label switchers won’t be coming back when the economy improves – at least not without some incentive.

Winning back these shoppers will not be easy for branded manufacturers.  Although many will be tempted to cut back on new product development, now is the time to innovate.

What To Expect From Name Brands

• More products with new health and wellness claims like “now with more calcium,” or “no trans fats.”
• New package designs with claims like “re-sealable” or “renewable.”
• New package sizes and shapes that will make it more difficult for store brands to copy.
• Innovative new flavor profiles with more line extensions.
• New advertising in new places to get the message across to consumers.

Retailers aren’t just sitting back waiting for new brands to copy; over the past several years, we’ve seen store brands evolve from inexpensive national brand alternatives to exclusive destinations that allow retailers to differentiate themselves. Many store brands achieve premium pricing while strengthening retail banner equity with more upscale offerings. Retailers are investing in their own brands more than ever as their efforts are paying off. The battle between national brands and store brands is about to get interesting.

Britain’s top brand? Coca-Cola, which racked up £969 million in sales in 2008. Following behind – and showing impressive 16 percent growth – was bread brand Warburtons, with sales of £710 million.

“A strong brand, which focuses on its core value proposition, can outperform own label even in tough times.  Consumers want products that are known quantities,” said Jake Shepherd, Marketing Director, Nielsen UK.

In addition to Warburtons, bread brands Hovis and Kingsmill also ranked in the top 10.  Other top 10 brands included Cadbury Dairy Milk chocolates, Walkers Crisps and Nescafe coffee.  The fastest growing brand was Danone Activia, an active health yogurt, which posted a strong 42 percent increase in sales in 2008. New entries in the top 100 list included laundry brand Surf and Kettle premium potato crisps.