A master course in adaptation – how the inflationary environment has influenced the FMCG market

Brand or private label?

In 2023 private labels were able to increase their market share more: their share in sales grew from 31% in 2019 to 35% in 2023. A striking characteristic of last year was the decline in volume sales – both private label and branded product sales reduced. Looking back at the last five years, it can be seen that private label prices have increased at a rate above the average price increase experienced in the FMCG market during periods of crisis, such as the Covid pandemic or the inflationary period of 2022-2023.

Consumer plans include buying private labels

More consumers plan to buy private label products than manufacturer brands in the next 6 months. On the positive side for brands, more respondents attribute better quality to brands than to private labels. It can also be seen that there is a clear financial consideration behind choosing private labels. For the same price shoppers would buy a brand and they are now choosing private labels over brands due to their financial situation at the moment.

Promotional price entailed growth, full price led to a drop in volume sales

78% of categories have experienced a drop in volume sales, but 22% have seen an increase. In the categories where volume sales grew, private labels were able to grow more strongly, while in the categories where volume sales declined, both private labels and brands lost volume at similar rates. In the growing categories the rate of price change in 2023 compared to 2022 was smaller than in the declining categories, and the price gap between private labels and branded products was also smaller.

Changes that may last longer

In addition to instant buying decisions being very interesting, it is also worth looking at the longer-term changes in the minds of shoppers. By their very nature these have a certain inertia, so a sudden turn for the better in the economic situation won’t immediately change these trends. Compared to 2021, in 2023 price clearly won against nutritional value: last year the proportion of people who said price is more important than nutritional content increased. Two thirds of respondents still say they don’t throw away leftovers and always put everything away, but fewer shoppers are interested in the nutritional content itself and experimentation with new foods has declined. //