Private Label Growth Is Reshaping Grocery

There was a time when private label mostly meant “cheaper alternative.”

Not anymore.

Private label sales in the U.S. reached a record $282.8 billion in 2025, and store brands grew 3.3%, nearly triple the growth rate of national brands at 1.2%. They also hit all-time highs of 21.3% dollar share and 23.5% unit share. In food and beverage specifically, private label now holds about 23% market share. That is not a side story. That is the story. 

For CPG suppliers, this changes the conversation with buyers in a very real way. A buyer is no longer asking only, “Is this product good?” They are also asking, “Why should I give this item space when my own label is improving, gaining trust, and often delivering stronger margin logic?” Circana notes that private label has evolved from a generic, low-cost substitute into something more innovative, differentiated, and trusted by shoppers. That means suppliers are not just competing with other brands anymore. In many categories, they are competing with the retailer’s own increasingly capable house brand. 

Here is where the pressure gets personal. Imagine a fictional example: a mid-sized salsa brand lands a review with a grocery chain after two years of steady regional growth. The product tastes great. Packaging is sharp. Velocity is respectable. But sitting across from that brand is a retailer's private-label line that has improved color, flavor variety, and shelf presence while keeping the opening price point low. Suddenly, the supplier is not defending the claim that the item belongs on the shelf. They are defending why it deserves to stay.

That is the new bar.

If you are a supplier, this does not mean the game is over. It means the old playbook is over. You cannot win with “premium” stamped on the label and little else to back it up. You need proof. Proof that your product drives incrementality. Proof that your packaging tells a stronger story. Proof that your flavor, function, quality, brand loyalty, or shopper mission is meaningfully different. When store brands are available in 97% of the food and nonfood categories, Circana tracks for PLMA, being merely “pretty good” becomes dangerous. 

This is where many suppliers make a costly mistake. They try to beat private label only on price. That usually turns into a slow bleed. A better move is to beat private label on clarity.

Make it painfully obvious why your item earns its slot. Maybe your product solves a usage problem better. Maybe it delivers a bolder flavor profile. It may have cleaner ingredients, stronger social proof, better promotional lift, or stronger digital conversion when shoppers search online. Whatever the reason is, it needs to be specific enough that a buyer can repeat it in one sentence.

And yes, margin still matters. A lot. But so does the total package. The brands that keep winning tend to give retailers more than a product. They give them a story that fits the shelf, the shopper, and the category strategy.

That means suppliers should be asking harder questions right now: Are we clearly differentiated? Does our packaging communicate value in three seconds? Can we prove velocity by channel? Are we helping the retailer trade shoppers up, or are we just asking for space?

Those are uncomfortable questions. They are also healthy ones.

Private label growth is not just a challenge. It is a forcing function. It pushes suppliers to sharpen their proposition, simplify their messaging, and earn their spot with something stronger than habit. The brands that respond well will become more disciplined, more retailer-ready, and more resilient.

That is the opportunity hiding inside the threat.

Woodridge Retail Group believes suppliers can still win in a private-label-heavy environment. But winning usually starts with brutal honesty. Not panic. Not fluff. Just a clear-eyed look at what makes your product truly worth carrying.

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