Private Labels are driving a significant transformation in the fast-moving consumer goods (FMCG) sector across Europe, according to Circana’s latest report, Private Labels: Transformation for Growth.
The report highlights how Private Labels have capitalised on shifting consumer behaviours, offering affordable, high-quality products that meet evolving demands for health, sustainability, and value.
Despite intense inflationary pressures across the FMCG landscape, Private Labels achieved an impressive 9.4% growth in value sales and a 2.2% increase in volume sales across the largest six European markets (EU6 – France, Germany, Italy, Netherlands, Spain, and the UK) as of March 2024. With a 39% market share in value sales and a 46% share in unit sales, Private Labels have firmly established themselves as key players in the sector.
Ananda Roy, senior vice president of Thought Leadership at Circana, said: “Private Labels have redefined the competitive landscape, not just by offering lower prices but by consistently delivering quality, innovation, and sustainability. Their success underscores a broader consumer shift towards brands that align with their values, particularly in health-conscious and eco-friendly categories.”
The report reveals that categories such as Chilled & Fresh Foods, Household Care, and Personal Care have seen the highest Private Label penetration, with notable gains in Baby Food (+2.3pp) and Pet Non-Food (+2.2pp). Spain, Germany, and the Netherlands lead in Private Label market penetration, with Spain achieving a 48% market share.
While Private Labels surged, National Brands showed modest recovery through aggressive promotional strategies. However, even with 43% of National Brand units sold on promotion in the UK, they continue to lag Private Labels in overall growth.
Circana’s report outlines four strategic options for brands looking to compete effectively: diversify into adjacent categories, grow the category through innovation, preimmunise distinctively, and collaborate strategically. Brands that focus solely on promotions without investing in innovation risk falling behind in an increasingly dynamic market.
Innovation is key
Circana also warns of a slowdown in category innovation, with 17% fewer new product launches observed due to supply chain disruptions and a focus on core product ranges. This presents a risk of the FMCG sector becoming an ‘innovation desert,’ emphasising the need for both Private Labels and National Brands to prioritise innovation to drive organic growth
Continued growth momentum is forecasted for Private Labels, driven by investments in range expansion, premiumisation, and sustainability initiatives. Consumer preferences for health, wellness, and ethical consumption will continue to influence purchasing decisions, reinforcing the importance of aligning product offerings with these values.
Positive economic outlook fuels CPG growth
With positive GDP growth forecast for the Euro area in 2025 (+0.4pp YoY), Circana predicts a cautiously optimistic outlook for FMCG growth. Private Labels are expected to continue their strong momentum, driven by investments in range expansion, pricing strategies, and product innovation. However, National Brands have the potential to narrow the gap if they pivot towards innovation and diversify their portfolios. As both sectors adapt to evolving consumer demands, the FMCG landscape is set to remain dynamic and highly competitive in the year ahead.
Roy concluded: “2024 marked a pivotal year for the FMCG industry, with Private Labels setting a new standard for growth and innovation. Looking ahead, 2025 will be a defining year for both Private Labels and National Brands, as long-term success will hinge on their ability to innovate and connect with evolving consumer needs. The opportunity is open for all brands to differentiate themselves and deliver products that resonate with today’s value-driven consumers.”
Key highlights from the report include:
- Private Label value sales grew by 9.4% across the EU6 markets, with the highest penetration in Spain (48%), Germany (43%), and the Netherlands (42%).
- Private Labels achieved a 2.2% increase in volume sales, outpacing National Brands, which saw a 3.8% decline in the same period.
- Baby Food (+2.3pp) and Pet Non-Food (+2.2pp) categories saw the most significant Private Label growth.
- National Brands relied heavily on promotions, with 43% of units sold on promotion in the UK, but still lagged in overall unit growth.
- 17% fewer new product launches were recorded, raising concerns about a slowdown in category innovation.
