The Rise of Private Label – Volatility Accelerates Growth Across All Segments
| After the COVID-19 pandemic and the start of the Ukraine war, consumer sentiment started to gradually improve worldwide through the start of 2026, driven by decreased energy prices, moderate inflation and stabilizing food prices. However, this period of ease has seen periods of reversal with the Russia / Ukraine Conflict and the ongoing Operation Epic Fury. These and other factors have driven volatility in energy prices, supply chain disruptions and decreased overall consumer sentiment. With energy price increases likely to flow through to inflation across all goods, household budgets are squeezed on multiple fronts, and consumers will remain price sensitive. Consumers will focus on essential purchases and will be less driven by brands and discretionary luxuries.
Private label goods are the obvious answer for value-conscious consumers around the world. Today, however, quality perception, category credibility and shopper trust increasingly matter alongside price. Private label is no longer seen purely as low-cost alternative, as retailers increasingly view private label brands as a critical element of their competitive differentiation. Retailers are investing more actively in their own brands through innovation, packaging and premium shelf space placement. The article below highlights attractive trends realized in the sector and the potential for continued strong momentum, both for current sponsors seeking to maximize portfolio value and for firms looking to enter this increasingly attractive market. |
Summary
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Lincoln International’s experts analyze why retailers are investing more actively in their own brands through innovation, packaging and premium shelf space placement.
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Private Label Sector Growth
The private label market continues to grow and offer unique business opportunities for services and product players in the different categories, driven by multiple factors and trends.
Inflation Creates Price Sensitivities
Long a European phenomenon, private labels have grown in popularity across global markets as consumers search for value. Consumers are increasingly focusing on 1) value for money in home categories, 2) Unique new products and flavors, 3) lower-cost alternatives if perceived as having the same value and 4) consuming better-for-you food.
As highlighted in the following chart, consumer inflation has subsided from its peak in 2022 but is expected to increase as energy cost rises impact the price of goods and services more broadly.
| Increasing Inflation Level for EU 27
Source: ECB, Statista |
Development of EU Natural Gas Prices (Indexed to January 1, 2019)  Source: S&P Capital IQ as of 25th March 2026 |
Since the beginning of 2026, the price for EU natural gas has increased by ~88%, predominantly driven by macroeconomic shocks.
Retailers Push Non-Food Categories
Discount and value retailers are expanding private label penetration by leveraging competitive pricing and frequent promotions, shifting a larger share of market demand into standardized, high-volume tenders with their suppliers.
The significant growth of value retailers and their private label catalogues is observed by ongoing category growth outside of food. Discount food retailers are offering non-food products, and value retailers are emerging in non-food categories, like Action’s exponential growth.
| Global Store Portfolio
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Differentiating Through Quality and Variety of Goods
Discounters focus on a differentiation strategy for their own private label assortment: entry, core and premium. Private label retailers offer a variety of ingredients and claims across a broad spectrum of subsegments, in every category from food to home textiles to personal care. This strategy is necessary to meet demand and foster consumers’ perception of equal or superior to the quality, value and options offered by brands.
This all leads to consumers believing private label goods offer equal or superior quality, value and variety compared with branded options.
| Brand vs. Private Label Attribute Comparison
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Retailer Focus on Cost Management
At the same time retailers are focused on differentiating themselves with private label programs, they are also increasingly focusing on their own internal cost structures. Retailers have been decreasing their staff of merchants / buyers for several decades, leaving fewer buyers to do the same amount of work.
This trend has pushed retail merchants / buyers to lean heavily on private label suppliers for value driving functions like product ideation, formulation, planogram planning and point of sales data analysis. Retailers’ increasing reliance on private label manufacturers creates significant switching cost and customer stickiness.
Investment Opportunities & Sector Outlook
The overall market share trend is clearly favorable for private label, with a strong development in unit growth. In the same time frame, branded goods grew in value due to inflationary price increases, not in volume.
In a recent McKinsey survey, 28% of respondents report purchasing more private label products today than two years ago. This figure increases to 34% among U.S. respondents, the highest share by region. Several factors are contributing to this rise.
| Market Share Trend (%)
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Internationally, volume growth accelerated in the U.S. to almost to 23.5% in 2025. Private label goods have now outpaced the growth of national brands in both dollar and unit sales growth for three consecutive years.
In Europe, Top 7 countries have shown a similar direction, a trend which Lincoln’s experts anticipate continuing through 2026.
| Private Label Value Share Change 2023-2025
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Private Label Volume Share Change 2023-2025
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While the private label market continues to grow and offer unique business opportunities for services and product players in the different categories, high structural entry barriers offer financial and strategic investors an attractive opportunity to invest. The relevant entry barriers are driven by retailer relationships, switching costs and compliance needs.
Barrier Strength
Conclusion
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Price awareness remains key among consumers: Ongoing inflation and energy prices drive consumer behavior |
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Quality parity is the tipping point: Many consumers now believe private labels are “just as good” as brands. |
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3 |
Value advantage reinforces similarity: Lower price + similar quality → rational substitution |
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Trust gap is shrinking: Retailer brands gain trust, reducing traditional brand advantage. |
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5 |
Increasing retailer reliance on product manufacturers |
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6 |
Behavior confirms perception: Growth in private label share reflects real-world acceptance of equivalence. |
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