Kroger expects private brands to further growth in 2025

CINCINNATI — With consumers still hunting for more value, The Kroger Co. has fueled steady expansion of its Our Brands private label portfolio, which the supermarket giant sees as a traffic driver and margin enhancer.

In fiscal 2024 ended Feb. 1, Cincinnati-based Kroger rolled out more than 900 new private brand products, including 370 new fresh items. The year featured the debut of Field & Vine, a new brand of regionally grown berries, as well as the launch of meal bundles under the Simple Truth organic and natural brand.

“Our Brands had another strong quarter, with sales outpacing national brands, led by growth in our most premium brand, Private Selection,” interim chief financial officer Todd Foley told analysts in a March 6 conference call on fourth-quarter and full-year results. “Encouragingly, our positive sales trends were broad-based across many of our food categories during the quarter.”

Kroger’s 2024 Our Brands expansion built on the 700-plus new private label items introduced in fiscal 2023, which included the launch of the Mercado Hispanic products brand. Also in 2023, the retailer added more Mercado offerings and expanded the Smart Way budget-priced brand, which launched in September 2022.

Overall, Our Brands now encompasses more than 13,000 items and generates $30 billion in annual sales. The products are made in 35 food production plants operated by Kroger.

“Our Brands is an important differentiator for our business, providing Kroger the ability to offer unique and high-quality products at an exceptional value,” Foley said. “We expanded our multi-tier Our Brands product portfolio in 2024, resulting in more than 90% of customer households purchasing Our Brands items last year.”

In cultivating its private label portfolio, Kroger has “built distinct brands that are customer favorites,” Foley said

“We’re always listening to our customers to understand how we can create more offerings to better meet their needs,” he explained, noting that Kroger leverages its “proprietary customer insights” to spur innovation. “We look to create destination items that can only be found at Kroger, differentiating ourselves from competitors and national brands. Last year, we introduced Field & Vine, a new brand offering regionally grown berries. We also began refreshing existing product lines and rolling out new packaging, which reinforces product quality and improves shoppability.”

Foley described Our Brands products as “priced well below national brands at equal or greater quality.” That positioning aligns with shoppers’ current perceptions of grocery store brands. In its recent US CPG Private Label Story report, market research firm Circana noted that consumers no longer deem private labels as lower-cost, lower-quality options, as 69% of those polled said they view private brands as similar or superior to national brands.

Kroger’s Our Brands roster “has been a staple in what we go to market with because it hits so many sweet spots,” Foley said. “It delivers great quality at a value to our customers and, especially in this environment, that’s huge. It’s a margin enhancement mechanism for us because of the (price) spread with national brands on all of those and it gives us a point of differentiation and distinction, with the innovation to give our customers something they can’t get anywhere else. So it’s kind of the ultimate triple play.”

Private label pricing versus national brands has held steady at about 20% cheaper, the Circana study said. In food and beverages, the mainstream price tier accounted for 46% of private brand dollar share, compared with 32% for the value tier and 22% for the premium tier.

Kroger conducts “deep dives” across product categories to “make sure we understand where we stack up against national brands and where there’s substitutability or replaceability relative to national brands where Our Brands might be able to be featured,” Foley said.