Those plain-wrapped “budget” items that parents apologized for buying have grown up into products people brag about finding. Private labels have flipped the grocery world upside down. They are now estimated to capture 20% of grocery dollars, while national brands have seen their unit sales slide 7% since 2021.
Behind every store brand success story sits a shopper who discovered something surprising: the cheaper option actually tasted just as good — or even better.
The power dynamic has rocked the food industry. Products created by the very stores selling them now outshine brands with decades-old legacies and Super Bowl-level marketing budgets. That blue box of mac and cheese might have fueled many people’s childhoods, but today’s shoppers increasingly reach for the store’s version sitting right beside it. What changed wasn’t just packaging or quality — it was consumers’ entire relationship with brands themselves.
The private label revolution plays out differently in each aisle of the supermarket. Sometimes it’s about saving money, sometimes about discovering something that’s not available anywhere else. Either way, the days of feeling second-rate about choosing store brands have vanished.
The question facing every food company now isn’t whether private labels matter but how quickly the ground will continue shifting beneath their feet.
Shelf Space Showdown: The Private Label Coup Taking Over Carts
Private labels have transitioned from being budget alternatives to becoming retail giants. In the U.S. alone, it’s a market that could grow from $145.63 billion in 2024 to $283.36 billion by 2030 at an 11.73% compound annual growth rate, according to Arizton, a market research firm. Those numbers should terrify national brand managers with private labels. As of February 2025, claiming all-time high market shares: 21.7% of dollars spent and 23.9% of units sold across U.S. retail.
“Private brands have really arrived,” says Tom Cosgrove, director of industry relations at FMI — The Food Industry Association, an industry body. “Shoppers tell us the No. 1 reason for purchasing private brands is price and value (both at 71%). Yet these aren’t just temporary inflation-driven gains — a solid 51% of consumers plan to stick with store brands even after grocery prices drop.”
Category dominance varies wildly. Dairy products lead the charge with a massive 25% market share, while data from Circana, another market research firm, reveals that store brands saw notable growth year-over-year (in dollar sales) in several categories: refrigerated foods (7.5%), general food categories (4.3%), and beverages (4%). Meanwhile, Steve Zurek, vice president of analytics at Nielsen, reports that some over-the-counter pharmaceuticals have lost nearly half of their market share to private labels, which now account for 50% in certain channels.
Younger shoppers drive much of this revolution. “Gen Z and younger millennials care about the experience and what’s in the box,” notes Zurek. “They’ll notice if it’s a private label or national brand only after checking if it meets their standards. Boomers believed brands equaled quality, but now quality stands at parity — and sometimes private labels win.”
The innovation advantage may also prove decisive. Private labels launch products faster than national brands, skipping the fight for distribution since their retail channel is pre-secured. “They’ve moved into the innovation space,” says Zurek. “National brands face financial hurdles that private labels simply don’t.”
Marketing tactics have evolved, too. “Private labels promote via streaming services and national TV — that’s new,” says Zurek. Retailers ranging from Aldi to Trader Joe’s to Whole Foods have built empires largely on private label offerings.
The future looks even brighter for store brands, with some analysts projecting that private-label market share will reach 30% by 2033, mirroring European market trends, according to Clarkston Consulting. Meanwhile, the FMI reports that more than 90% of food industry leaders plan to increase private label investments in the next two years, creating an existential challenge for traditional brands.
Economic volatility introduces wildcards, however. “Much depends on the tariff situation,” cautions Zurek. “Supply chain disruptions hit national brands first, then trickle into private labels. It’s a whipsaw at this point.”
Reshaping Supplier Relationships
Retailers have flipped the script on manufacturers with once-equal partnerships now looking increasingly like lopsided power plays. And with private labels commanding 35% gross margins compared to national brands’ measly 26%, according to CB Insights, retailers wield these numbers like weapons in negotiation rooms.
“Collaboration among trading partners has been key to the success of private brands,” explains Cosgrove at the FMI. “When the industry talks about innovation in private brands, they think beyond just new product development. It’s about addressing unmet needs — packaging, flavors, supply chain, sourcing, logistics, merchandising, and marketing.”
The contract disparities paint a vivid picture of this power shift. National brands receive modest one- to-two year agreements with 45-60-day payment terms. In comparison, private label suppliers have extended three- to-five year commitments, 90-120 day payment windows, and must satisfy nearly twice the compliance requirements — more than 32 standards versus just 18.
Manufacturers caught serving both masters face the toughest challenges. After supplying Walmart’s competing Equate line, Unilever, an Anglo-Dutch consumer-goods firm, watched helplessly as its Dove division hemorrhaged 14% profit. Production conflicts plague 42% of dual-suppliers, who admit prioritizing store brands by delaying national brand shipments during crunch periods.
“Lessons manufacturers learned from the pandemic include redundant manufacturing capabilities and supplier diversification,” notes Zurek. “We’re back to just-in-time inventory and really kind of being at risk of having stockouts show up if there’s a loop thrown into the supply chain.”
Savvy suppliers have countered with adaptive strategies — creating “hybrid brands” that work for either national or private labels and earn 23% higher margins than their rigid competitors. Kroger, meanwhile, cut out the middleman by purchasing 17 manufacturing plants outright. And it is likely that, as time passes, there will be more and more stories like this.
Store Brands Shatter the Discount Ceiling
Private labels have ditched their “cheap alternative” identity faster than shoppers grabbed toilet paper during the pandemic. Today, store brands play across the entire price spectrum — many still offering 21-59% savings versus national brands, while others boldly match or exceed big-name pricing, according to Insight to Action, a business management consulting firm.
“Price per equivalized unit is a metric that levels the playing field, and in some cases, private label is higher here,” explains Zurek. “It’s challenging the paradigm a little bit — we used to think private labels were a cheaper alternative, but that’s not always the case when you look at it in a normalized metric.”
The math drives retailers wild with excitement. Private labels deliver 25-30% higher gross margins than national brands, and manufacturing costs run 40-50% lower without intermediaries and bloated marketing budgets, according to Loyal Guru, a retail market research firm. Some categories even yield 50% more profit, Forbes reported in a 2023 article. The bottom-line difference also speaks volumes: 35% profits for private labels versus 26% for national brands.
Promotional strategies further reveal fascinating contrasts. “Dollar sold per promotion — national brands are in the mid to low 30s, while private labels are in the low 20s, about 10 points behind,” notes Zurek. “They’re still using similar promotion strategies as the national brands. But, online, the impulse distraction is much lower, and retailers can suggest private brand alternatives during the shopper’s journey.”
The green premium offers the most surprising pricing twist. Consumers will pay 12% more globally for eco-friendly products (up to 20% in growth markets). Organic products command extraordinary markups — 72% for milk and 82% for eggs. “Just by their nature, some private labels like Whole Foods are hitting this category,” explains Zurek.
“Store brands are trying to maintain a price gap compared to national brands in most places,” adds Zurek. “That can be anywhere from a 10 to 15 or even 20% advantage for the same ounce, weight, or piece count for any item.” The gap persists — but smart retailers now know exactly when to maintain it and when to charge what their premium products deserve.
Changes in Overall Customer Perception
Private labels have pulled off what struggling brands everywhere dream about — complete reputation reinvention. Once dismissed as the “budget option” many would reluctantly reach for when money was tight, store brands now attract shoppers who drive past competing stores just to get them. The shift feels personal for many consumers who’ve discovered their favorite products wear the retailer’s name, not the national brand logo they grew up with.
“During the COVID-19 pandemic, we saw a lot of people give private brand products a try,” explains Cosgrove. “Either because the manufacturer brand they wanted was out of stock, or they were cooking more at home. That trend has continued as food prices have remained high. Shoppers increasingly have a positive sentiment toward store brands, with terms like ‘good,’ ‘great,’ ‘quality,’ and ‘better’ frequently used to describe them.”
The numbers tell the transformation story: 57% of consumers regularly visit specific stores to buy their private label products. Even more revealing, 90% of shoppers plan to stick with private brands even after inflation cools.
Premium packaging deserves significant credit for this perception upgrade. Store brands have ditched generic “look-alike” designs for sophisticated visuals that often surpass national brands. The “translucence trend” reveals more of the product with less packaging, suggesting both quality confidence and environmental responsibility. Finishing touches like foil stamping and embossing add another edge that rivals premium national labels.
Retailers have also segmented their private offerings across multiple tiers. Value-focused lines like Walmart’s Great Value anchor the low end, while premium collections like Aldi’s Specially Selected compete directly with gourmet brands. The middle ground fills with targeted solutions such as clean ingredients and specialized dietary options.
“Younger generations are more concerned about transparency,” notes Zurek. “The stigma attached to buying private labels has dissipated with younger shoppers. It’s almost a badge of honor that they’re buying store brands because it shows they’re frugal while getting a product that over-delivers on value and quality at a good price.”
Raw figures add even more context to this generational split: 61% of Baby Boomers and 64% of affluent consumers show higher primary grocery store loyalty, and 50% of millennials happily store-hop for better deals. Generation Z takes this further, with product attributes trumping brand names entirely.
“We find younger generations tend to be less brand loyal,” adds Cosgrove. “They are more focused on product attributes, such as how a product helps their health or treats their planet. If a brand can answer those questions in a manner that meets these age cohorts’ needs, they are more willing to switch.”
Retailers such as Trader Joe’s have fully embraced this attribute-first mentality, with 80% of its inventory being private label, emphasizing quality standards and exclusivity. Digital signage educates shoppers on ingredient sources and seasonal offerings, feeding the transparency hunger that drives younger consumers.
The quality reality often surprises first-time private label shoppers. Many premium store brands objectively outperform their national counterparts — take Canada-based Loblaw’s President’s Choice chocolate chip cookies, which pack 39% chocolate chips compared to Chips Ahoy’s measly 19%.
The strategic opportunity couldn’t be clearer: the brands that continue investing in quality, transparency, and targeted segments stand to capture loyalty that national brands once took for granted — especially as Gen Z (and even Gen Alpha) shoppers gain more purchasing power.
The Next Chapter: Private Labels Keep Evolving
Private labels have come a long way. Once purely budget options, they’re now brands shoppers actively choose and trust. Most in the industry have seen this change happen firsthand and gradually — store by store, category by category — until suddenly, at almost the drop of a hat, it felt like the entire market changed. The days when retailers simply copied national brands at lower prices have been replaced by genuine innovation and quality that sometimes exceeds what traditional manufacturers offer.
Shoppers make decisions based on what matters in their daily lives — not industry reports or market share battles. They want products that solve real problems, whether saving money, eating healthier, or making more sustainable choices. The most successful brands going forward, whether private or national, will be those that focus less on marketing speak and more on delivering what people actually need and putting the customer first.
Yes, the “customer is always right” may seem like a played-out cliche, but that’s the simple truth at the heart of the private label story. And it’s one that will continue reshaping the industry for years to come.