Global private-label market share to double by 2025

Half of sales at the world's food retailers will come from private label products by the year 2025–up from 25% now.

That's according to a new report from Rabobank, a Dutch financial institution that specializes in food and agriculture.

Rabobank antipates the future of national brands will increasingly be one of have and have-not brands. Specifically, A-brands will remain on store shelves, anchoring price levels for a category and offering shoppers the familiar brands they know.

But secondary B-brands will have a tougher go. They'll need to reposition themselves or risk getting squeezed out.

B-brands must either invest in quality and target the premium market or essentially give up on the national brands market and focus their efforts on private label, the report concludes.

“Our research shows that private label and A-brands are an inseparable combination. Like love and marriage, you can’t have one without the other," the report's author, Sebastiaan Schreijen, associate director of processed food and retail at Rabobank, said.

"But where two’s company, three’s a crowd.  This report is an early warning to B-brand suppliers to adapt their strategies to survive.”

Schreijen sees several trends driving private label growth. They include continued consolidation of grocery markets in developed countries and the emergence of modern retail methods in emerging markets, where private-label penetration is now in the low single digits.

He also pointed to the increasing sophistication of private label products. Retailers are coming out with new innovations that consumers want. At the same time, consumer acceptance of private label has risen since the recession.

Private label sales are certainly growing globally, but recent data is finding little of it in Canada. The Nielsen Company recently reported that private-label market share stood at 18.1% in 2010, down slightly from 18.4% the previous year. It marked the sixth straight year that private-label penetration had fallen.

Private label acceptance is highest in European countries. In Switzerland it stands at 46% market share and in the U.K. 43%.