The US food industry continues to see a shift towards private label products over branded consumer foods. According to analysis by US investment bank AllianceBernstein, private label products have been gaining volume market share, leading to a decline in branded volumes. The market share for own-label products has seen an increase, reaching 26.9% in measured US channels. This trend is attributed to the widening price gaps between branded and private label products.
The price difference between branded and private label foods has been steadily increasing, reaching 38.8% so far this year. This has created challenges for US food manufacturers as they try to recover lost volumes during the inflation-linked pricing cycle. Despite efforts to adjust pricing, volume pressures are still evident in the industry.
Various companies in the food and beverage sector are experiencing different levels of impact from this trend. For example, snacks and frozen food maker Kellanova reported volume pressures, while Hershey CEO Michele Buck highlighted a pullback in consumer spending on confectionery. Kraft Heinz reduced its sales forecast due to waning consumer sentiment, while Mondelez International remains optimistic despite a decline in volumes.
AllianceBernstein’s analysis also identifies companies that are most at risk of consumers trading down to private label products. While certain companies like Tyson Foods, McCormick, and Kraft Heinz face this risk, others like Beyond Meat, Hershey, and Simply Good Foods have minimal exposure to private label.
The investment bank’s coverage companies have still lost volume market share to own-label products. However, the price gaps with private label for these companies have narrowed, indicating a more competitive pricing environment. Overall, despite challenges, branded food companies are adapting to the changing market dynamics in the food and beverage industry.
