U.S. consumer brands lose share as private labels and insurgents pressure sales

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U.S. brands lose share

Highlights

Kraft Heinz, General Mills, and other large consumer brands report contracting North American sales volumes, with U.S. bricks-and-mortar retailers selling 9.3bn fewer units versus five years ago.
Private-label products now represent over a quarter of U.S. food and consumer packaged goods sales, with NielsenIQ noting two-thirds of Gen Z view them as equal to national brands.
Retail media sales in the U.S. are expected to rise 20 per cent to $73bn in 2024, increasing supplier costs as established brands boost influencer and AI-driven marketing to defend market share.

Volume pressure builds across consumer staples

As reported by the Financial Times, the squeeze on established consumer packaged goods companies is showing up in weaker volumes, flat sales trends and lagging share performance across much of the sector.

Kraft Heinz says its North American sales volumes have contracted in nine of the past 10 years and continue to slide this year. Similar pressure is affecting Conagra Brands, General Mills, JM Smucker, PepsiCo and Colgate-Palmolive, while the S&P consumer staples sub-index has risen just 14 per cent since early 2023, far behind the broader S&P 500.

Research cited in the report shows U.S. bricks-and-mortar retailers sold 9.3bn fewer units of food and consumer packaged goods over the past 12 months than five years earlier. Private-label products now account for more than a quarter of total sales, and Bain and NielsenIQ analysis indicates volume declines accelerate in 2026, with sales down 2 per cent year over year in most months since February.

At the same time, smaller branded challengers are taking a disproportionate share of growth. Bain says the 100 insurgent brands it tracks capture 36 per cent of last year's dollar sales increase in consumer products, despite their relatively small share of the overall market.

Kraft Heinz chief executive Steve Cahillane is responding with a renewed push behind legacy brands, backing that effort with $700mn after pausing plans to break up the company. More than a third of that sum is going to marketing, including a July partnership with Walt Disney that puts Heinz ketchup and Philadelphia cream cheese on menus at Disney theme parks and cruise ships and brings Disney characters on to Kraft Heinz packaging.

Retailers gain leverage as shoppers and media fragment

Retailers are benefiting from tighter household budgets and changing consumer perceptions of store brands. On Walmart.com, a 7.25-ounce box of Kraft macaroni and cheese sells for $1, while a comparable Great Value product sells for 64 cents, highlighting the price gap facing lower-income shoppers.

Private label historically holds a smaller share in the U.S. than in markets such as the UK, Germany and Spain, but that is changing as Aldi expands and larger chains improve quality and premium positioning. Walmart is removing synthetic dyes from its own-label food brands and has launched Bettergoods, while Costco continues to expand its premium Kirkland Signature range. NielsenIQ says two-thirds of Gen Z consumers see private-label goods as just as good as national brands.

Consultants and executives say retailers also gain from stronger negotiating power and new manufacturing options. Contract manufacturing capacity expands after years of low interest rates and investment incentives, making it easier for chains to copy innovations without owning extensive food production assets. Some branded groups even produce private-label goods themselves, blurring the line between supplier and competitor.

Large companies are also contending with a more fragmented advertising market. Procter & Gamble says it is harder to reach consumers efficiently, while retail media sales in the U.S. are expected to rise 20 per cent this year to $73bn, according to eMarketer, pushing suppliers to spend more for visibility on retailer platforms. Groups including P&G and Unilever are increasing their use of influencers, TikTok and AI-driven marketing tactics to defend share.

Even so, established brands retain scale advantages in manufacturing, distribution and retailer relationships, and many also have the balance sheets to acquire fast-growing challengers. PepsiCo, for example, spends $3.2bn on deals including Siete Foods and Poppi, underscoring how incumbents are using acquisitions as well as marketing to respond to the sector's reset.

In our earlier article, we examined how U.S. retailer earnings are becoming a key test of consumer demand as spending patterns split between higher- and lower-income shoppers. We also highlighted why Walmart is being watched closely, including the role of its higher-margin Walmart Connect advertising business in supporting profits as broader retail momentum cools.

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