The number of consumers using private label food and beverage products continues to rise, but U.S. consumers are losing their enthusiasm for these value-oriented options.  

The NPD Group says its food and beverage research shows private label’s share of household servings was 18% in 2000 and reached 27% in 2011. In contrast to steadily increasing usage, satisfaction with private label foods meeting consumers’ needs has dipped from 32% in 2009 to 24% in 2012.

Officials say consumers’ recent increased use of private label foods and beverages may have been more a matter of necessity—as a result of the economy and higher grocery prices—than deliberate intention.

In 2009, Mintel released a related report, “The Evolution of Private Label–Does Brand Name Really Matter?” In it, researchers found 34% of adults said they intended to purchase more private label foods vs. a year ago. According to 2012 surveys, that percentage has dropped to less than a quarter of adults.

NPD says this does not mean private label products have failed to make progress during the last decade, since the report finds that two thirds of adults say store brands’ quality is much better today than it was five years ago.

NPD says its latest report examines why private label servings may be up, but intent to purchase more private label is down. The research firm says it finds, among the explanations, that consumers’ store brand name awareness and identification remain quite low. For example, 25% of shoppers are unable to identify the top-selling store brand as a store brand.

The report also found that while more private label end-dishes are being served, consumers’ loyalty to private label is still strongest in categories that are mostly used as ingredients. Flour and butter top the list of private label-loyal categories. In contrast, categories where there is a stronger loyalty to name brands are very likely to display the brand to the user. Examples in these categories include frozen dinners and entrees, yogurt and carbonated soft drinks.

“The question is if food inflation declines and, at the same time, the economy improves, will consumers return to the name brands they know and trust,” says Darren Seifer, NPD food and beverage industry analyst and author of the report. Nevertheless, name brands need to be aware of private label’s continued popularity. pf