Bernstein: US private-label food volume share rises, putting greater pricing pressure on branded manufacturers

Why did value share fail to keep pace with rising volume share?

In US channels monitored by NielsenIQ, private-label volume share was 31.5% over the latest 12 weeks, up about 35 basis points year over year; value share was 27.7%, still down slightly.
Bernstein believes the divergence suggests shelf prices for branded foods may be rising faster than those for private labels, widening the gap between them. Pressure on low-income consumers and rising grocery prices in recent years may also be prompting retailers to attract shoppers with lower-priced private labels.
There is an important limitation to the coverage: Aldi and Trader Joe's, which rely heavily on private labels, are excluded from Nielsen's monitored US channels. Bernstein believes this may understate the growth in private-label market share.

In the grocery department, the year-over-year gain in private-label volume share widened from about 30 basis points last quarter to nearly 60 basis points this time, while value share was roughly flat. Volume share grew markedly in coffee and nuts, while energy drinks rebounded from the previous quarter.
Chocolate is not usually a category dominated by private labels, but their volume share also rose significantly this time, after being roughly flat last quarter; private-label volume share generally fell in snack categories such as cookies, potato chips and tortilla chips.
Eggs are a striking example of a changing price gap: private-label volume share rose nearly 500 basis points year over year over the latest 12 weeks, while value share fell about 100 basis points. Bernstein believes retailers appear to have sharply cut private-label egg prices after avian flu pushed up egg prices in 2024–2025.
Lower prices did not bring share gains in every category: private-label volume share in butter fell about 70 basis points year over year, and value share fell about 350 basis points; the decline in private-label volume share for frozen meals for multiple people widened from the previous quarter.

Bernstein believes that if retailers keep private-label prices low while branded manufacturers raise prices, the widening gap could further erode branded products' volume share. Food companies focused on the US market and main-meal products face particular pressure.
The firm said the impact could be more pronounced for brands whose sales are declining or growing far more slowly than Walmart's same-store sales, including Conagra, General Mills, Kraft Heinz and Campbell Soup's meals and beverages division.
Meanwhile, rising US trucking, packaging and potentially agricultural input costs could put further pressure on food companies' margins: if branded manufacturers struggle to raise prices, their ability to pass on costs will be limited.

Walmart has asked private-label suppliers to remove 30 food additives by early 2027, and Aldi has announced a similar initiative. Bernstein believes private labels could gain further share if retailers can convince consumers that formula changes make the products more credible.
But consumers have other ways to save money. Some branded food companies say younger low-income consumers may switch to cheaper categories such as macaroni and cheese or instant noodles, while some low-income retirees choose to cook for themselves with inexpensive ingredients.