The Paris-based manufacturer plays a dual role – serving as a supplier of a range of savoury snacks for Europe’s largest retailers and a co-manufacturer for branded food companies – reflecting the versatility and power of private labels in today’s marketplace.
“Europe Snacks’ leadership in the private label market across key product categories and geographies is indicative of the value proposition the company offers to both retailers and brand owners,” said Kurt Beyer, partner at the New York-based private equity firm.
Disrupting the status quo: From budget buys to brand killers
The numbers tell the story. Private labels now command 25.5% of unit sales in the US, up from 24.7% in 2022, according to Circana. In Europe, where discounters like Aldi and Lidl dominate, the penetration is even higher – 38% in 2023, as per McKinsey.
These figures aren’t just statistics; they’re proof of a shift in consumer behaviour. Why? Private label is no longer simply providing shoppers with competitive price points but now starting to win-out on quality, cost and shopper experience.
In an era of high inflation, soaring food prices and economic uncertainty, shoppers are trading down – without feeling like they’re compromising. While many initially turned to private labels out of necessity, a surprising shift has emerged: consumers now view these products as equal to or even better than national brands. And once they make the switch, they rarely go back. According to NielsenIQ’s 2024 report, 70% of shoppers have tried private labels and half intend to stick with them. Why? Over 80% of US consumers believe private labels match or surpass the quality of national brands, a sentiment shared by 85% of European shoppers, according to McKinsey.
Retailers aren’t just capitalising on this momentum; they’re driving it. By investing heavily in innovation, clean label products and gourmet offerings, store brands are fast becoming category leaders. These own label lines are now key tools for retailers, not only to differentiate themselves in a crowded market but also to forge stronger connections with value-conscious, quality-driven consumers.
Retailers are leveraging own label brands to capture consumer loyalty and redefine value. Take Canadian grocery giant Metro, which recently rebranded its flagship private label line, Irresistible. This wasn’t just a packaging update: it was a strategic overhaul. Metro introduced 350 new products in a single year, boosting the brand’s visibility and appeal.
“Consumers typically spend an average of three seconds choosing a product from a grocery shelf,” said Annie St-Laurent, senior director of Private Labels, Metro.
“We focused on visibility, attractiveness, desirability and ease of use to ensure our products stand out.”
This focus has paid off, securing Metro’s position as Canada’s second-largest private label food retailer.
Metro is not alone and retailers across the globe are embracing the power of turning private labels into brands with distinct identities. According to consumer intelligence firm NIQ, 53% of retailers expected private label to be their number one growth driver in 2024.
Riding this wave, Albertsons upped the ante with the launch of Overjoyed in September, a private label created to ‘celebrate life’s everyday special moments’.
“Overjoyed fills a gap in our portfolio,” said Brandon Brown, Albertsons’ senior VP of Own Brands.
“It’s about meeting customers’ needs for quality and delight.”
The new label joins Albertsons’ expanding private label portfolio, which includes Signature Select, O Organics, Lucerne and Open Nature, available across Albertsons-owned banners such as Safeway, Vons, Jewel-Osco, ACME and Shaw’s. Focused on bringing innovation and differentiation into the private label space, the Overjoyed line features indulgent treats like French macarons, mini palmiers and baking chips, alongside seasonal offerings and gift-worthy home décor that strike a balance between affordability and indulgence.
Giants like Costco and Target are also leading the charge. Costco’s Kirkland Signature accounts for 28% of total sales, proving private labels can grow into standalone powerhouses. Meanwhile, Target’s Good & Gather is reshaping the snack and food landscape with premium products tailored to evolving consumer needs.
In the UK, Tesco secured its position as the cheapest full-line grocer for 16 consecutive months in its 2023/24 results, thanks to its private label strategy. Previously, the retailer’s private label offerings were divided into three tiers: budget-friendly Tesco Everyday Value, mid-tier Tesco and premium Tesco Finest. However, in response to Aldi and Lidl, Tesco revamped its ranges, introducing distinct budget-friendly lines like Creamfields, Stockwell & Co and Ms Molly’s, each with a unique branding that mimics national brands while emphasising exclusivity.
In 2023, Sainsbury’s revamped its private label strategy by transforming its value-focused Sainsbury’s Basics line into the more polished Stamford Street, while Asda made a bold move to rebrand its budget range, Just Essentials, with bright yellow packaging to ensure budget-friendly options were unmistakably clear to shoppers.
By rethinking what private label can offer, retailers are proving that store brands aren’t just competing with national names – they have the power to surpass them.
The bakery and snack opportunity
The snack category is particularly ripe for disruption. Consumers are ditching traditional brands in favour of more affordable treats and private label snacks like tortilla chips, crackers and popcorn are redefining the snack aisle. The bakery section is also a goldmine for private labels. Think premium sourdoughs, brioche buns and gluten-free pastries that rival artisanal brands but come with a lower price tag. Retailers are tapping into this demand, creating bakery lines that feel bespoke yet remain accessible.
Private label is an attractive proposition for bakery and snack brands: delivering higher margins, greater flexibility and stronger relationships with retailers. By cutting out intermediaries, private label producers keep more of their profits while working closely with retailers to meet evolving market demands.
Flexibility is a major drawcard. Private labels empower brands to pivot quickly, responding to trends like gluten-free diets, plant-based snacks and artisanal baking. Seasonal experiments, such as pumpkin spice croissants or mincemeat-flavoured popcorn, are easier to test and scale under a private label.
Innovation and differentiation are driving the revolution. Retailers like Mercadona are leveraging customer feedback to refine products at unprecedented speeds. In 2023 alone, Mercadona ran 11,000 consumer tests, delivering 500 product improvements and 314 new launches.
Brands also have greater freedom to focus on clean label formulations, bold flavours and sustainable packaging, appealing to health-conscious consumers and those prioritising values-driven purchases.
Quality control is another cornerstone. Through close collaboration with co-manufacturers, retailers ensure their store brand products rival national brands, fostering trust and long-term consumer loyalty.
One Rock Capital’s acquisition of Europe Snacks is just one example of the private label revolution in action. From Metro’s Irresistible launch to Costco’s Kirkland empire and Tesco’s enduring value proposition, private labels are transforming the grocery landscape. They’re not just value alternatives in today’s tight economic landscape – they’re the future of food retail.
