• by Sarah Mahoney  @mahoney_sarah, April 24, 2009

While the recession has been fueling big gains in private-label use, a new report from NPD Group finds that store brands have been gaining steadily in popularity for the last decade: A full 97% of U.S. households routinely use some generic products.

At this point, 24% of all food and beverages served in U.S. homes are store brands, compared with 18% back in 1999.

Perhaps the biggest change over the decade, the Port Washington, N.Y.-based market research company says in its report, is that no one is ashamed about serving store brands now. "We do not hide private label foods as an ingredient or as an additive to another dish," it says, adding that about 54% of all store-brand food consumption is in "the end dish."

And despite its penny-pinching image, private-label use is actually lowest among less affluent consumers, accounting for about 30% of foods served in households earning less than $30,000 per year. Among affluent consumers -- those earning more than $70,000 annually --private-label servings account for about 33% of food served. And use is highest in the middle: About 37% of foods served are store brands among households earning between $30,000 and $69,000.

Competition is intensifying, as stores sharpen up and expand their product offering to include ready-made foods, specialty items and organic lines. In its more recent results, for example, Kroger says 27% of grocery revenues came from its store brands, rather than national brands.

Other studies have shown an increase in the perception of quality among consumers, Nielsen, for example, which says private-label sales now account for $81 billion in annual sales, reported that 62% of American shoppers now believe store brands are "as good as name brands."

"Name-brand and private-label marketers will each need to focus on differentiating their products while finding ways to effectively address consumer needs," NPD notes, "as the lines between the two are blurring in the minds of consumers."