As inflation puts pressure on consumer spending, private label food and beverage is well positioned and has regained the momentum it lost during the COVID-19 pandemic.

Key Takeaways

  • Key factors driving the long-term growth of private label food and beverage include consistent demand from consumers searching for value, quality improvements that have enhanced consumer perception of private label products relative to branded products, and expanding private label initiatives among food and beverage retailers.
  • During the height of the COVID-19 pandemic, consumer spending shifted away from private label in favor of national brands as consumers increasingly shopped online—where private label historically hasn’t been well-merchandised—and traded up in food and grocery due to additional government stimulus.
  • In 2022, consumers’ pandemic-era spending shifts toward branded products began to reverse as the influence of stimulus money wore off and inflation and interest rates put pressure on consumers’ balance sheets. Private label is gaining market share relative to national brands as buyers switch to less expensive options and opt for more value-driven retail channels.
  • William Blair’s consumer and retail investment banking team is bullish on private label food and beverage M&A activity in the near term given the non-cyclical and nondiscretionary nature of many of these businesses. Demand could come from large food and beverage companies looking to bolster their private label offerings and financial sponsors seeking to tap into private label’s industry tailwinds.