Understanding The Psychology Behind Private Label Food Brands

For grocery retailers, the competition for sales has increased dramatically within the past ten years, with dollar stores and convenience retailers increasing the amount of every day food products that they provide consumers.  The ‘pop in’ shopping experience is often viewed as easier for common food items, and American grocers are starting to feel the impact of this increased competition on their sales revenues.

There has never been a better time to invest in the development of unique, price conscious and trending fresh meat and frozen products, and as an international meat processor with extensive experience in private label branding, we’d like to share some industry insight and food for thought, about developing a new revenue stream with quality meat products.

The Appeal and Demand for Private Label Brands

The average American spends more than 6% of their net income on groceries, or about $300 per month according to some studies.  Does that sound like less than you spend per month on groceries?  The data reflects that most low- and middle-income households are trying to stretch their grocery dollars as far as possible, and that means hunting for better bargains when they shop for food.

The caveat is that American consumers are more aware today, than ever before, about nutritional value and quality.  While on a limited grocery budget, they do not expect to purchase the highest level of quality, without paying a premium price.  However, they also (on average) do not want to purchase food that may be low in nutritional value, or items that do not taste as good as some of the brand leading products that they have grown up on.

Private label brands assure the consumer that they are getting quality, without paying a premium price.  If they have a favorable opinion about their favorite grocer, they trust that quality has not been compromised while manufacturing a private label food product.  And they appreciate the price break that helps them stretch their grocery budgets further.

Millennial’s Love Private Label Brands

The next up and coming influential shopping segment, millennials are selective about the foods they purchase and the brands they choose.  One of the most interesting things about millennials in terms of their purchasing trends, is that they are educated about branding, promotional advertising and online marketing.

That means that your average millennial shopper is more likely to not “believe the hype” when it comes to glossy big brand marketing.  They are economically stable, but frugal and discerning about their budgets overall.  And that means finding value and reducing costs wherever they are able to; and that includes trimming the fat from their monthly grocery budgets.

Some interesting new research supports the preference that millennial shoppers have for private label brands.  One study conducted in 2018 “The Branding of Private Label” published by the Cadent Consulting Group, discussed that private label brands would hit a record high of over 18% of products purchased in American grocery stores that year.   The average shopping cart is comprised of 25% private label brands, but for millennials, the number actually averages over 32%.

In addition to that increased number of private label brands that millennial grocery shoppers are choosing, they also indicated in the survey that they intend to purchase more, stating faith in the quality of products that carried the same name as the grocer they chose to frequent.  There is a level of trust and appreciation for quality and understanding of price consciousness and value.

Food retailers are responding quickly to this purchase preference and opportunity.  One of the most successful tactics used by private label grocery brands, is to visually improve the appearance of the packaging to closely mimic major brands.  It is not to mislead the consumer, but rather to provide the same emotional experience that they enjoy when purchasing a major national brand.

Millennials want to experience the same satisfaction of putting a high-end brand leader in their cart or basket, without paying the price.  But for these shoppers, the appearance of the packaging enhances their satisfaction and purchase experience.

While brands have focused on the Baby Boomer population segment for decades, as the consumer base with the most spending power, there are currently 83 million millennials (according to the last U.S. Census data) in America, compared to 75 million Baby Boomers.  But as parents of young families, the millennial segment has increased grocery spending in the past five years, and that trend is expected to continue.   Your sales growth as a grocer will depend on the ability to appeal to millennial food shoppers, and their growing family needs, and price and budget sensitivity.

Creating a New Private Label Brand of Meat

At Miami Beef® we have been the silent industry partner and resource for grocery chains across the United States, and internationally since 1973.  We provide an in-house research and design team that helps grocers innovate trending and high-demand products, that can be added to the fresh or frozen meat section.

We begin by identifying gaps and opportunities for the grocer and provide a list of products such as turkey burgers, beef burgers, or exceptional premium American Style Kobe or Wagyu products, that appeal to different consumer segments.

We work with our retail customers to innovate delicious frozen meatballs, premium fresh grass-fed ground beef (in 1 lb. packages), steaks, chops, beef water and fajita sliced beef and more.   We can customize the seasonings to help grocers create a product that is differentiated from major brand offerings, and our branding team can also assist with package design and more.

If you have considered creating a private label brand for your grocery store or chain, studies show that it is a lucrative business opportunity with high sales potential for grocers.  It is also a good way to expand your brand awareness as a food distributor or retailer, by developing family-friendly and budget conscious foods that your customers will enjoy.

For more information on our private label branding services, visit our website and contact us to schedule a meeting with our research and development team.   Miami Beef® can help you innovate delicious flavors, profitable meat products and a new line of private label fresh or frozen meats that your customers will love.