Private labeling: an opportunity to seize

INSIGHT – The rise of private labeling has long been viewed as a crisis phenomenon, expected to recede once price pressures subsided. The figures tell a different story. The Belgian foodservice industry, therefore, should develop private labeling rather than fight it.

 © GONDOLA FOODSERVICE

Private label brands account for 40.3% of the market in Belgium, according to Europanel, above the European average. In the food retail sector, this figure exceeds 60%. And private labels are no longer competing with national brands solely on price: they are also innovating. In Western Europe, 70% of new food product launches now carry a private label. Seven out of ten new products come from a retailer's own portfolio.

The phenomenon could accelerate further if manufacturers continue to implement across-the-board price increases without sufficiently strengthening their value proposition. For many consumers, the choice quickly becomes rational as soon as a cheaper alternative offers equivalent perceived quality.

The trend is reaching the out-of-home food sector. As revealed by The Cube, our unique data model, private label represents 25% penetration in the foodservice industry. The potential is considerable, and the gap will close: with raw materials accounting for 30% of an operator's costs and margins under pressure, the shift towards better-value alternatives is structural.

The best approach for manufacturers and wholesalers is probably no longer defensive. It is organized on two levels that reinforce each other instead of cannibalizing one another. On one side, high value-added products accompanied by genuine service: training for kitchen teams, recipe development, operational support, or product innovation.

On the other hand, there are own brands co-developed with wholesalers, designed specifically for the constraints of foodservice: adapted weights, ease of use, optimized lifespan and affordable prices for operators under pressure.

Inflation doesn't kill premium. It kills empty premium. The players that will continue to grow will be those capable of either offering clear perceived value at a competitive price, or building a sufficiently strong experience to sustainably justify their positioning.

The right response is not defensive. Co-developing private label brands with wholesalers, designed specifically for the constraints of foodservice (adapted weights, optimized shelf life, accessible prices) allows you to capture this growth while preserving national brands in value-added segments.