Private Label: How Suppliers Can Ride the Wave

Let’s be blunt: private label isn’t a “recession play” anymore. It’s a structural shift in how baskets are built. In the first half of 2025, U.S. store brands hit record share—21.2% of dollars and 23.2% of units—and they’re still gaining ground. That’s not a blip; it’s a new baseline.

Below is a candid take—what’s growing (by category), who’s winning (by retailer), who’s lagging, and what innovative suppliers can do to win with, not against, private label.

Where the growth really is (by category)

Short story: the center of gravity is shifting toward refrigerated, beverages, frozen, and general food, with pet care and home care showing steady unit growth. PLMA’s latest reads show refrigerated and beverages leading dollar gains, while beverages, pet care, and home care lead on unit growth. Beauty and OTC tick up more slowly; general merchandise lags.

Zoom out and you’ll see the same arc from Circana and NIQ: food & beverage is pulling private label share faster than non-food, and shoppers are rewarding value + quality, not just the lowest price. NIQ also flags ready-to-drink (RTD) and snack formats as “category expanders” where retailer brands can grow the pie, not just take it.

Underrated hotspot: convenience. From a small base (≈4% unit share), c-stores are leaning into store brands—snacks, beverages, confection—creating white space for nimble suppliers who can stand up compliant, fast-cycle packs.

Who’s winning—and who isn’t (yet)

Leaders (by scale or penetration):

• Costco: Kirkland Signature is the gold standard—now roughly one-third of Costco sales and widely cited around $86B in annual revenue. It’s a destination driver and a benchmark for quality.

• Aldi: more than 90% of the assortment is private label, and the chain is doubling down with a sweeping rebrand to put “Aldi” on nearly everything.

• Walmart: sheer scale + penetration. Six of the top 10 U.S. private labels by household penetration are Walmart brands (Great Value at 86% penetration). Walmart also launched Bettergoods, a chef-y, trend-led food brand to court younger shoppers.

• Target: about one-third of merchandise sales come from owned/exclusive brands—Target keeps stacking design-forward hits across food, apparel, and home.

• Kroger: “Our Brands” cleared $31B and keeps expanding into premium and wellness tiers.

• Trader Joe’s: famously majority-private label (≈80–85% of SKUs), with quick-rotation novelty that trains discovery behavior.

Lagging or mixed signals:

• Drug and convenience channels: private label tends to trail grocery and club on share, though c-store momentum is building from a low base. Translation: big runway if execution improves.

• Amazon: after cutting dozens of in-house brands in 2023–24, Amazon relaunched and consolidated grocery under “Amazon Grocery” this month. It’s a reset more than a retreat—but “prove it” time on quality and velocity.

What this means for national brands (in stores)

Expect tighter price gaps, fewer me-too SKUs, and more shelf space for tiered private label (value/mid/premium). Retail execs plan to grow store-brand dollar share ~3.3 points by 2027, so resets will privilege differentiation, not duplication. If your SKU can’t justify a premium story (efficacy, sensory, nutrition, cultural relevance), it’s vulnerable.

But this isn’t zero-sum. NIQ’s 2025 work shows high-performing retailers build ecosystems where brands + private label both thrive—private label pulls trips; brands supply halo and breakthrough claims. The winners orchestrate both.

The supplier playbook: 8 moves that actually work

1. Pick your battlegrounds by elasticity (not ego). Lean into categories where private label is expanding the category (RTD, snacks, refrigerated meal solutions). Where PL is slower (high-efficacy HBA/OTC), double down on proof points, claims, and sensory.

2. Design a three-tier architecture—yes, even if you’re branded. Premium “badge” packs for loyalists; value-engineered formats to narrow the gap; and an everyday hero that’s promotion-efficient. If your ladder’s missing a rung, private label will fill it.

3. Be the “silent engine” behind retailer brands . Co-manufacture for the retailer where it’s accretive. You learn velocity patterns, secure lines, and de-risk capacity while keeping your national brand focused on higher-story SKUs. (Plenty of Tier-1s do this quietly—and profitably.)

4. Show up with modular, geo-smart assortments. C-stores and small formats need variety to hit compliance and trip missions—but only if cases are right-sized and shelf-ready. Bring a plug-and-play 6-, 8-, and 12-foot plan that mixes value + premium PL alternatives alongside your brand anchors.

5. Exploit “fresh adjacency.”Refrigerated and frozen are hot. Build cross-category bundles (sauce + protein, beverage + snack), and pitch endcaps timed to issuance cycles and weekend stock-ups.

6. Win on speed and product data. Retailers say yes faster to vendors with bulletproof specs, sustainability claims, nutrition callouts, and digital content ready for PDPs. (NIQ notes consumers trust retailer-endorsed labels; your clean content lifts both PL and brand.)

7. Protect your moats where PL is slow. In Health and Beauty, where outcomes matter, invest in third-party validation, superior formats, and targeted claims. Use shopper testing to prove the difference (not just say it). (Beauty’s growing, but still trails F&B momentum.)

8. Forecast by channel reality, not averages.Model a club/mass scenario (private label weight high), a grocery scenario (tiered PB + regional flavor), and a c-store scenario (fast turns, smaller facings). Back your ask with category math, not adjectives.

A quick, fictional vignette (to make it tangible)

A mid-size salsa company sees private label gaining in refrigerated dips. Instead of only defending, they do two things: (1) launch a premium, limited-batch hatch-chile line with a QR code to farm stories; (2) co-manufacture a clean-label store brand for a top regional grocer with a size and price architecture aimed at first-price-point shoppers. Twelve weeks later, their brand maintains its price with fewer promotions, the PL line drives incremental trips on endcaps, and total category dollars grow. Not a guarantee—just a play that maps to the numbers.

So…is there upside for brands and suppliers?

Absolutely. Private label is a traffic magnet—and a partner opportunity for suppliers who can innovate fast, co-manufacture quietly, and present retailer-ready assortments. The big club/mass winners (Costco, Walmart, Target) set the tone; grocery is racing to catch up with tiered private label; c-store is the stealth growth channel. Suppliers who help retailers land that three-tier mix while protecting a few brand moats will find themselves in more line reviews, not fewer.