First they copied product, now they're lifting the whole playbook – and innovating harder: Private labels' $46bn strategic expansion has brands deeply worried

From top left: Circana's Daniel Bone, Sally Lyons Wyatt and Ananda Roy; Jaid Hulsbosch; FutureBrand's Victoria Berry, former KPMG's James Stewart, Retail Doctor Group's Anastasia Lloyd-Wallis and FutureBrand's Rich Curtis
Coles and Woolworths are among a growing and diverse set of retailers injecting hundreds of millions into private-label range expansion – not just for revenue growth, but customer stickiness, trust and loyalty. They’re no longer just chasing price-conscious consumers: Today’s own brand strategies are leveraging every lesson from the brand playbook to win from value to premium tier, utilising quality product credentials, growing first-party data insights, category diversification and co-brand partnerships while also tapping into future-forward trends such as health and wellbeing, blurred work/home lifestyles, sustainable sourcing, changing consumer behaviours and preferences to innovate. It’s working. Circana figures show 4.8 per cent year-on-year growth across CPG/FMCG to $46bn in annual private-label sales last year. Complementary research shows 95 per cent of Aussie consumers are now open to buying private-label brands, and exclusive research supplied to Mi3 reveals broad familiarity and emerging motivators for own brand purchases. Even more significantly, Gen Z and Millennials are increasingly being swayed to consider private-label products. Here’s the lowdown on why and how retailers are making private-label the next big brand success story, and what name brands should attempt to fight back.
What you need to know:
- Private-label brands are on the up as retailers invest hundreds of millions into range expansion, from Woolworths and Coles to Adore Beauty, The Iconic, Bunnings and more.
- Circana pegged private-label brands representing 36 per cent of Australia’s CPG / FMCG sales at the end of 2024, up 4.8 per cent year-on-year and worth $46bn in sales.
- While private-label brands usually see an upswing in high inflationary and uncertain economic conditions due to historical low-cost positioning, this time things are different, industry experts from Circana to FutureBrand, Retail Doctor Group, KPMG, YouGov, and Honeycomb Strategy. The big reason? Own brand is no longer a price + promotion play.
- Instead, there’s a long-term, concerted effort to diversify both category and approach by retailers, covering value through to premium that’s using every aspect of the brand playbook.
- Key inputs include product premiumisation, more first-party customer data insights, future-forward trend tapping, riding the wave of new consumer behaviours and preferences such as health and wellbeing, sustainability focused products and packaging, co-partnerships and more.
- Coles Finest is a posterchild for this success. The supermarket’s owned premium food brand chalked up a 20.4 per cent increase in sales revenue in FY24, more than double the rate of overall sales in store over the 12-month period. It’s also seen a 13.7 per cent leap in the March 2025 quarter.
- But more broadly, the Aldi effect in Australia has delivered a whole new mindset around own brands and supermarket purchasing. Today’s private-label brand strategy is also driven by the trust equation. With more retailer brands retaining trust, experts argue own brand products, especially those with better product quality credentials are gaining the halo effect and vice versa.
- It’s not just winning over Baby Boomers, the first cohort to go for private-label brands – diversification is also winning over Gen Z and Millennial generations. Numerator’s analysis suggests Gen Z’s share of private-label spending is projected to surpass Baby Boomers by mid-2026, spending 18.4 per cent of their wallet on private-label products thanks to a combination of tight budgets, evolving expectations around quality, values and purpose. Numerator also found 30 per cent of Gen Z private-label spend is on premium-tier products, up from 25 per cent in 2019.
- The question is, how far can private label go? For the experts Mi3 spoke to, the sky’s arguably the limit.
Lift your game. That’s it. These supermarkets have the opportunity to place their products in optimum shelf space as well. So yes, other brands need to lift their game.
Retailers see them as a key revenue growth driver and differentiator that’s building customer trust. More consumers are putting them into shopping baskets thanks to stronger price plus quality propositions, further convinced by innovations tapping consumer trends and changing lifestyle preferences such as health and wellbeing and sustainable sourcing. Younger demos are now willing to buy them too.
Private-label brands – known also as own brands or home brands – are growing share as retailers concertedly invest dollars into the breadth and depth of these ranges. Woolworths which has just invested $100m into reducing the price of 400 SKUs, mostly across home brand items, in its latest price war with rivals, Coles and Aldi. Last year, Coles’ premium own brand, Coles Finest, notched double the sales revenue run rate of overall sales in-store (20.4 per cent). Outside of grocery, Adore Beauty has snapped up Ikou for $25m and earmarked 8-10 per cent of total revenue coming from its three own brands near term.
All this investment presents a real and present danger to name brand owners in categories stretching grocery and CPG to apparel, homeware, pet care, consumer electronics and more. Circana pegged private-label brands representing 36 per cent of Australia’s CPG / FMCG sales at the end of 2024, up 4.8 per cent year-on-year and worth $46bn in sales. The contrasts with 39 per cent share in Europe and 22 per cent in the US.
Own brands' popularity typically shoots up in tougher economic conditions. So it’s not surprising in a cost-of-living crisis with high inflation, supermarket price wars and increased Government pricing scrutiny to keep grocery sector price tags in check, that own brands have surged over the last year or so.
But signals are this latest rise is more significant this time around. The biggest shift is away from price as the overwhelmingly dominant reason for purchase. Historically, own brands were cheaper alternatives. Not anymore. Supermarkets and retailers are diversifying in and out of category to command a multi-tiered position in the brand hierarchy – and consumers are lapping them up.
From price alone to price + quality + proposition + preferences
On shelves today are diverse value-to-premium private-label products with quality credentials – from Coles Finest and Aldi cheeses to Adore Beauty’s Viviology beauty products and Bunnings’ Matador barbeques. They are bundling a heady mix of premiumisation, elevated culinary experiences, trend-forward innovations and ingredients inspired by lifestyle trends, sustainability-focused packaging and ingredients, co-branded partnerships, third-party verified product quality, and even standalone, ‘phantom’ branding with no association with the retailer whatsoever (cue last year’s ABC 4 Corners report and a bottle of Pure Origin gin that’s in fact produced by Coles liquor subsidiary, James Busby).
“Retailers are investing in creating equity, driving innovation, sustainability, differentiation and premiumisation. In every region, private brands are going beyond simply playing on price and promotions,” said Circana global EVP and chief advisor on consumer goods and foodservice insights, Sally Lyons Wyatt, in a recent webinar. “These brands have evolved over the past 45 years from generic, low-cost and undifferentiated copies of mainstream products to modern and highly competitive products today. These are hitting the right mixture of consumer-focused, strategy obsessed, unique and data inspired products.”
Consumer purchasing is following suit. A fresh YouGov survey found 95 per cent of consumers are open to private-level products, with cost as the primary driver (68 per cent). But it’s not the only factor driving purchases. Sixty-three per cent cite quality perceptions and 43 per cent cited taste influencing their choices. Three in 10 Aussies would be encouraged to purchase products from private levels when grocery shopping if these offered unique products not available from widely recognised brands (32 per cent) or if there were organic or healthier options available (30 per cent). One in four could also be encouraged to purchase private label if products adhered to ethical or sustainable sourcing, or if they make the purchase decision easier (23 per cent).
They are incredibly strategy obsessed, constantly evaluating category dynamics, looking at white spaces or areas of margin and volume focus. They’re looking at range discipline. They're looking at products that are incredibly innovative and differentiated. Product portfolios are now often sustainable. They deliver against claims they have in food and beverages very high quality and taste, and they're quite innovative. Retailers are also increasingly consumer focused. They are using their shopper panel data extensively, particularly mining loyalty data and really looking at their shopper segmentation every six months. And finally, retailers are incredibly data-driven.
Size of the prize
According to Circana figures, food and beverage has dominated the private-label onslaught of the last four years in CPG/FMCG, commanding 39 per cent share in Australia. Circana figures to end of November 2024 show private-label value share in Australia is highest in meat and seafood (82 per cent), produce (63 per cent) and bakery (55 per cent).
Economic conditions helped. But Circana SVP and industry advisor, consumer goods, Ananda Roy, said signs of easing inflation from early 2025 hasn’t stopped their growth trajectory here or globally.
“The reason for this is not pricing and promotion. This is because growth driven by retailers investing in this transformation … they are incredibly strategy obsessed, constantly evaluating category dynamics, looking at white spaces or areas of margin and volume focus,” he said. “They’re looking at range discipline. They're looking at products that are incredibly innovative and differentiated. Product portfolios are now often sustainable. They deliver against claims, they have in food and beverages very high quality and taste, and they're quite innovative. Retailers are also increasingly consumer-focused. They are using their shopper panel data extensively, particularly mining loyalty data and really looking at their shopper segmentation every six months.
“And finally, retailers are incredibly data-driven. They are looking at demand forecasting so they can reduce waste, pricing and promotion analytics, particularly promotion effectiveness and identifying the optimal price points and price gaps to national brands is critical.”
Australian retailer examples
Coles and Woolworths are examples of all this in action. Coles Finest, the supermarket’s owned premium food brand, chalked up a 20.4 per cent increase in sales revenue in FY24, more than double the rate of overall sales in store over the 12-month period. It’s also seen a 13.7 per cent leap in the March 2025 quarter.
“Coles Finest is the largest premium own brand range in Australia,” says Coles GM own brand, quality and sustainable source, Charlotte Rhodes. “It’s the top tier of our own brand ranges and goes across all of our business. It’s a really exciting, premium brand for us.”
Woolworths claims its home brand products deliver consumers an average price savings of 30 per cent to branded equivalents, leading customers to trade into own brand to improve the value of their basket during FY24. But its health play is also bolstering sales: Macro, Woolworth’s health-focused own brand range, reported 12 per cent sales growth in F24.
“We’ve been making progress on making healthy eating easier by reformulating our own brand products and implementing initiatives to help customers make informed decisions across the whole customer journey,” Woolworths stated. “Our Woolworths Food Company own brand range was ranked the healthiest of the four major Australian retailers for the fifth year in a row.”
In addition, with customer demand for convenient ready-made meals at home growing, Woolworths Food Company launched ‘Dine In’, 35 affordable pre-made meal options. The range is being trialled across 100 stores in NSW and Victoria. Woolworths also expanded its popular own brand Cook range during the year with six budget-friendly meal solutions, chalking up double-digit growth. Signalling further growth ambitions, Woolworths has acquired 100 per cent of B&J City Kitchen and Beak & Johnson to strengthen own brand manufacturing capabilities.
This is not just food...
Similar extensions are underway globally. This week, UK-based Marks & Spencer announced its ‘Bigger Pack, Better Value’ range was growing by one-third to 100-plus lines, and it’s upgraded or launched 40 new lines, including M&S’s first-ever medicine cabinet essentials, baby food and laundry pods.
“When we talk about being a shopping list retailer, it means that customers can trust us to have what they need when they come shopping, in the right size and at the right price. We’ve been working hard to close our range gaps and make sure the price and quality of our key family lines delivers against customers’ expectations,” said M&S Food MD, Alex Freudmann.
According to Circana data, Australian consumers on average bought private label in seven more categories in 2024 compared to 2022. All this, says Circana, makes CPG name brands considerably vulnerable to private-label brands: 17 per cent of them. In Australia, it suggests the three most vulnerable categories are cosmetic accessories (+6.9 ppt), baby food (+5 ppt) and hair accessories (+5 ppt).
“Private label used to be incredibly cheap and potentially nasty type products, and very much at the bottom end of the scale in supermarkets, because consumers trusted their independent brands more than they trusted private-label products,” former KPMG national leader of consumer and retail, James Stewart, tells Mi3. “But over the last 20 or so years, that whole perception has changed dramatically. In grocery in particular, the tremendous success of Aldi, which is almost completely private label, plus also the success of Costco, which has an enormous amount of private label in its product portfolio, are examples here. Those international brands coming in on a private label-only basis and educating the Australian customer that private-label product can be good value and good quality at the same time, has been a significant dial mover in the eyes of the customer.”
Home brand sentiment: Exclusive consumer findings
In an exclusive consumer survey undertaken for Mi3, Honeycomb Strategy found most Australians are aware of home brands, especially in the packaged food (82 per cent), cleaning products (81 per cent) and home goods (66 per cent) categories. Consumers are less familiar with home brand ownership across beauty and cosmetics, health and wellness and pet / baby categories. And home brands are in the buying cycle for the majority: 89 per cent had purchased a home brand in at least one category, with packaged goods, home goods, fresh food and cleaning products the most common.
Notably, two in three in Honeycomb’s fielded survey see the quality of home brands as the same as well-known brands. This was especially the case with packaged food (67 per cent) and cleaning products (66 per cent). In fact, more than one in four (27 per cent) see home brands as better than branded alternatives – although the caveat here is one in three also cite lower quality against well-known brands as a main reason why they don’t buy or would not consider buying home brand products.
Baby boomers do take the lead here, with 76 per cent citing home brands provide more value for money. Seven in 10 believe home brands are growing in popularity as a result, and 57 per cent believe the quality of home brands has improved over time.
It’s value for money that’s still the primary driver of purchasing for those surveyed by Honeycomb (61 per cent) followed by lower price (58 per cent) against branded products. But again, experience is popping its head above the parapet: 39 per cent say they buy home brand because they believe the products are just as good, and 37 per cent are motivated by a previous good experience.
Private label used to be incredibly cheap and potentially nasty type product, and very much at the bottom end of the scale in supermarkets because consumers trusted their independent brands more than they trusted private-label products. But over the last 20 or so years, that whole perception has changed dramatically. In grocery in particular, the tremendous success of ALDI, which is almost completely private label, plus also the success of Costco, which has an enormous amount of private label in its product portfolio, are examples here. Those international brands coming in on a private label-only basis and educating the Australian customer that private-label product can be good value and good quality at the same time, has been a significant dial mover in the eyes of the customer.
Gen Z, millennials drawn to own brand narratives – and social appeal
Even more notably for brand owners are younger consumers becoming more willing to buy private-label brands.
Numerator’s analysis found Gen Z’s share of private-label spending is projected to surpass Baby Boomers by mid-2026, spending 18.4 per cent of their wallet on private-label products thanks to a combination of tight budgets, evolving expectations around quality, values and purpose. Numerator also found 30 per cent of Gen Z private-label spend is on premium-tier products, up from 25 per cent in 2019. It’s up across millennials and Gen X over the last six years too (27 per cent to 32 per cent, and 27 per cent to 30 per cent, respectively).
Nielsen IQ paints a similar picture, finding twice as many millennial and Gen Z respondents in its Mid-Year Consumer Outlook: Guide to 2025 Report willing to spend more on private-label products. Local Circana and YouGov data also show both greater familiarity with private-label products, and a willingness to buy them.
The motivations with younger Gen Z consumers has another angle to it. Retail Doctor Group senior insights manager, Anastasia Lloyd-Wallis, points out Gen Z and millennials are likely to be more loyal to brands they connect with. That's where the importance of the brand becomes stronger, she adds.
What also can’t be ignored is the reach everyday brands now have to consumers either directly or indirectly through social media platforms, apps and increasingly mainstream influencers.
“Back in the good old days, you'd buy your products at the supermarket, get home, unpack and stick it all in the cupboard. Whereas now, they’re all over the house insofar as these brands situating themselves in very public areas of your life, or indeed, your social media profile,” comments FutureBrand Australia CEO, Rich Curtis.
“In that modern world of social media and influence, those brands are more expressive through their design, their design cues, their lifestyle associations and so on. Those things can now travel much further in terms of word of mouth, who do you trust, recommendations from friends and so forth. So definitely, that role of packaging and identity has morphed in the age of the internet. It's no longer simply about pick the red one from the shelf. It plays into all the stories, reels and the TikToks as how those brands get represented.
“I don't think you should dismiss that as branding as a façade so it looks cool. I think it's branding as a platform for telling a story, and the brand becomes a prop for you being able to tell that story from the social media stage.”
Retailers know it too. Walmart has relaunched a private-label brand targeted at Gen Z customers to take on rivals and cross-sell products to customers. The 30-year-old 'No Boundaries' private-label fashion line debuted in July offering products popular with Gen Z including oversized tees and baggy jeans, Denise Incandela, executive vice president of fashion at Walmart US, told a conference in New York. The brand drives US$2 billion in sales for Walmart annually. The range of 130 items will include men's and women's wear, intimates, shoes and a plant-based bra, whose pads are made out of 75 per cent sugarcane. Eighty per cent of the products were set to be priced below US$15, but a few bargain-basement products priced at $5 were also available including printed tees, shirt tail dresses and short shorts.
The trust factor
Stewart doesn’t blame any of them for jumping in – aside from the average 20-30 per cent gross margin own brand products have historically attained retailers on third-party stock.
“If it's executed well, and they can successfully launch and sustain private-label products, it builds trust in their brands, which is a really important thing,” he says. "It keeps people coming back, because they know the value proposition is good, and they know the price and quality is good. The second thing is, is if they can execute it properly, private label normally has a better margin outcome for the retailer than third-party brands. That applies to both food private label as well as non-food private label.
“Premier brands like Smiggle and Peter Alexander, which are private local brands, will by definition, do a better gross margin for those retailers... So there's a commercial incentive for the retailers. There's a value proposition incentive for the customer. And there are existing players in the market, such as Aldi and Costco, not only in Australia but globally, who have demonstrated this is a very good business model.”
Lloyd-Wallis also raises the trust factor. “What we are seeing is consumers are changing the way they shop. When things are a lot tighter, they're leaning into brands they trust. This is not necessarily the product brands, but the retailer brands,” she says. “They're willing to pay a bit more for a brand they trust, as long as it hits all those hygiene factors.”
Recent Retail Doctor Group research found the number one reason consumers are loyal to brands is because it’s a brand they like. “And they're talking about the retailer brand,” says Lloyd-Wallis. “For example, the retailer brands being Woolworths, Coles, Aldi rather than the individual brands they sell.
“If I use The Iconic as an example, they sell Nike, but the consumers are going to The Iconic because they trust The Iconic. In the same way, this applies to products in grocery sectors, because they trust Woolies or Coles. That's where I think this rise of private label is coming up.”
Duopoly and ACCC scrutiny on supermarket pricing aside, it seems. “It's the Woolies brand that is strong, rather than the individual products they are selling,” continues Lloyd-Wallis. “You can see this halo effect around the Woolworths brand. Aside from ACCC stuff going on right now, there’s still this effect on consumers, because they’ve grown up with Woolies, they have this trust of Woolworths.
“Consumers are quite traditional by nature, and they go to what's safe, what's comfortable, particularly in times of economic uncertainty. They lean toward brands that they rely on, they trust. Particularly at this time, you see the heritage brands doing well, because they've been around a long time: Telstra, Myer, Coles. They may not be the best brands, but they’re reliable.”
Adding stickiness is Woolies and Coles building up loyalty through their loyalty programs. “People get this confidence and trust through all the other aspects of value. Look at insurance and all of these other pieces Woolies is putting in there to create this customer trust and stickiness – that then allows them to play in that private-label space,” she adds.
The Aldi effect
Then there’s the Aldi effect. “Aldi has drastically changed perceptions and expectations on what people or how people want to shop,” says FutureBrand head of strategy, Victoria Berry.
“The other thing Aldi has done particularly well that’s upset other retailers and brands along the way, is standing behind the product quality,” adds Curtis. “This isn't just about creating own brand as a facade for commoditised products. Certainly, there's been lots of research historically around which categories within retail are more or less ripe for the own brand picking. I think those dynamics have changed. In part, that’s Aldi's response, where it enters all its cheeses into internationally recognised competitions, and Aldi cheeses win – much to everyone else’s chagrin.
“A brand is not a logo; the brand is the product, the experience. These things are one and the same. It can't replace the substandard products… Aldi’s done that particularly well in terms of standing behind and certainly putting front and centre the quality of those products, not just creating a brand as a façade.”
In fact, private-label brands are leading on innovation, Circana’s Roy claimed. “It is not the national brands leading innovations in every instance. In some cases, particularly in health and wellness, particularly in things like vitamins, minerals and supplements, you're seeing private labels in some cases, way ahead of national brands in terms of innovations and formulations,” he said.
A brand is not a logo; the brand is the product, the experience. These things are one and the same. It can't replace the substandard products… Aldi’s done that particularly well in terms of standing behind and certainly putting front and centre the quality of those products, not just creating a brand as a façade.
Coles Finest case study
The starring example of premiumisation and innovation is Coles Finest, Australia’s largest owned premium brand, with over 100 products from jam to granola and ready meals. It recently won a Product of the Year Award for its Coles Overnight Berry & Coconut Chia Pudding in the Taste consumer awards, a product leveraging health and wellbeing pillars.
“High-growth, premium private label meals right now are being effectively pitched as restaurant quality alternatives, and that's at a time when Australians have been more reticent to spend in hospitality. So private label exists as a chance to trade up, even though people are trading out and down from eating out,” commented Circana Australia insights director, Daniel Bone.
Hulsbosch was responsible for overhauling the Coles Finest brand look and logo last year, opting for high-quality product visuals and simple packaging detail with custom detailing consistent across all current and future products. The target sweet spot is consumers looking for restaurant quality food and replicating that experience at home, says Hulsbosch MD, Jaid Hulsbosch.
“It’s really about showcasing the product, the quality and the freshness of it, bringing those restaurant quality experiences and replicating those at home at an affordable price. What we're really doing is creating the anticipation at the point-of-sale through leveraging the brand’s equity, having best-in-class photography and an easy to understand and navigate communication hierarchy on the pack,” Hulsbosch explains.
“That makes the choice simple and easy for the consumers, so they can quickly assess what it is they're getting, and get it as a reasonable price. What we are doing is branding a real, top-quality product, because that's what will keep the consumers coming back. If the products are good, then the consumers are coming back. We're bringing that anticipation, and Coles is delivering on that anticipation.”
It’s a far cry from the days of Black & Gold where “there was no way you would be seen dead having those products in your supermarket basket”. Coles Finest is proud of its connection to the mothership while also seeking to land premium qualities, says Hulsbosch.
And like any other brand, Coles Finest also recognises consumers are still looking for those category cues – from pack information to messaging hierarchy. “It's leveraging the equities and brand value of the brand, whether it’s Kleenex, Huggies, or Coles and Coles Finest, it's ultimately leveraging and building off those brands,” he says.
Private and name brand partnerships
It’s not just standalone selling propelling private labels forward. Circana's Bone pointed to Coles Simply featuring in the supermarket’s current Collectibles activation alongside a number of high-profile participating national brands. Coles Simply notches 65 per cent brand awareness based on Kantar brand tracking. Meanwhile, an award-winning collaboration between Woolworths and named brand, Biscoff, helped double household penetration in the last two years “and garnered cult status in doing so”, he said.
Another Coles cross-promotion saw Coca-Cola partnering on a Coles branded hot roast chicken and soft drink deal. Notably, Coles leveraged its own retail media network including digital front-of-store screens and in-store floor stickers to draw attention to the deal.
“Where does all this MPD and trade activation leave us? The ongoing research we've done with our shopper panellists reveals there's certainly higher acceptance of own label,” Bone said. And it’s translating into more product sales.
“What we can see across the 25 per cent who are most favourable towards own label is that they're buying an additional 126 private label items, more than the average Australian shopper,” Bone said. “In contrast, those holding less favourable attitudes are spending $5.7 dollars per trip less on private label. So attitude is very much correlated with spend.”
What we are seeing is consumers are changing the way they shop. When things are a lot tighter, they're leaning into brands they trust. This is not necessarily the product brands, but the retailer brands.
How brands fight back
According to Circana, name brands have been endeavouring to fight back. Quarterly CPG / FMCG unit sales have been in the black and tracking up since Q4, 2023, driven by a heavy emphasis on price promotions to maintain competitiveness with private label. By contrast, with 20 per cent-plus discount in average prices remaining the same, private label has clearly not relied solely on price gaps to grow and retailers have been innovating across the pricing tiers, Lyons Watt said. In Australia, Circana cited private-label relying more on everyday low prices while name brands are relying on promotions.
“Have they [own brands] depended on promotions to grow? The answer is quite simply no,” she said.
But another tool name brands can wield is direct-to-consumer (D2C) channels. Circana, Lloyd-Wallis and the FutureBrand team all cite the rise of D2C as a counter mechanism giving named brands an ability to better build experiences and engagement with consumers. Curtis calls it one example of Newton’s Law in marketing: “For every action, there’s an equal and opposite reaction”.
“There have been some success stories and some tragic failures with very famous but very non-profitable DTC brands. If you are one of those big companies with a portfolio of brands, well, yes, you're thinking about the levers you can pull to build on the loyalty that's been hardwired into that relationship with your consumer over many years, if not decades. And how do you leverage that, albeit a loyalty that’s been won indirectly regarding distribution channel. That's definitely a question on people's minds.”
A poster child example of that mix of defensive and coexistence strategy for Berry is Nespresso. “Nespresso is a huge global brand, and it can own a lot of its own experiences; it has its own retail experience, and a lot of other brands can't say the same. But it’s opening up to be available in far more many places, including the local supermarket,” she says. “Ten years ago, you'd have to go into a Nespresso store in order to restock your pods. That's a very different story now.
“What we would say [to a name brand] is this: How do you double down on those characteristics that make you, you, and are very hard to replicate, but at the same time, make yourselves as relevant and available as possible?”
Circana’s first piece of advice is focus on how you can grow the category itself. “Develop leading features, consider blurring boundaries and nurture excitement, especially for the consumer and the retailer, to help them see how you're going to drive traffic into their stores. This will ultimately help you defend your shelf space as well,” Lyons Watt advised.
Revenue growth management practice to optimise your portfolio price packs and assortment optimisation, while maintaining entry-level and value pack pricing, is another must. “Connect with consumers via brand equity and communication – you need to win the storytelling around solutions and occasions. Encourage experiences and build emotional connections,” she said.
Collaborating with retailers is important as well, especially for in-store execution and trade effectiveness where applicable. Lyons Watt also recommended promoting solutions with private labels and targeted discounts if possible while also urging name brand owners to consider retailer exclusives to maintain brand visibility with impactful placements.
“Lastly, ensure your product will meet and or exceed consumer expectations. You want to strive for unique benefits that can then justly justify some price points,” she said. “And stimulate new occasions and emphasise quality and trust… consumers buy for occasions, they don't buy necessarily for categories or specific products. Think about what you ladder up to: Do you ladder up to a meal occasion, a snack occasion, a special moment, a holiday occasion? Whatever that might be, definitely think about how you can leverage your portfolio to meet the needs of consumers.”
Is there anything private label can’t go into?
With Aldi's clothing range, Coles and Woolworths owned liquor, Bunnings pet products and pools, Kogan electronics, Temu and Shein, it raises a burning question: Is there anywhere private label can’t go?
“It's a really good question,” says Lloyd-Wallis. “You sit there and think is there a time when Woolies and Coles might be starting to put their own electronics out there. We see Amazon moving into spaces now as well. So I’m not sure if there is an end. If you've got a strong enough brand with trust and consumers are saying, I like your brand, I trust you, it’s enough to buy your products regardless of what you’re selling.”
In CPG, Circana forecasts approximately 18 per cent of unit sales are vulnerable to additional gains from private labels. In Australia, cosmetics accessories, baby food and hair accessories are its top three most vulnerable CPG products.
Stewart points out if you were to just look at Aldi's play, definitions of private label “can go a long way”. “The question is whether the retailer thinks that's actually a sensible strategy, and do they want to compete with an Aldi or a Costco?” he asks.
“From a shareholder perspective and from a strategy perspective, most of these retailers will say, well we don't all want to sit in one particular place in the market matrix. We don't want to compete directly head-to-head with Aldi, because all you end up doing is cannibalising each other. You constantly have retail models trying to find space which resonates with the customer and allows them to create that white space where they can succeed.”
Then there’s the lure of market differentiation by offering choice. “If you’re a normal supermarket, they actually want the variety of those third-party brands because they recognise the customer wants it,” Stewart says. “It’s more about the mix and what that mix on the shelf looks like.
“Bizarrely in beauty products, we’re seeing the evolution of brands coming in with a private-label model. If they're successful at doing that, then they end up creating their own brand of that private-label model, which is a very legitimate and sensible strategy to play. But again, they’re trying to find places in the market whereby they can create white space to either win enough market share to create a sustainable, profitable businesses, or dominate that particular segment of the market. Because not everybody wants to buy beauty products in that space. There'll be a category of consumers that will, but there'll be another category of consumers that say, actually I like to buy my premium products.”
Catering to individualised needs
Lloyd-Wallis sees individualised needs stretching well beyond demographics and into more contextual moments, and it’s an opportunity for all.
“There are so many nuances now you need to capture – as well as income and age, you need to build on the emotions,” she advises. “What do I need at this point in time, particularly when we talk in grocery? That is not as straightforward as 10 years ago, where people are either at home or at work.
“Nielsen IQ says 46 per cent of Australians are spending more on private label, but that’s still 54 per cent who are not. What we’ve got to remember is it’s not a one-size-fits-all for consumers, and consumers are very different. There will be different personalities who will quite happily lean towards owned brands because they trust the retailer. But then there will be others who would not touch own brands with a barge pole because they want that elevated premium experience they perceive those manufacturing brands providing.”
Hulsbosch is blunter: “Lift your game. That’s it. These supermarkets have the opportunity to place their products in optimum shelf space as well. So yes, other brands need to lift their game,” he says.
For Stewart, private label is simply another type of competition to square up to. “I don't think that we should adopt an underlying assumption private label is inherently bad. I think it's actually good for the consumer, but it's also good for the good for competition, because it forces the competition to keep evolving.”