The private brand revolution is no longer on the horizon, it’s here, reshaping the fast-moving consumer goods (FMCG) landscape in real time. While private brands were once viewed as cheaper alternatives, often associated with compromise on quality or prestige, today’s reality is very different. Retailers are transforming private brands into powerhouses of innovation, quality and consumer connection. For FMCG brands, this shift presents both a challenge and an opportunity. The question is: how should they respond?
Own brands: From budget buys to brand challengers
Private brand products are no longer the poor relation of national brands. In fact, they’re outperforming many household names. According to Circana data, private brands now account for 39% of FMCG value share across major European markets (EU6) and hold an even larger 46% share by unit sales. Countries such as Spain, Germany and the Netherlands lead the charge, with private brand penetration reaching 48%, 43%, and 42% respectively.
This surge isn’t simply a by-product of inflation. Yes, rising prices have made affordability more important than ever, but private brands have succeeded by transforming their entire proposition, focusing on innovation, quality, sustainability and building consumer trust. Retailers are leveraging data-driven insights, shopper segmentation, and loyalty schemes to create private label offers that resonate deeply with today’s shoppers.
Why private brands are winning
As Howard Wright, Executive Creative and Strategy Director at Equator Design, explains, retailers hold significant advantages. “They are more nimble and agile,” he says. “They can increase and decrease their ranges quickly to react to shifting market conditions.” This agility allows them to respond to consumer demands, whether it’s a sudden focus on price or a growing desire for ethical sourcing, faster than traditional FMCG brands.
Retailers also benefit from the brand halo effect. Shoppers who trust a supermarket’s private brand pizza are more likely to buy its cereal, pet food, or household cleaners. “You’re buying into an umbrella of products,” Wright explains. “If I like their pizza, I’m pretty sure their ice cream is going to be good too.” National brands don’t have this built-in cross-category credibility. Heinz may dominate beans, but that doesn’t guarantee success in frozen meals.
Evolving consumer behaviour: Loyalty is dead, long live discovery
The days when shoppers stuck to brands simply because their parents did are over. Consumers are more adventurous, digitally influenced, and less loyal. Social media, influencers and peer recommendations are driving rapid shifts in buying behaviour. As Wright puts it, “It’s almost a trend now to try new things and give your reviews on them.”
The new battleground: Innovation, premiumisation, and collaboration
The rise of private brands doesn’t mean national brands are doomed. But they can’t afford to stand still. The Race for Resilience 2023 Innovation Pacesetters report suggests four strategies for FMCG brands to stay competitive:
1. Collaborate strategically
Some national brands are becoming suppliers to own brands or co-developing limited editions to access new retail channels and shopper segments. Strategic partnerships can generate viral earned media and protect volumes in saturated categories.
2. Grow the category
Branded sports and energy drinks provide a masterclass here. With 470 product launches and 18 new brands in 2023, they are adding new shoppers through functional claims, natural ingredients, and format variety. Rather than cannibalising existing products, these brands are expanding the category itself.
3. Diversify into high-growth adjacencies
Reformulating and repositioning products to appeal to emerging premium segments is key. Nestlé’s move into at-home snacking for hybrid workers shows how brands can unlock new consumption moments beyond breakfast or traditional mealtimes.
4. Premiumise distinctively
FMCG brands must create value worth paying for. Premiumisation isn’t just about higher prices – it’s about innovations that attract new shoppers, target new needs, and deliver on quality. Lindt and Ferrero have shown how strategic acquisitions, and distinctive offerings can drive volume growth, even in a crowded confectionery market.
What FMCG brands need to do now
Wright’s advice for brands is clear: “You need to work harder on your pack. You can’t just rely on brand recognition anymore.” Brands must reintroduce themselves, communicating benefits, provenance, and purpose on pack and beyond.
Consumers are savvier than ever, particularly in the flexitarian and health-conscious segments. They want transparency, nutritional value, and great taste, not just a familiar logo. Brands stuck on legacy recipes or old positioning risk becoming irrelevant.
Relevance over heritage
Consumers no longer care if a recipe hasn’t changed in 60 years. They want to know it reflects today’s health standards, environmental concerns and flavour preferences. “Be relevant now,” Wright says. “Customers are not the same as they were a long time ago.”
Inspire trial and repeat purchase
Make shopping fun again. Use experiential retail, proximity storytelling, and digital tools to create immersive experiences both online and in-store. Products need to stand out on the shelf and in the social feed.
The future: Private brands as brands, brands as experience provider
The lines are blurring. Private brands are building premium propositions, while traditional brands are pivoting to become experience providers. Both need to think like media channels, constantly engaging with consumers across platforms.
For FMCG brands, this is the moment to rethink everything, from product innovation and portfolio strategy to packaging design and promotion. The private brand revolution has levelled the playing field. The winners will be those who understand the new rules and aren’t afraid to rewrite them.
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