A Statistical Guide to Today’s Store Brands - …

1 A Statistical Guide to today s Store Brands Copyright 2016 PLMA Source: Nielsen/PLMA Copyright 2016 PLMA EXECUTIVE SUMMARY Growth continues for Store Brands as sales set new records across major retail channels Store brand sales in the reached $ billion in 2015, an all-time record. That was an increase of $ billion over the previous year. In just the past two years, annual sales of Store Brands have increased +5%, or $ billion, in the combined channels. Store brand dollar share came in at , also the highest mark ever. Across all the major retail outlets which combines annual sales for more than 700 product categories and subcategories in supermarkets, drug chains, mass merchandisers, the club channel, dollar Store channel and military exchanges Store Brands sales grew by +2%, a performance that equaled that of the national Brands , which also rose +2%.

2 Data for PLMA s 2016 Private Label Yearbook were compiled by Nielsen for the 52 weeks ending December 26, 2015. Numbers and percentages have been rounded off by Nielsen where necessary and totals may exceed 100% in some instances. Source: Nielsen/PLMA Copyright 2016 PLMA EXECUTIVE SUMMARY Including all Brands , the combined channels accounted for two-thirds of a billion dollars in food and non-food grocery items sold in 2015. Sales across the board increased by $ billion, or +2%. Looking at unit sales, both Store Brands and national Brands were off fractionally in the combined channels, less than a half percentage point each. Unit sales of Store Brands were almost 44 billion, nominally even with last year. As a result, Store brand unit share held at across all outlets combined. SupermarketsDrug ChainsAll OutletsStore Brands Market Share Dollar ShareUnit ShareIn individual channels, the results for 2015 were mixed.

3 In supermarkets, total sales of Store Brands were $ billion, roughly on par with the prior year. (Over a two-year period, Store brand sales are up in the vast channel by 2%, or $ billion). National brand sales rose Both Store Unit market share for Store Brands was in supermarkets, while dollar share was measured at In drug chains unit share was as dollar share increased to Unit share for all outlets grew to combined and dollar share was Source: PLMA/Nielsen Source: Nielsen/PLMA Copyright 2016 PLMA EXECUTIVE SUMMARY Brands and national brand were off in unit sales. With unit share at , nearly one of every four items sold in the country s supermarkets last year was a Store brand. As for drug chains, Store brand dollar sales rose nearly a percentage point to $ billion, while national Brands fell about a point.

4 In unit sales, both sectors gave ground. $ $ $ $ $ $ $ $ $ 201320142015 SupermarketsDrug ChainsMass, Club & DollarStore Brands Dollar Volume in Billions Annual Total : All Channels Combined $ $ $ Source: PLMA/Nielsen Source: Nielsen/PLMA Copyright 2016 PLMA EXECUTIVE SUMMARY Store Brands spell savings for shoppers Store Brands continue to represent outstanding value to the American shopper. Consumers could save an estimated $44 billion a year by buying Store brand products over national Brands , said a study by the National Bureau of Economic Research that looked into shoppers behavior toward the products. So why are some still choosing the national brand over the Store brand?, asked the report. Because ads are more likely to mislead the least informed buyers.

5 The best informed shoppers were more likely to buy the Store brand over the brand name options. Consumers still look for ways to save money, added a report from McKinsey. While the number cutting back has stabilized, they are still pinching pennies. Throughout the recession they saved money by switching to Store Brands . That trend continues. Consumers are not returning to higher-priced options. Three-quarters say they do not intend to go back to purchasing more expensive Brands . One-third no longer prefer the more expensive brand, having realized that the Store brand offers better value than expected and is of higher-than-expected quality. Source: Nielsen/PLMA Copyright 2016 PLMA EXECUTIVE SUMMARY Ongoing market basket research by PLMA consistently reveals that shoppers can save about one-third on basic grocery and household items in a typical supermarket by opting for Store Brands over national Brands .

6 As most shoppers have come to understand, the difference in price is largely due to the so-called marketing tax, that is, advertising and promotional costs incurred by national brand manufacturers that are passed on to consumers in the form of higher prices. It is estimated that big CPG companies spend about 25 cents of every dollar to build brand equity. Digital advertising is especially growing. The consumer products industry will increase digital ad spending by a compound annual rate of 14% up to 2019, reported eMarketer. The 2016 PLMA Yearbook utilizes data provided by The Nielsen Company for the 52 weeks ending December 26, 2015. The annual compilation has become the benchmarking standard for retailers and suppliers. In it, Nielsen sales and market share statistics are reported for more than 700 food and nonfood product categories.

7 Figures for all outlets come from total supermarkets with annual sales over $2 million, drug chains with annual sales over $1 million, mass merchandisers, club and dollar stores channels, and military exchanges. Source: Nielsen/PLMA Copyright 2016 PLMA EXECUTIVE SUMMARY Looking beyond these traditional outlets and the data available from Nielsen, a more comprehensive figure for annual Store brand sales in food and non-food consumables would include an estimated $20 billion or more in revenues from chains that range from no-frills discounters like Aldi and Save-a-Lot, to specialty chains such as Whole Foods and Trader Joe s, as well as convenience Store . If counted, these outlets would produce a grand total approaching $140 billion in total sales. Even that total does not take into consideration Store brand products sold by chains specializing in office supplies; hardware, tools and do-it-yourself; home improvement, home decor and domestic goods; consumer electronics, baby care, pet care, toys, personal care and sporting goods.

8 These are just a few of the non-grocery retail channels that are marketing a growing variety of Store brand items. Source: Nielsen/PLMA Copyright 2016 PLMA EXECUTIVE SUMMARY Focus on Supermarkets Looking at the eleven individual departments across the supermarket, Store brand dollar share was down in eight of the sectors, ahead in two and even in one. Fresh meats was the best performer; Store brand share was up nearly a point to General merchandise was the other dollar share gainer for Store Brands . In the huge dry grocery department, the biggest in the channel by far, Store Brands were off but only by three-tenths of a point. In terms of unit share, Store Brands were down in nine of the eleven departments and up in two: frozen food and general merchandise. The top ten categories when it came to gains in dollar volume were: Fresheners & Deodorizers; Fresh Eggs; Insecticides & Repellants; Candles, Incense & Accessories; Housewares & Appliances; Buckets, Bins & Bath Accessories; Fresh Meats, Coffee, Grooming Aids and Bottled Water.

9 Of interest, in four of these winning categories Store Brands have single digit dollar shares, but in three the share is well above the average penetration in the channel: Fresh Eggs ( ), Fresh Meats ( ) and Bottled Water (27%). Source: Nielsen/PLMA Copyright 2016 PLMA EXECUTIVE SUMMARY The top ten categories in gains in Store brand unit volume were Buckets, Bins & Bath Accessories; Baby Food; Fresheners & Deodorizers; Feminine Hygiene; Candles, Incense & Accessories; Laundry Supplies; Bottled Water, Cookware, Coffee and Baby Needs. Bottled Water leads the list in overall Store brand unit share at followed by Laundry Supplies, at In overall Store brand dollar sales, the top five categories in the channel were all in fresh and most have extremely high Store brand shares: Milk ($ billion in sales last year; 56% Store brand dollar share), Cheese ($ billion; 39%), Bread & Baked Goods ($ billion; ), Fresh Produce ($4 billion; ) and Fresh Eggs ($3 billion; ).

10 In overall Store brand unit sales, five of the top six were also in fresh and generally sported high Store brand share: Milk ( Store brand unit share), Bread & Baked Goods (35%), Cheese ( ), Fresh Produce ( ) and Fresh Eggs ( ). These results are noteworthy as many industry analysts see fresh sections in the supermarket channel growing faster than other parts of the Store over the next few years. Source: Nielsen/PLMA Copyright 2016 PLMA EXECUTIVE SUMMARY Focus on Drug Chains Across the eleven departments in the drug Store channel, Store Brands gained in dollar share in five and declined in six. In the largest single department, health and beauty aids, which at $ billion accounts for more than half of all channel sales, Store Brands share rose two-tenths of point to Share gains were also recorded in fresh produce (up points), packaged meat (up ), non-foods grocery (up ) and dairy (up ).