Private labels have established themselves as a key player in the sector across major European markets, with a 39% market share in value sales and a 46% share in unit sales, according to a new report from Circana.
The latest report, titled Private Labels: Transformation for Growth, revealed that private labels achieved 9.4% growth in value sales and a 2.2% increase in volume sales across the six largest European markets (EU6 - France, Germany, Italy, Netherlands, Spain, and the UK) as of March 2024.
Ananda Roy, senior vice-president of Thought Leadership at Circana, stated, "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."
The report revealed that Spain, Germany, and the Netherlands led this surge in private labels, with Spain reaching a 48% market share.
The highest private-label penetration was seen in categories such as Chilled & Fresh Foods, Household Care, and Personal Care, while notable gains were witnessed in Baby Food (+2.3pp) and Pet Non-Food (+2.2pp).
Alongside the growth of private labels, national brands also witnessed modest recovery through aggressive promotional strategies.
However, even with 43% of national brand units sold on promotion in the UK, they continued to lag private labels in overall growth, according to the study.
Strategic Options For Brands
Circana also outlined four strategic options for brands looking to compete effectively in this market.
These include diversifying into adjacent categories, growing the category through innovation, premiumising distinctively, and collaborating strategically.
Brands that focus solely on promotions without investing in innovation risk falling behind in an increasingly dynamic market, it noted.
Circana warned of a slowdown in category innovation, with 17% fewer new product launches observed due to supply chain disruptions and a focus on core product ranges.
This poses a risk of the FMCG sector becoming an ‘innovation desert,’ emphasising the need for both private labels and national brands to prioritise innovation to drive organic growth.
CPG Growth
Circana has predicted a cautiously optimistic outlook for FMCG growth in 2025 based on a positive GDP growth forecast of 0.4pp year on year in the Euro area for the year.
The report also forecasts continued growth momentum for private labels, driven by investments in range expansion, premiumisation, and sustainability initiatives.
It expects purchasing decisions to be influenced by consumer preferences for health, wellness, and ethical consumption, reinforcing the importance of aligning product offerings with these values.
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 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."
