Private labels are driving a significant transformation in the fast-moving consumer goods (FMCG) sector across Europe, states a recent report, showing how own labels are redefining the competitive landscape, not just by offering lower prices but by consistently delivering quality, innovation, and sustainability.
According to Circana’s latest report, Private Labels: Transformation for Growth., private labels, also known as own labels, achieved an impressive 9.4 per cent growth in value sales and a 2.2 per cent increase in volume sales across the largest six European markets (France, Germany, Italy, Netherlands, Spain, and the UK) as of March 2024.
With a 39 per cent market share in value sales and a 46 per cent share in unit sales, private labels have firmly established themselves as key players in the sector.
The report reveals that categories such as chilled and fresh foods, household care, and personal care have seen the highest private label penetration, with notable gains in baby food (+2.3pp) and pet non-food (+2.2pp).
While private labels surged, mainstream brands showed modest recovery through aggressive promotional strategies. However, even with 43 per cent of national brand units sold on promotion in the UK, they continue to lag private labels in overall growth.
Circana also warns of a slowdown in category innovation, with 17 per cent fewer new product launches observed due to supply chain disruptions and a focus on core product ranges.
This presents a risk of the FMCG sector becoming an ‘innovation desert,’ emphasising the need for both private labels and mainstream national brands to prioritise innovation to drive organic growth.
Ananda Roy, Senior Vice President of Thought Leadership at Circana, said, "Private Labels have redefined the competitive landscape, not just by offering lower prices but by consistently delivering quality, innovation, and sustainability.
"Their success underscores a broader consumer shift towards brands that align with their values, particularly in health-conscious and eco-friendly categories."
Continued growth momentum is forecasted for private labels, driven by investments in range expansion, premiumisation, and sustainability initiatives. Consumer preferences for health, wellness, and ethical consumption will continue to influence purchasing decisions, reinforcing the importance of aligning product offerings with these values.
Private Labels are expected to continue their strong momentum, driven by investments in range expansion, pricing strategies, and product innovation. However, National Brands have the potential to narrow the gap if they pivot towards innovation and diversify their portfolios.
As both sectors adapt to evolving consumer demands, the FMCG landscape is set to remain dynamic and highly competitive in the year ahead.
Roy concluded, "2024 marked a pivotal year for the FMCG industry, with private labels setting a new standard for growth and innovation.
Looking ahead, 2025 will be a defining year for both private labels and national brands, as long-term success will hinge on their ability to innovate and connect with evolving consumer needs. The opportunity is open for all brands to differentiate themselves and deliver products that resonate with today’s value-driven consumers."
