Value Matters: Branded Promotions Driving CPG Share Gains

As the consumer remains under well-documented pressure and continues to seek value at retail, consumer packaged goods companies face a challenging backdrop given the need to simultaneously provide value to the consumer while offsetting inflationary pressure. Given this dynamic, the logical expectation would be intensifying private label share gains.

However, CE Scanner data indicates trade down dynamics are more nuanced vs a simple shift to private label. In recent weeks, private label share of the total CPG universe has declined y/y at a rate of ~30-40bps, while branded promotion has accelerated within categories in which private label accounts for 15-30% of sales (a sizable albeit not a commanding share), yielding accelerating branded share gains. As such, the data suggests that while consumers remain value focused, they continue to demonstrate a preference for branded products when prices fit within their budgets. This dynamic highlights the importance of CPGs providing value to consumers, whether through protecting entry level price points, economy sizes or multi packs, a broader product assortment across price tiers, or simply lower list prices.

While brands have historically promoted at a greater rate than private label, the magnitude of that gap has widened in recent months. Across the ~70 categories in which private label accounts for 15-30% of sales, the gap in the percentage of branded sales on promotion vs the percentage of private label sales on promotion has widened to ~5-6pts, coinciding with accelerating branded share gains in the month of December. The observed data is in-line with recent commentary from both General Mills and Conagra – both of whom have taken action to lower prices for consumers and provides further evidence of the need to provide value to consumers in the current macro environment.