Private label brands were the "second choice" in American supermarkets for years—cheap, functional, but not exactly desired. They were the ones Americans grabbed when they were short of cash, not when they craved. Fast-forward to 2025, and the numbers have been reversed. Private label growth in US grocery stores hasn’t only picked up pace, but are now rewriting the competitive calculus between consumers and national brands.

Private label's boom era

Private-label dollar sales in the US grew 4.4% during the first half of the year to June 15, 2025, above the corresponding period last year, according to new data from the Private Label Manufacturers Association (PLMA). Private-label unit sales also rose by a modest 0.4%. US national brands, on the other hand, had dollar sales rise by just 1.1%, while unit sales dropped by 0.6% during the same period.

Private-label market share also reached a record high. Dollar market share was 21.2%, unit market share was 23.2%. PLMA estimates private-label sales to reach $277 billion in 2025, up from last year's record of $271 billion. That would be the third year in a row private-label has outgrown national brands in dollar and unit selling growth.

What was once a compromise purchase is now a deliberate buy by tens of millions of American consumers. Retailers have shifted store brands from the back burner to the front burner, and consumers increasingly see them as equivalent—with or even superior to—traditional packaged foods.

Why private label is emerging victorious now

The pandemic years compelled consumers to experiment as supply chain shortages reduced shelves to empty space where they previously filled them with known brands. Not only were store brands less expensive, many consumers discovered, but similar in quality. Add the inflationary stresses of the last two years, and private label was the clear victor.

It's supported by a recent Food Marketing Institute (FMI) survey: 71% of American consumers now compare private-label quality to or better than national brands. The retailer's reputation is important. Trader Joe's or Costco fans will not hesitate to try their private-label products because they know the retailer's reputation is transferred to the store brand.

To retailers, private label means healthier margins and healthier profits. While national brands typically return 25–35% margins, private label typically returns 40% or more. That margin advantage is the reason chains Target, Kroger, Aldi, and Costco are doubling up on expanding store brand lines.

Five Trends Enabling Private Label Growth

1.      Premiumisation at scale

Store brands are no longer simply value propositions. Kroger's "Private Selection" and Aldi's "Specially Selected" are focused on rich flavor, upscale packaging, and restaurant-quality products.

2.      Channel-driven innovation

Kirkland Signature of Costco accounts for approximately one-third of Costco's sales, and Target's "Good & Gather" is a lifestyle brand. Aldi and Trader Joe's, each with approximately 90% SKUs private label, show how far a retailer can push the model.

The "dupe" effect Social media has spurred the popularity of store-brand "dupes" that recreate national brand favorites at reduced prices. TikTok and Instagram comments tend to create frenzy buying of Trader Joe's snacks or Aldi's desserts.

3.      Transparency and sustainability

Shoppers expect store brands to meet the same nutritional and moral requirements as national brands. Whole Foods' "365" brand and Walmart's traceable produce programs are just two examples of how private labels are leading the way here.

4.      Product development data-driven

Grocers with strong loyalty programs and advanced analytics, such as Walmart's Luminate platform, can identify trends in real time and respond more rapidly than most consumer packaged goods (CPG) companies.

5.      Consumer perception: The gap in quality is narrowing

The old cliche—that store private label is cheap quality—is disappearing fast. NIQ's 2024 Brand Score Study revealed that 60% of American consumers have faith in store brands and 71% think they are as good as or better than national brands in quality. Gen Z and Millennials, especially, are less brand-loyal to heritage CPG names and more willing to try fashion-forward, value-priced alternatives.

What does this mean for national brands?

Legacy brands still dominate the majority of grocery shelves, but they cannot afford to ignore private label growth in US grocery stores anymore. In order to maintain their share, national brands must:

·         Lean into innovation: Lead with unique products and R&D that cannot be easily copied by retailers.

·         Decrease development times: Bring new tastes, packaging, and packs to market more rapidly.

·         Defend category leadership: Remain value-added products-focused and avoid a race-to-the-bottom price war.

·         Shift to strategic alliances: Certain makers already co-produce store-brand items for retailers to preserve relationships and drive additional revenue.

Private label challenges on the horizon

In spite of the momentum, dangers exist. Private-label gains are muted by economic upswings as customers return to tried-and-true standbys. Most store brands are founded on copying national brand innovations rather than leading the way, which would check growth if trend pipelines get drained. Moreover, a single dud product can taint the reputation of a whole retailer's private-label line.

The path ahead

Private label is no longer a supporting actor in the US grocery market—it's a force to be reckoned with. Premiumisation, retail confidence, and social media frenzy are propelling growth, and private-label brands now shape customer behavior unimaginable a decade earlier.

For national brands, the message is innovate, adapt, or lose shelf space. For retailers, the challenge is enormous—better margins, greater loyalty, and greater control over their supply chain. The battle between store brands and national brands is far from won, but the wind is firmly in store brands' sails. As private label growth in US grocery stores continues, tomorrow's grocery aisle will be greatly different from the one consumers have grown up with.