Private label functional foods: overview
- Private label functional foods increasingly challenge brands across Europe
- Private labels hold 52% share of high-protein products
- Branded high-protein and high-fibre products currently grow faster
- Retailers expand ranges with added nutritional benefits
- Private label has the potential to gain long-term functional advantages
The transformation of private label in recent years has been truly something to behold.
Once considered a cheaper, lower-quality alternative to brands, it has premiumised and delved into numerous new categories, and is no longer seen it as a compromise on the quality offered by brands.
One category into which private label has ventured is functional foods.
The functional category once aimed to “give brands fresh reasons to be talked about”, says Andy Wardlaw, chief ideas officer for market research company MMR Research, offering them “breathing space” in the face of private label’s onslaught.
Yet now, private label is going functional as well.
Private label goes functional
“We are seeing more functional foods on shelves across Europe for both brands and retailer private labels,” says Ananda Roy, senior vice president of global thought leadership at analytics platform Circana.
Private label functional foods, he suggests, are competing with branded products, tapping into consumer demand for healthier, more nutritional foods.
“Increasingly innovation is coming from private labels; they are not waiting for brands to define the market.”
Private label products that boast high protein content, for example, currently make up a 52% share of such products, compared with 48% for branded products, according to data from analytics company Nielsen IQ. While branded products dominate the high-fibre category, private label makes up a substantial minority.
Nevertheless, in both categories, branded products are growing faster than private label.
What private label products are functional?
Private label functional foods are being introduced across categories, explains Circana’s Roy.
Products such as high-protein snack bars, high-protein ice-cream and coffee, and liquid meal replacements with added protein, fibre, vitamins, probiotics, peptides and collagen are seeing private label versions.
Many retailers are looking at foods associated with ‘gut health’ as well.
One example of a private label functional food is Marks & Spencer’s Brain Food range, which includes ingredients such as omega-3 (DHA), iron, zinc, iodine, folate, and vitamin B12.
Can private label win?
Currently, branded products boasting functional benefits such as high protein and fibre are growing faster than private label.
However, MMR’s Wardlaw predicts that private label may stand a chance of winning out over brands in the functional category overall.
“We don’t think brands can rely on this functional era for long,” he says. “I believe that private label is even better placed to win this current functional era.”
Private label is “not weighed down by the trappings of brand heritage and brand imagery.” This, he suggests, gives it an advantage in the functional space.
Furthermore, he says, transparency in areas like protein content is making it easier for consumers to contrast private label directly with brands, providing numerical amounts to compare.
In short, he says, “brands cannot win”.
Whether or not this will ultimately be the case, it is clear that private label is competing in the functional food space. Its evolution is not over.
