Less-Frequent Toothpaste Runs, More Private-Label Buys: Consumer CPG Trends

Image above: Target private-label brand Up&Up

While price inflation in food and beverages continues to benefit private label products, switching to store brands is just one of several forms of consumer trade-downs expected to continue throughout 2023.

That’s the assessment from analyst Nik Modi, managing director at RBC Capital Markets, during a recent webinar by The Food Institute in which he shared some of his takeaways from the recent Consumer Analyst Group of New York (CAGNY) confab.

Citing data from the Private Label Manufacturers Association, Modi noted that dollar sales of store brands rose 11.3% in 2022, compared to a 6.1% gain for national brands.

Factoring out price increases, unit sales of store brands were down only 1% while national brands saw their volume drop 4.1%.

Separately, in a report titled “The Inflation Diet,” consumer research platform Attest cites survey data from 2,000 nationally representative consumers showing that 73% of respondents have “acquired a taste for private-label brands and have no intention of reverting to more household—and expensive—names.”

Drilling deeper, Attest found that 34% of those 73% said they will definitely keep buying store brands, 39% probably will, and just 9% won’t stick with store brands.

While tradedowns to store brands started off primarily among low-income households last year, “Now it’s spreading to middle and higher income as well,” said Modi.

As for other forms of trading down, he addressed four as charted by RBC and McKinsey & Co.

Leading the way is adjusting quantity/pack sizes of CPG purchases followed by the “delayed purchase” metric.

“Did you know that household penetration of toothpaste is negative year over year?” Modi said.

“Not because people are brushing their teeth less. It’s just they are taking longer to replace their toothpaste tubes.”

Then there is the trend of consumers changing retailers for lower prices and/or discounts.

“Walmart talks about how over 50% of their share gains come from households making over $100,000 a year. Guess what? That means consumers are trading down from higher-priced retailers to Walmart. That pressure will only build as we move deeper into the year.”

The fourth trade-down factor is buy now, pay later.

“That also has been ramping. People are literally borrowing money to buy their groceries.”

Yet another consumer shift is the pandemic-inspired pivot from out-of-home eating to in-home consumption that shows little signs of easing.

One of Modi’s positive observations from CAGNY was how Conagra has introduced canned chili from QSR Wendy’s to retail shelves and “upscaled” its P.F. Chang’s frozen meals “to make people feel like they can get an out-of-home experience in the home” because it’s just cheaper.”

He cited social media as an example of how power has been shifting from institutions—be they government, religious or corporate—to individuals.

At CAGNY, Church & Dwight explained how TheraBreath became one of the top 10 most-loved brands on TikTok through user as opposed to company posts.

“Again, the corporation is not getting involved really at all. The individual is driving the brand. And I think that’s the way brands are going to built in the future,” Modi said.

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