Gone are the days when private brand products were considered a quality compromise when seeking lower price options. Private brand products are now in nearly every household in the U.S. This market penetration has helped retailers use their own store brands to deliver loyalty and margin. 

However, growth in recent years has been stagnant. At the same time, consumer interest in sustainability is steadily climbing, with 78% of U.S. consumers saying that they feel better when they buy products that are sustainably produced. Is there an opportunity to bring sustainability into private brands to differentiate them and give them a needed sales boost?

Premium private brand offerings, such as natural and organic are growing in share, while value and mainstream offerings are declining. According to the Food Marketing Institute’s report on the Power of Private Brands, organic private brands have a 30% share of all organic products, compared to the lower share of 20% for the rest of the grocery store.

Kroger and Aldi see growth through sustainable brands

Illustrating this, Kroger’s natural and organic line of Simple Truth products tops all natural and organic brands in the U.S., both national and private. It may be no surprise that over half of grocers surveyed by Supermarket News in late 2016 indicated that they planned to add to and update their natural and organic lines within twelve months to leverage this trend.

Retailers are taking this a step further and aiming to differentiate by bringing sustainability to the entire private brand offering premium, mainstream, and value products. This includes addressing issues such as clean labels/no synthetic additives, sustainable paper, palm and seafood, and optimized packaging.

ALDI’s offerings address these issues and, not coincidentally, their business is growing. In an announcement about the company’s plans, ALDI  connected their success to their private brand products providing consumers with “high-quality, affordable food that they can feel good about serving their families.”

This points to sustainability helping deliver the  trust and quality that consumers value. As a result, retailers are expanding the suite of issues they are addressing in their private brands. Safer ingredient strategies are on the cusp of becoming mainstream, for example, with CVS announcing their efforts to remove chemicals of concern in their private branded products and Walmart releasing Great Value products with the U.S. EPA Safer Choice label.

A key element to success may be engaging consumers. The track record of brands such as Seventh Generation and Ben & Jerry’s shows that when consumers are aware of a brand’s sustainability values, companies are rewarded. While only time will tell, the direction private brands are headed shows promise for both delivering business needs and advancing sustainability issues.