US shoppers are regaining their taste for the national brand groceries that some steered away from during the recession, providing evidence of an improvement in consumer confidence.
Kroger, the largest US traditional supermarket, said on Monday it had seen robust fourth quarter growth of national brands. David Dillon, chief executive, described this as “another positive sign” of an improving consumer mood.
During the depth of the recession, sales surged of Kroger's lower cost own brand goods, such as Kroger Value Wheat Puffs Cereal, outstripping established national brands as shoppers focused on saving money.
National and private label brands grew at about the same speed during its fourth quarter, ending on January 30.
Mr Dillon noted that some of the national brand growth resulted from more aggressive promotional spending by manufacturers. But he said it was also in line with other signs of renewed discretionary spending, such as stronger sales at Kroger's Fred Meyer jewellery chain, and improving sales of flowers and speciality coffee.
“I actually take it as one sign of some glimmer of hope of improvement,” he said, of the stronger national brand performance. Kroger has the largest private label business of the three largest US supermarket chains. Private label sales account for 27 per cent of its sales, or more than $12.5bn.
Separately, Walter Robb, co-president of Whole Foods Market, said its more than 270 natural and organic supermarkets were seeing a similar slowdown in sales growth for its private label products. As the recession hit, Whole Foods private brands growth rose to four times the rate of national brands, he said but had slowed to more normal rates of 2-2.5 times larger. “It's still growing faster, but the brands are starting to come back. Which I would say would be another indication that . . . it is coming back towards a more appropriate balance between private label and branded goods.”