Private labels in the food industry

Faced with rising living costs, consumers are increasingly turning to store brands in order to save money. In 2023, for example, almost a third of consumers worldwide said they planned to buy more private labels as a way of reducing costs. This trend isn’t going away and it’s particularly strong in Germany and Spain.

Growth in this segment continued in 2024, with 62 per cent of all private-label product launches around the world appearing on shelves in Europe, followed by North America and Asia. The leading markets are the United Kingdom, the United States and France. When broken down by category, a clear ranking emerges, with bread and baked goods accounting for the highest share of own-brand products in the global food and beverage sector.

The term private label is applied to goods that are produced by specialist manufacturers but sold under the brand name of a retail company. Examples include own brands offered by large supermarket chains, such as Tesco Finest, Sainsbury’s Taste the Difference or Just Essentials from Asda. The retailer controls the product range, price positioning and brand image, while production is often handled by specialist manufacturing companies.

The old image of the “budget brand” has fallen by the wayside. The new generation of private labels favours “premiumisation” – in other words, the use of high-quality ingredients or materials, sustainable packaging and clear origin labelling. Many successful retailers now use own brands as drivers of innovation to bring trends to market faster than traditional manufacturer brands.

Examples include organic ranges with links to the region and vegan ready-to-eat products tailored specifically to urban target groups. The advantage for retailers is that they have full control over pricing, storytelling and brand differentiation.

Private-label contracts can make strategic sense for manufacturing companies because they allow for continuous capacity utilisation, help cover fixed costs and provide market access via large retail chains.

However, excessive dependence on a single retailer carries risks. Pressure on prices and margins is high, and the bargaining power is typically in the hands of the retailer. Consequently, successful companies strike a balance between the volume of private-label orders and the production of their own manufacturer brands, or diversify their customer base.

For retail chains, private-label products do more than just yield lucrative margins; they serve as strategic differentiation tools to secure the loyalty of certain target groups. Those that succeed in establishing own brands with clear positioning – whether in the premium, organic or discount segment – enjoy competitive advantages.

Rising demand goes hand in hand with growing regulatory pressure. Issues such as food safety, certifications (IFS, BRC, organic logo) and packaging legislation such as the EU Single-Use Plastics Directive must be taken into account.

Instead of seeing this landscape as a burden, innovative companies are turning regulatory initiatives into selling points, for example by switching to recyclable packaging or carbon-neutral production processes ahead of the competition.

The coming years are expected to bring further growth, both in terms of breadth –with more categories – and depth – through segmentation. AI and automation will accelerate product development and supply chain management. E-commerce is also set to change the private-label business, with digital own brands, exclusive online products and direct-to-consumer strategies opening up new channels. Private labels will therefore also be a key topic at Anuga 2025 , where around 4,000 companies offering private-label products will be represented.