• by Sarah Mahoney  @mahoney_sarah, June 5, 2007

It's no news that the popularity of private-label grocery products is growing, whether it's the Wild Oats-Pathmark natural foods line, Target's successful Archer Farms foods, or Whole Foods' 365 Organic Everyday Value brand.

What is different, according to a study from the Private Label Manufacturers Association (PLMA), is that the popularity of private-label foods seems to be creating a halo effect for other product categories.

Some 41% of shoppers now identify themselves as "frequent" buyers of private-label food brands. Five years ago, 36% of respondents described themselves that way; 15 years ago, only 12% called themselves frequent buyers.

And about two-thirds of respondents say that if stores stocked a wider variety of products, they'd buy them. Almost half say their regular shopping basket now contains one-quarter or more store brand products. On average, the study finds, 32% of consumer purchases are private-label products.

And because retailers have done a better job of making private-label brands appealing, that appeal is stretching far beyond the budget shopper. In fact, the association's study finds that consumers in the middle-income ($30,000-$75,000) and high-income ($75,000-plus) brackets are "much more likely to buy a larger amount of private label goods in the coming year than those in the low-income (under $30,000) bracket."

In food alone, private-label sales are still soaring, according to Packaged Facts. For 2006, sales were $48 billion, and by 2011, it predicts, sales will top $56 billion. Dairy and grain foods are the biggest categories, while pizza is the fastest-growing. In beverages, store-brand bottled water and energy drinks top the list, with bottled water growing by more than 12%. Only the juice segment showed an overall decline during the same period, the market research company reports.

That kind of consumer approval is clearly translating into other categories. The PLMA study finds that one-fifth of consumers say they frequently buy private-label products in the health and beauty, home office, household and home improvement categories. Recent launches include Whole Foods' mineral cosmetics, Target's new Bath & Body department, with 20 of its own brands, and Costco, which has launched 112 products in its Office Impressions line of office supplies.

"The research clearly points to the growing awareness and popularity of store brands," the association says, "and shows a fundamental change in attitude toward private label products."

Overall, the association says, retailers currently have three advantages over name-brand marketers when it comes to new launches: "Since the retailer owns the shelf, they can keep new products in stock longer. Retailers are closer to shoppers and understand their needs. And retailers can quickly produce products in growth categories that tap into changing tastes and trends."