In recent years, private labels in the food industry have seen significant growth. In this article, we will examine current trends, highlighting the shift towards premium products, business opportunities for distributors, and strategies to promote superior quality products in both retail and food service sectors.

Private label trends in the food industry

The sustained growth of private label sales has made this trend a key focus, particularly in the food market. According to the 2024 report by the PLMA (Private Label Manufacturers Association), private label sales reached a record value of $236.3 billion in the USA in 2023. This success is driven by several factors, including consumers' growing preference for products with better value for money compared to well-known brands, the control that distributors and retailers have over branding, and the increasing trend towards premiumisation (the positioning of products in a higher market segment, attracting consumers willing to pay more for a superior experience).

Private label sales in Europe also achieved a market share of 37% in 2023, marking a 1.2% increase. Specifically, distributor-branded product sales totaled 302 billion euros across the 17 European countries analyzed by NielsenIQ. While Switzerland saw a slight decrease, it still holds the highest share of private label products at 52%. Significant increases were also noted in the Czech Republic (+3.5%), Portugal (+2.9%), Spain (+2.2%), and Hungary (+2.2%).

Regarding market share, the Netherlands stands at 44%, followed by Spain and the United Kingdom at 43%, and Germany at 40%. Other figures include Portugal (39%), Belgium (38%), Austria (35%), Denmark (34%), Poland and France (32%), Italy and Hungary (28%), Sweden (27%), Greece (23%), the Czech Republic (22%), and Norway (21%).

Consumers view private label products as an opportunity to save money without sacrificing quality. In fact, 57% of consumers believe private labels offer good value for money, 43% buy them to save money, and 29% consider them on par with well-known brands.

Another significant trend is premiumisation. While private labels were initially perceived as budget alternatives, they are now making inroads into the premium product segment. Distributors and manufacturers are investing in high-quality ingredients and advanced production techniques to compete with conventional brands in higher market segments. This shift is attracting consumers, particularly younger generations like Gen Z, who are seeking new and exclusive taste experiences.

Another emerging trend is regional cuisine (for example, products from the diverse Italian culinary landscape, characterized by various traditions and local specialties). Consumers are showing increased interest in products with a strong connection to their place of origin. As a result, retailers and wholesalers are introducing new regional cuisine products to meet this demand. Transparency and sustainability are also crucial, with consumers increasingly demanding information about product origins and preferring those that meet ethical and environmental standards.

Opportunities for distributors

Private labels present numerous opportunities for distributors. Firstly, they enable higher profit margins and the potential to build customer loyalty by offering competitively priced products. Many distributors have demonstrated that a well-managed selection of private label products can lead to substantial sales growth.

Another opportunity for distributors is the ability to stand out from competitors through product research and innovation. By investing in premium and sustainable products, retailers can attract a broader and more diverse consumer base. Additionally, the introduction of regional products and specialties can further differentiate the offering, establishing the brand and distributor as a quality leader in the industry.

In the following two paragraphs, we will discuss general considerations about brand promotion in the context of private labels. We will then specifically explore the opportunities related to Italian products, which benefit distributors and importers worldwide, as well as Italian producers looking to increase their exports. Both producers and distributors have the chance to excel in their markets by implementing successful private label strategies, considering the latest trends and shifts in consumer habits.

How to promote your private label and build a quality brand

For distributors interested in developing their private label, it's useful to follow some key steps:

1. Market research: understand the needs and preferences of your target market through surveys, research, and data analysis.

2. Supplier selection: work with reliable suppliers who ensure high-quality products and consistent supply and logistics.

3. Product range selection: carefully select the products to include in your private label. Focusing on products with quality certifications like PDO (protected designation of origin) and PGI (protected geographical indication) can assure consumers of high standards and build brand trust. Including artisanal and traditional regional cuisine products, particularly those in high demand (such as pasta, oil, condiments, baked goods, cured meats, cheeses, etc.), is beneficial. These products must be of superior quality to stand out from generic brands and meet the expectations of business clients (retailers and restaurateurs) and discerning consumers.

4. Flagship products: featuring a few standout products known for their quality and uniqueness is essential. These items, like solid balsamic vinegar or white truffle, not only attract new customers but can also serve as the brand's flagship, strengthening identity and reputation. Flagship products can help capture new customers' interest, who can then explore the entire product catalog.

5. Products with significant growth trends: identifying and including popular products, such as 'nduja and burrata, can be a successful strategy. These items not only align with current consumption trends but also help the distributor stay competitive and relevant.

6. Branding and packaging: investing in appealing and recognizable brand and packaging design is critical. Emphasize transparency and sustainability. For more on packaging for artisanal products, see "Packaging for Artisanal Food Products: how to communicate protection, durability, aesthetics and identity".

7. Promotion and marketing: use targeted marketing strategies to promote private label products, especially to B2B customers. A dedicated team should work to enhance and spread the brand among retailers, other distributors, wholesalers, foodservice operators, and hospitality businesses.

8. Feedback, testing, and continuous improvement: collect feedback from customers and use this information to continuously improve product presentation and service. This includes the constant introduction of new items to be tested in stores.

These strategies, tailored to the specific context and target customers, can create a successful private label. By offering high-quality products that cater to consumer needs and preferences, the distributor can differentiate from the competition and build a strong, recognizable brand.

Market opportunities for premium Italian private label products

The creation of a premium Italian private label offers extraordinary business opportunities in both the retail and foodservice sectors.

In the retail sector, Italian products are universally acclaimed for their superior quality, authenticity, and rich culinary traditions.

Positioning a line of premium Italian products on store shelves attracts food enthusiasts and differentiates from competitors by offering an exclusive selection that combines sophistication and refined taste.

Consumers are willing to pay a higher price for products that convey a sense of authenticity and high quality, such as Italian products, especially if supported by effective branding that emphasizes the product's origin and history.

A distributor who creates a private label of Italian products can aim to become a unique point of reference for a wide range of items. Retailers looking for selected, high-quality Italian products, with an emphasis on profit margins and shelf success, may find it beneficial to have a single supplier for various traditional Italian culinary items. This centralization allows for more efficient inventory management and business relationships, reducing logistical complexity and improving consistency in product quality. Moreover, a distributor specializing in premium Italian products can adapt the offerings to market needs and consumption trends, ensuring that the products meet or exceed consumer expectations.

In the HoReCa sector, premium Italian products can serve as a distinguishing feature for restaurants and hotel chains aiming to offer a high-end culinary experience. Incorporating premium Italian ingredients into menus not only enhances the perceived value of the dishes but also allows for the creation of authentic recipes that satisfy customers seeking unique gastronomic experiences. Moreover, collaborating with renowned chefs and restaurateurs and organizing tasting events can boost the brand's visibility and reputation, creating a virtuous cycle of growing demand and brand loyalty.

In summary, a distributor investing in a private label of premium Italian products can capitalize on the global appeal of "Made in Italy", successfully entering both the retail and foodservice markets. By doing so, they can leverage consumer trends that prioritize quality, authenticity, and high-end gastronomic experiences.

Opportunities for producers

Producers can gain numerous benefits from collaborating with distributors to create private labels. Firstly, such collaboration can facilitate entry into foreign markets, reducing the costs and risks associated with international expansion. Moreover, producers can enjoy increased visibility and the distributors' expertise in positioning products within their regions, leading to higher sales.

Private labels enable producers to retain control over the production and quality of their products, ensuring they meet the standards required by international consumers. Moreover, the ability to customize products to fit local preferences enhances the likelihood of success in the international market.

Next, we will examine the prospects for producers, highlighting the most important factors to consider, including financial security, strategic, and operational aspects.

Penetrating new markets with private labels

For producers aiming to expand into international markets through private labels, adhering to best practices is crucial to offer distributors products that align with emerging trends and the varied needs of different national markets. Here are the key points to consider:

1. Market analysis: study consumer trends and preferences in target markets to develop products that meet their needs, attracting importers and distributors who create their own mid-to-high-end and premium private labels.

2. Reliable distributor partnerships: choose partners with solid local market knowledge and an established distribution network.

3. Maintaining bargaining power: producers must maintain a balanced bargaining power to avoid over-dependence on a single customer. This can be achieved by collaborating with multiple partners of varying sizes and characteristics, diversifying the client portfolio. Avoiding excessive reliance on one entity ensures a healthier balance and reduces risk.

4. Assessing partner stability: select partners with financial stability and long-term commitment to build strong relationships and mitigate risks of business failures or sudden contractual changes.

5. Quality focus: ensure products consistently meet high-quality standards to satisfy international consumers and B2B clients (such as specialized retailers, retail chains, wholesalers, and foodservice operators).

6. Flexibility and customization: be adaptable and ready to customize products to fit local and national market demands.

7. Marketing and communication: implement B2B marketing and communication strategies to showcase your ability to produce private label foods, positioning yourself as a reliable producer and key partner for importers and distributors.

8. Innovation and diversification: Offer a diverse product range to attract different market segments. By staying attuned to the latest trends and consumer behavior shifts, invest in R&D to keep your catalog fresh and appealing while maintaining your strengths in quality and authenticity.

Future prospects and evolution of private labels

The future prospects for the private label sector are extremely promising. Continuous innovation and the increasing demand for premium, sustainable, and local products are driving the market's evolution. Premiumisation will remain a dominant trend, with consumers more willing to pay higher prices for high-quality products that provide unique culinary experiences. Moreover, integrating advanced technologies in supply chain monitoring and product customization will enhance operational efficiency and better address the needs of food companies and consumers.

Producers and distributors who can swiftly adapt to these changes and invest in quality and innovation will be well-positioned to capitalize on these emerging trends, facilitating growth and establishing a strong presence in the global private label market.