The American Pantry Study, released by market intelligence firm Deloitte, finds that US consumers are less loyal to food and beverage brands than in the past. Only 31% of brands are considered must-haves by shoppers, and 88% indicate they purchase private-label products that are just as good, if not better, than their big-brand counterparts.
Declining brand loyalty
Pat Conroy, vice chairman and leader of US consumer products for Deloitte, told FoodProductionDaily national packaged food and beverage brands are feeling continued pressure, thanks to a combination of budget-minded consumers, declining brand loyalty, and increasing number of private-label options in every aisle at retail.
“While consumers initially resented buying less-expensive products out of necessity a few years ago, they have changed their tune,” he said. “They have shifted from a feeling of settling for lower-priced brands to settling in to store brands distinguished by high quality."
In nearly all of the consumer packaged goods categories examined in the survey (28 out of 30), consumers indicated they believe store-brand products equal or surpass their national-brand counterparts in terms of quality. The private-label categories faring the best include bottled water, deli meats, condiments, and salty snacks.
However, American shoppers remain loyal to big brands in a number of categories, even in the face of price differentials. These categories include soft drinks, coffee, and beers.
Deloitte reports shoppers predisposed to private-label purchases can be divided into four categories. “Super Savers,” for example, are aggressive users of coupons and are willing to travel to multiple stores to find the best deals; they make up 26% of shoppers.
“Sacrificers” (19%) are more likely than most to switch to store brands, but they feel dubious about the prospect. Members of this group tend to have lower income and larger household size than those in other segments.
“Planners” (23%) hone in on a combination of menu planning, pantry management, and deal seeking to conserve resources. Then, “Spectators” (32%), the group least affected by economic conditions, are more likely to pick products based on convenience than price, and are less likely to pick private label, than other shoppers.
Chances at recovery
According to Conroy, all is not lost for consumer packaged brand owners; if food firms focus on quality, consumers are more likely to return to brands and leave the private-label items on the shelf.
“Traditional thinking that targets consumers at multiple price points with good, better or best offerings often misses the mark," he said. “Given the bifurcation of consumers between higher and lower income levels, brands should instead address different shoppers' ability and willingness to spend by moving to an OK, better and excellent brand portfolio.”
Other reasons that could motivate consumers to opt for brands over private-label options include product trial; 78% of respondents in the Deloitte survey indicated they purchased a higher-priced, newly launched product within the past 12 months. Also, trusted brands and healthful foods can grab consumers over private label options with higher calorie count or fat content.