the evolution of private label in a transforming … · the growth of e-commerce will also allow...

Susan ViamariVice President, Thought Leadership

November 2018

THE EVOLUTION OF PRIVATE LABEL IN A TRANSFORMING MARKETPLACE

Private Label 2018

© 2018 Information Resources Inc. (IRI). Confidential and Proprietary. 2

Executive Summary

Private label accounts for 16 to 20 percent of CPG dollar spending across generations; share of spending is growing across generations but strongest among young millennials.

Private label has grown across rural regions. The Mid-South and Southeast regions are growing more quickly than others.

E-commerce private label sales are seeing explosive growth across food and beverage and non-food categories.

Private label dollar sales grew 5.8 percent in 2018, outpacing national brands by a wide margin.

Private label trip and basket size growth is strongest in the club channel; grocery is also seeing growth, but not as strong.

Retailer private label programs are taking off and transforming the CPG industry, providing consumers not only value, but also products that have high ethical, environmental and taste standards.

Prospects for private label growth for the remainder of 2018 are solid; retailers and manufacturers have an opportunity to build basket size and margin by focusing on premium-tiered solutions.


Economic Measure 2013 2014 2015 2016 2017

GDP (% chg.) 3.6% 4.4% 4.0% 2.7% 4.2%

Unemployment (%, SA) 7.4 6.2 5.3 4.9 4.4

Consumer Price Inflation (% Chg.)

1.5% 1.6% 0.1% 1.3% 2.1%

Retail Sales (% Chg.) 3.8% 4.2% 2.6% 2.9% 4.7%

Residential Permits,

Total (Mil)4.0 4.2 4.7 4.8 5.1

Unemployment Fell to 4.4% in 2017; Retail Sales Growth Was Strong

Source: Moody’s

ECONOMICGROWTH


The U.S. Economy Grew at 3.5% in Q3 2018

Source: https://www.wsj.com/articles/u-s-economy-grew-at-3-5-rate-in-third-quarter-1540557378

ECONOMICGROWTH

• Growth driven by robust consumer and government spending

• GDP: 3.5 percent annual rate from July through September, to $18.7 trillion, adjusted for inflation

• Consumer spending is being powered by plentiful jobs and impact of tax cuts

• Unemployment rate fell to its lowest level since 1969

• Spending up in many areas, including restaurants to recreational goods

• Government spending also up:

• Defense outlays grew at a 4.6 percent annual rate in Q3


Consumer Prices Were Moderate in Q3, Following Run-up Earlier in 2018

Sources: https://www.wsj.com/articles/u-s-consumer-prices-edge-higher-in-august-1536842016; https://www.wsj.com/articles/u-s-personal-spending-ends-third-quarter-on-solid-footing-1540816526

ECONOMICGROWTH

• For now, inflation poses little threat to the economy.

• August was the first month this year that the year-to-year price growth eased.

• To raise interest rates or not? There is an evolving view that the lowest unemployment rate in nearly five decades might not be creating excessive inflationary pressures. If inflation stays under control, it could bolster the case for suspending rate hikes in the near-term future.

• The personal-consumption expenditures price index rose 0.1 percent between in September, the fourth straight month in which the Federal Reserve’s preferred inflation gauge fell short of the 0.165 percent monthly pace needed to meet its 2 percent annual target.

• Spending and income grew in September, a positive sign for the economy’s main engine heading into the fourth quarter.


The Struggle to Afford Groceries Is Widespread, and More Prevalent Across Younger and Less-Wealthy Households

33%

27%

29%

31%

31%

Q1 2018

Q4 2017

Q3 2018

Q3 2017

Q2 2018

Source: IRI Consumer Connect™, Q3 2018

10%

20%

37%

58%

> $100K

$55K-$99.9K

$35K-$54.9K

< $35K

38%

42%

33%

19%

Millennials

Gen X

Boomers

Seniors

Inco

me

Gen

erat

ion

Households Having Difficulty Affording Groceries% of Households, Total Population


Shopping Behavior, Total Population

Private Label Is Seen as a Viable Money-Saving Option

84%

73%

83%

73%

Buy private labelproducts to

save money

Try new, lower-priced brands to

save money

Top 2 Box SummarySource: IRI Consumer Connect™, Q3 2018

Q3 2017 Q3 2018


Shopping Behavior, By Generation

Younger and Lower-Income Consumers Are More Likely to Turn to Private Label to Save Money

77%

65%

80%

71%

87%

78%

88%

79%

Buy privatelabel productsto save money

> $100K $35K-$54.9K$55K-$99.9K < $35K

92%

82%

86%

84%

80%

73%

77%

57%

Buy privatelabel productsto save money

Gen XMillennials Boomers

Seniors


Shopping Behavior, By Income


save money


save money


Private Label Perceptions, Total Population

This Year Has Seen a Small Decline in Private Label Quality Perceptions Across Childless and Single-Person Households

76%

68%

69%

68%

Private label productsare a bettervalue than

national brands

Private label productsare just as good

in quality asnational brands


Q3 2017 Q3 2018

67%

74%Child – 1+

Child - None

65%

71%

Single Person HH

Multiperson HH


Unit Sales Change

Total CPG By Market Sector

Still, Private Label Dollar Sales Outperformed in 2018, Growing Four Times Faster Than National Brands

Source: IRI Market Advantage™, year-to-date ending Oct. 7, 2018, and same period prior years; MULOC

3.0% 3.1%

2.2%1.7%

0.0%

4.3%

2.1%

1.5%

5.8%

1.4%0.8%

1.3%

2015 201820172016

0.9% 1.0%0.4%0.4% 0.3%

0.9%

-0.2%

-1.0%

3.2%

0.5%

-0.2%

3.8%

2015 2016 2017 2018

Dollar Sales Change

Total CPG By Market Sector

Total PrivateLabel

Total CPG Total NationalBrands

Total PrivateLabel



3.5%

2.5%

5.5%

6.5%

5.0%

7.0%

8.0%

0.0%

7.5%

Private Label — Dollar Sales % Chg. vs. YA, By Edible/Nonedible

Total U.S. Edible Nonedible

3-Dec-17 31-Dec-17 28-Jan-18 25-Feb-18 25-Mar-18 22-Apr-18 20-May-18 17-Jun-18 15-Jul-18 12-Aug-18 9-Sep-18 7-Oct-18

*Note: Acculturated Hispanics are defined as Hispanics speaking only English or English more than SpanishSource: IRI Consumer and Shopper Insights Advantage™, All Outlets, Quad Week Data Ending Oct. 7, 2018, and preceding, NBD aligned

Private Label Growth Rate Slipped During the Past Year, but Is Showing Signs of Turning Upward; the Non-Edibles Sector Has Been More Volatile

*


And Retailers Remain Focused on Growing Private Label Programs

Sources: IGD Retail Analytics; Retail Dive

Retailers are remodeling stores and developing new product ranges in an effort to attract a wider range of shoppers.

Unique private label ranges help retailers to differentiate from competitors and provide a compelling reason to visit.

The growth of e-commerce will also allow retailers to target shoppers in new markets and build trust in their private label lines.

Amazon has plans to dominate the private label market, aggressively moving into garden/outdoor, grocery, health/household and home/kitchen, as well as cross-category everyday commodity essentials.

Target views private brand development as a significant opportunity to drive differentiation, deliver unique experiences and build shopper loyalty. Key focus areas include an “Expect More” brand promise and a “Pay Less” value element.

Following the acquisition of Safeway, Albertsons has become a private brands powerhouse, generating sales of over $11.5 billion in 2017. It has partnered with Instacart to launch an online market, O Organics Market, featuring products from its O Organics and Open Nature private brands.

1

2

3

4

5

6


Dollar Sales Have Been Solid Across Edibles, With Frozen and Refrigerated Departments Standing Out


Beverage

General Food Refrigerated

4.4% 4.3%5.3%

2.6% 2.3%

5.9%

1.1% 0.6%

7.0%

3.3% 3.0%

5.9%

2015 20182016 2017

Total PrivateLabel


1.3% 0.7%

4.1%

-0.2% -0.3%

0.4%1.7%

0.4%

7.0%

2.8%1.7%

7.2%

1.9% 2.1%1.2%1.3% 1.4%

0.5%

1.2% 0.8%3.5%

1.3% 0.9%

3.5%2.3%

3.0%

0.9%

-1.7%-0.3%

-5.0%

1.2%0.2%

3.6%2.4%

0.3%

7.1%

Frozen

Dollar Sales Change

By Edibles Sector and Department

Total PrivateLabel


Total PrivateLabel


Total PrivateLabel



Private Label Dollars Are Growing at an Above-Average Pace Across Non-Edible Departments; General Merchandise Is Particularly Strong


Beauty

Health Home Care

2.2% 2.0%

4.9%

1.8% 1.4%

7.0%

0.2%

-0.2%

5.9%

2.2% 2.0%

4.7%

2015 2016 2017 2018

3.2% 3.0%3.7%

2.4% 2.2%2.9%

1.2%0.3%

4.6%

1.5%

-0.4%

7.6%

4.7% 5.3%

2.6%2.7% 2.9%2.0%

1.2%0.4%

4.2%

2.4%1.8%

4.2%

2.1% 2.2%

0.4%

2.2% 2.4%

-0.2%

1.6% 1.4% 3.4%2.4% 2.2%

5.0%

General Merchandise

Dollar Sales Change

By Non-Edibles Sector and Department

Total PrivateLabel


Total PrivateLabel


Total PrivateLabel


Total PrivateLabel



Private Label Unit Sales Growth Is Steady Across Edibles Departments, With Beverage and Frozen Standing Out


2.8% 2.7%3.6%

1.5% 1.0%

6.4%

-0.4%-1.1%

5.7%

1.8% 1.4%

5.1%

2015 2016 2017 2018

-1.0%-1.7%

2.1%

-0.8%-0.9%

-0.3%

0.1%

-0.8%

3.8%2.6%

1.7%

6.3%

-0.3% -0.2%-1.3%-0.1%

-0.6%-0.3% -0.8%

2.5%

-0.1% -0.7%

2.8%

0.0%1.5% 1.8%

0.9%0.4%

-0.2%

1.6%

-0.7%

-2.6%

4.0%

0.3%

-1.4%

4.0%

Total NationalBrands

Beverage

General Food Refrigerated

Frozen

Unit Sales Change

By Edibles Sector and Department

Total PrivateLabel


Total PrivateLabel

Total CPG Total NationalBrands Total Private

LabelTotal CPG

Total PrivateLabel



Beauty Is Showing Strong Private Label Unit Sales Growth; All Non-Edibles Departments Are Seeing Solid Private Label Performance


Beauty

Health Home Care

0.2%

-0.1%

2.7%

0.1%

-0.3%

3.3%

-0.6%-1.2%

4.4%

0.3%

-0.6%

6.6%

20162015 20182017

1.3% 1.2% 1.4%1.1% 1.0% 1.2%

-0.6%-1.5%

1.8%

-1.1%-2.4%

2.5%

1.7% 2.1%

0.4%0.5% 0.4% 0.6%

-0.1%-1.3%

3.4%

0.8%

-0.8%

5.2%

0.4% 0.9%

-2.8%

0.1% 0.5%

-3.4%

0.1% 0.2%

-0.8%

0.1%1.3%

0.0%

General Merchandise

Unit Sales Change

By Non-Edibles Sector and Department

Total PrivateLabel


Total PrivateLabel

Total CPG Total NationalBrands Total Private

LabelTotal CPG Total National

Brands

Total PrivateLabel



California

13wk $ Sales ($M) $2,564

4wk % Chg YA 1.2%

13wk % Chg YA 2.9%

West

13wk $ Sales ($M) $3,685

4wk % Chg YA 4.7%

13wk % Chg YA 5.8%

Plains

13wk $ Sales ($M) $2,344

4wk % Chg YA 4.1%

13wk % Chg YA 4.9%

South Central

13wk $ Sales ($M) $3,615

4wk % Chg YA 3.1%

13wk % Chg YA 4.0%

Southeast

13wk $ Sales ($M) $4,829

4wk % Chg YA 6.8%

13wk % Chg YA 4.8%

Mid-South

13wk $ Sales ($M) $4,425

4wk % Chg YA 5.0%

13wk % Chg YA 5.3%

Great Lakes

13wk $ Sales ($M) $4,573

4wk % Chg YA 2.0%

13wk % Chg YA 3.7%

Source: IRI Market Advantage™, L13 & L4 weeks ending Oct. 7, 2018, MULOC Regions

During the Past Quarter, Private Label Has Grown Across Regions; West and Mid-South Regions Grew Faster Than Other Regions

Northeast

13wk $ Sales ($M) $4,743

4wk % Chg YA 1.9%

13wk % Chg YA 2.8%

Region Trends, Private Label


Region Urban/Rural Trends, Private Label

Urban Definition - County Size A Top 25 Markets, Rural Definition - County Size C/DSource: IRI Consumer and Shopper Insights Advantage™, All Outlets Regions, 13 weeks ending Oct. 7, 2018, vs. YA, NBD aligned

Private Label Is Outperforming in Rural Markets in the Southeast and New England, but Is Stronger in Urban Areas of the Plains and Great Lakes Regions

Northeast

Urban Rural$ Sales

($M) $2,345 $1,026

% Chg YA 0.8% 2.6%

Mid South

Urban Rural$ Sales

($M) $1,024 $1,842

% Chg YA 6.8% 5.7%

Southeast

Urban Rural$ Sales

($M) $1,544 $1,580

% Chg YA 1.6% 5.4%

South Central

Urban Rural$ Sales

($M) $1,268 $1,192

% Chg YA 3.6% 2.7%

California

Urban Rural$ Sales

($M) $2,223 $341

% Chg YA 3.3% 2.9%

West

Urban Rural$ Sales

($M) $1,614 $1,580

% Chg YA 4.4% 4.9%

Plains

Urban Rural$ Sales

($M) $600 $1,246

% Chg YA 6.0% 4.4%

Great Lakes

Urban Rural$ Sales

($M) $1,746 $1,747

% Chg YA 4.3% 2.4%


Private Label Perceptions, By Generation

Millennials, Boomers and Lower-Earning Households Hold More Favorable Private Label Value and Quality Perceptions

63%

64%

67%

67%

73%

72%

74%

72%




national brands

< $35K> $100K$55K-$99.9K

$35K-$54.9K

75%

73%

74%

71%

68%

67%

63%

64%




national brands

MillennialsSeniorsGen XBoomers


Private Label Perceptions, By Income


Private Label Behaviors, By Generation

Private Label Can Be a Key Driver of Store Selection, Particularly Among Younger Shoppers

62%

45%

56%

49%

14%

66%

52%

57%

47%

15%

62%

58%

62%

50%

12%

64%

67%

69%

55%

9%

I often buy private labelsolutions instead of

name brands

I buy private labeloptions only from

certain stores I trust

I prefer stores that have alarge variety of private label

products to choose from

I choose to shop at certainstores because of their

private label offerings

I rarely or never purchaseprivate label solutions

> $100K$55K-$99.9K

$35K-$54.9K< $35K

64%

63%

70%

55%

12%

70%

59%

65%

58%

9%

62%

54%

60%

48%

11%

61%

49%

54%

43%

18%

I choose to shop at certainstores because of their

private label offerings

I buy private labeloptions only from

certain stores I trust

I often buy private labelsolutions instead of

name brands

I prefer stores that have alarge variety of private label

products to choose from

I rarely or never purchaseprivate label solutions

MillennialsGen X

BoomersSeniors


Private Label Behaviors, By Income


Store Selection Criteria, By Generation

Private Label Assortment Is a Key Driver of Store Selection Across Consumer Segments

74%

59%

59%

55%

42%

29%

83%

69%

64%

65%

51%

41%

70%Good assortment ofprivate label

food and beverage solutions

Good assortment ofprivate label

home care products


health care products


personal care products


beauty care products


pet care products

78%

55%

62%

49%

62%

49%

58%

40%

44%

26%

36%

> $100K $35K-$54.9K$55K-$99.9K < $35K

82%

68%

67%

67%

53%

39%

81%

68%

40%

60%

58%

44%

70%

51%

24%


beauty care products

62%


personal care products


food and beverage solutions76%


home care products


health care products


pet care products

62%

50%

62%

43%

50%

35%

34%

SeniorsMillennials BoomersGen X

Very/Somewhat Important Summary Source: IRI Consumer Connect™, Q3 2018

Store Selection Criteria, By Income


-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2015 2016 2017 2018

All OutletsGrocery Mass/Super

DollarDrugClub

Note: Walmart not included in Grocery or Mass/SuperSource: IRI Consumer and Shopper Insights Advantage™, All Outlets, Calendar year 2017 and two years prior, 52 weeks ending Oct. 7, 2018, NBD aligned

Dollar and Mass/Super Channels Have Seen Volatile Private Label Performance in Recent Years; Other Channels Are Largely Trending Up

Private Label — Spending % Chg. vs. YA, By Channel


Channels

Dollars/Buyer Dollars/Trip Trips/Buyer

L52 % Chg. vs. YA L52 % Chg. vs. YA L52 % Chg. vs. YA

All Outlets 5.0% 2.3% 2.7%

Club 5.9% 2.5% 3.3%

Grocery 0.9% -0.3% 1.2%

Drug 0.2% 6.8% -6.2%

Mass/Supercenter -2.4% -5.1% 2.9%

Dollar -1.2% -0.3% -0.9%

Note: Walmart not included in Grocery or Mass/SuperSource: IRI Consumer and Shopper Insights Advantage™, All Outlets, 52 weeks ending Oct. 7, 2018 vs. YA, NBD aligned

Trip Frequency and Buy Rate Are Driving Private Label Spending at Club; Grocery Is Also Positive, But Showing Less Strength

$1,080.2

$283.7

$447.7

$107.9

$66.3

$40.5

$12.5

$25.2

$11.5

$11.3

$9.8

$4.8

86.2

11.3

39.1

9.6

6.8

8.5

Private Label — Buy Rate, Trip Size and Trip Frequency, By Channel


-5.0%

0.0%

5.0%

10.0%

25.0%

Private Label — Dollar Sales % Chg. vs. YA, By Generation

Total U.S. Younger BoomersGen X Older BoomersYounger MillennialOlder Millennial Retirees & Seniors

3-Dec-17 31-Dec-17 28-Jan-18 25-Feb-18 25-Mar-18 22-Apr-18 20-May-18 17-Jun-18 15-Jul-18 12-Aug-18 9-Sep-18 7-Oct-18

Source: IRI Consumer and Shopper Insights Advantage™, All Outlets, Quad Week Data Ending Oct. 7, 2018, and preceding, NBD aligned

Private Label Dollar Momentum Has Been Fairly Consistent Across Generations, With The Exception of Younger Millennials


Dollar Sales ($M) Dollars % Chg. vs. YA Pt Share of Category Sales

81.8% 22.9%

6.9% 28.0%

17.6% 1.0%

-39.1% 2.7%

83.8% 20.1%

18.0% 6.2%

57.8% 11.6%

-26.3% 6.5%

4.1% 7.3%

20.0% 6.5%

Largest Private Label E-Commerce Categories

Source: IRI E-Market Insights™, 52 weeks ending Oct. 07, 2018

In E-Commerce, Edibles Categories Are Seeing Strong Private Label Growth on a Relatively Small Base

Office Products $27.5

Anti-Smoking Products

Natural Cheese

Meat - Rfg

Vitamins

Milk

Bottled Water

Food & Trash Bags

Gastrointestinal - Tablets

Cups & Plates

$68.5

$56.9

$45.7

$25.5

$24.3

$22.1

$19.7

$17.1

$16.4


Fastest-Growing Private Label E-Commerce Categories

Dollar Sales % Chg. vs. YA

*Note: Dollar sales % growth vs. YA for Aseptic Juices includes value greater than 1,000%Source: IRI E-Market Insights™, 52 weeks ending Oct. 7, 2018

And Several Smaller Categories Are Seeing Growth Well in the Triple-Digit Range

225.0%

262.2%

266.0%

322.7%

362.2%

506.0%

531.2%

699.9%

732.1%

1000.0%

Milk Flavoring/Cocoa Mixes

Spreads - Rfg

Evaporated/Condensed Milk

Sleeping Remedies

Cotton Balls/Swabs

Processed Poultry - Fz/Rfg

Soups/Sides/Other - Fz

Culinary

Batteries

Aseptic Juices *


Dollar Sales ($M) Dollars % Chg. vs. YA Pt Share of Category Sales

-5.9% 47.7%

3.8% 44.1%

9.0% 24.5%

27.8% 74.3%

27.3% 59.6%

-2.8% 23.9%

23.6% 53.2%

9.1% 57.4%

7.0% 27.2%

2.3% 43.8%

Largest Private Label Categories

Source: IRI Market Advantage™, 52 weeks ending Oct. 7, 2018, MULOC

In the Brick-and-Mortar World, Private Label Sales Are Much Higher; Growth Is Strong, Particularly in Refrigerated Meats and Fresh Eggs

Natural Cheese

Fresh Bread & Rolls

$1,973.6

Fresh Eggs

Seafood - Fz

Milk

Meat - Rfg

Bottled Water

Cups & Plates

Vitamins

Food & Trash Bags

$2,066.0

$7,265.5

$5,712.5

$4,063.7

$3,823.6

$3,739.1

$3,198.4

$2,546.9

$2,424.1


Fastest-Growing Private Label Categories

*Note: Dollar sales % growth vs. YA and base sales % growth vs. YA for Egg Substitute-SS includes value greater than 150%Source: IRI Market Advantage™, 52 weeks ending Oct. 07, 2018, MULOC

The Fastest-Growing Private Label Categories Are Largely From Refrigerated and General Food Departments

Dollars % Chg. vs. YA Base Dollars % Chg. vs. YA

150.0%

109.7%

92.9%

84.3%

81.6%

77.3%

61.0%

57.0%

46.5%

44.4%52.8%

54.8%

63.0%

66.3%

74.9%

78.3%

85.5%

98.5%

113.8%

150.0%

Fragrances - Women's

Outdoor Insect/Rodent Control Chem

Pest Control

Deodorant

Lard

Baby Gifts / Toys / Furniture

Baking Cups/Paper

Ice Substitute

Lunches - Rfg

Egg Substitutes - SS * *


Millennials Allocate More of Their CPG Spending to Private Label Solutions Than Other Counterparts; Share Is on the Uptick Across Generations

Private Label Dollar and Unit Share, By Generation

19.318.3

16.8 16.5 16.5 17.3

23.1 22.520.4 20.3 20.4

21.8

Retirees & SeniorsOlder MillennialYounger Millennial Older BoomersGen X Younger Boomers

Unit ShareDollar Share

Source: IRI Consumer and Shopper Insights Advantage™, All Outlets, 52 weeks ending Oct. 7, 2018 vs. YA, NBD aligned

Share Pt. Chg. Vs. YA

Dollar Share 1.1 0.6 0.4 0.7 0.7 0.7

Unit Share 0.8 0.8 0.7 0.8 0.7 0.7


Private Label Spending Is Fairly Steady Across Income Brackets; Momentum Is Also Consistent

17.018.2 18.3 17.7 17.7 17.1

15.7

20.922.3 22.2 21.7 21.9

20.919.2

<$15K $15K-$24.9K $35K-$49.9K$25K-$34.9K $50K-$69.9K >= $100K$70K-$99.9K

Unit ShareDollar Share

Source: IRI Consumer and Shopper Insights Advantage™, All Outlets, 52 weeks ending Oct. 7, 2018 vs. YA, NBD aligned


Dollar Share 0.2 0.7 0.9 0.7 0.7 0.6 0.5

Unit Share 0.4 0.9 0.9 0.8 0.9 0.8 0.6

Private Label Dollar and Unit Share, By Income


Non-Hispanic Consumers Allocate More of Their CPG Spending to Private Label Solutions Than Hispanics; Growth Is Quite Similar Between the Two

Private Label Dollar and Unit Share, By Ethnicity

17.2 16.7

21.319.6

AcculturatedHispanics

Non-Hispanic/ Unknown

Dollar Share Unit Share

*Note: Acculturated Hispanics are defined as Hispanics speaking only English or English more than SpanishSource: IRI Consumer and Shopper Insights Advantage™, All Outlets, 52 weeks ending Oct. 7, 2018 vs. YA, NBD aligned


Dollar Share 0.6 0.4

Unit Share 0.8 0.5


Economic Measure 2014 2015 2016 2017 2018P

GDP (% chg.) 4.4% 4.0% 2.7% 4.2% 5.3%

Unemployment (%, SA) 6.2 5.3 4.9 4.4 3.9

Consumer Price Inflation (% Chg.)

1.6% 0.1% 1.3% 2.1% 2.5%

Retail Sales (% Chg.) 4.2% 2.6% 2.9% 4.7% 5.4%

Residential Permits,

Total (Mil)4.2 4.7 4.8 5.1 5.4

Projections for the Remainder of 2018 Include Solid Economic Growth With Modest Inflation Pressures

Source: Moody’s


The U.S. Economy Grew at a Faster-Than-Expected Rate in Q3, but Warning Signs, Such as a Modest Rise in Business Investment, Are Emerging

Annualized Q3 2018 GDP Growth: 3.5%

U.S. Real GDP Growth

Source: U.S. Bureau of Economics

• The increase in real GDP in Q3 reflected positive contributions from personal consumption expenditures, private inventory investment, state and local government spending and federal government spending.

• Imports increased in Q3 after decreasing in Q2.

• Negatively pressures include a downturn in exports and a deceleration in nonresidential fixed investment.

4.9%

1.9%

3.3% 3.3%

1.0%

0.4%

1.5%

2.3%1.9% 1.8% 1.8%

3.0%2.8%

2.3% 2.2%

4.2%

3.5%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Q3 Q4Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q3Q1 Q2 Q3 Q4 Q1 Q2

U.S. Bureau of Economic Analysis Seasonally adjusted at annual rates

2014 2015 2016 2017 2018

Real GDP: Percent change from preceding quarter


Still, Private Label Prospects for the Coming Six Months Are Good, With More Than Half of Consumers Planning to Spend More on Private Label; Lower-Income and Younger Consumers Are Most Likely to Increase Spending


Gen

der

Eth

nici

ty

59%

58%

66%

73%

$55K-$99.9K

> $100K

$35K-$54.9K

< $35K

73%

71%

63%

54%

Millennials

Seniors

Gen X

Boomers

Inco

me

Gen

erat

ion

60%

66%

Male

Female

61%

65%

Hispanic

Non-Hispanic

Expect to Purchase More Private Label During the Next Six Months, Total Population


Consumers’ Willingness to Pay Premium for the CPG Solutions Has Inched up During the Past Year, Marking Opportunity for Private Label Growth

Consumer Willingness to Pay a Premium for…Total Population

40%

27%

42%

29%

Buy premium-quality beauty care products

Buy premium-quality food and beverage products


Q3 2017 Q3 2018


Premium-Tier Solutions Offer Opportunity to Capture the Attention of Older and Wealthier Consumers

60%

44%

48%

35%

35%

25%

28%

18%

> $100K$55K-$99.9K < $35K

$35K-$54.9K

37%

32%

35%

29%

42%

27%

51%

30%

MillennialsSeniorsBoomers

Gen X


Consumer Willingness to Pay a Premium for… By Generation

Consumer Willingness to Pay a Premium for… By Income






The Opportunity for Premium Trade-Up Exists Across Income, Age, Gender and Ethnicity

Expect to Purchase More Premium BrandsDuring the Next Six Months, Total Population


Gen

der

Eth

nici

ty

37%

35%

24%

19%

> $100K

$55K-$99.9K

$35K-$54.9K

< $35K

24%

24%

29%

36%Seniors

Millennials

Gen X

Boomers

Inco

me

Gen

erat

ion

32%

27%

Male

Female

34%

28%

Hispanic

Non-Hispanic

the evolution of private label in a transforming … · the growth of e-commerce will also allow...

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