Private Label’s Rise Is Not About Price. It Is About the Failure to Differentiate.

Image: Generated with AI — ChatGPT Pro.

For years, leading brands interpreted the growth of private label as a direct consequence of economic downturns. When household budgets come under pressure, consumers look for cheaper alternatives. It seemed like a logical explanation.

However, the data and the evolution of the market show that this is a much deeper phenomenon. In Spain, private label is expected to reach an average market share of more than 52% by 2026, with estimates pointing to 70% by 2035.

Private label is no longer a temporary fallback. It has become the preferred choice for millions of consumers.

The Big Shift: From Price to Perceived Value

Traditionally, the purchase decision came down to a very simple equation:

Leading brand = quality.

Private label = price.

Today, that relationship has changed dramatically. Consumers no longer look only at how much a product costs. They ask whether the price difference is truly justified by the value they get in return.

And in many categories, that question is becoming increasingly difficult for traditional brands to answer.

The constant improvement in private label quality, the attention paid to packaging and the professionalisation of production processes have significantly reduced the perceived gap.

When Quality Stops Being a Differentiator

Another factor is accelerating this transformation. In many cases, leading brands or established manufacturers are themselves producing products for retail chains.

This means that, even if the product is not exactly the same, the perceived distance between a leading brand and a private label product is much smaller than many consumers might think.

The consequence is clear: quality alone is no longer enough to justify significant price differences.

Why Leading Brands Still Matter?

Despite all this, leading brands still hold relevant positions in many categories.

Mainly for four reasons:

• Brand awareness and recognition.

• Tradition and purchasing habits built up over decades.

• Emotional and status-related associations.

• Broader product ranges and greater ability to segment.

However, none of these advantages is permanent. Especially when younger generations are less loyal to brands and more focused on value for money.

The Big Challenge for Manufacturers

The paradox is clear: while manufacturers invest in innovation, marketing and brand building, retailers use part of that knowledge to develop their own alternatives, competing directly with them on the shelf.

Private label is not destroying brands. It is forcing brands to justify why they exist.

Retailers also control key factors such as product placement, promotion and the amount of space available in store.

As a result, many brands are entering a new strategic phase.

• Being well known is no longer enough.

• Having a strong reputation is no longer enough.

• Claiming that the product is better is no longer enough.

Brands need to build competitive advantages that cannot be easily replicated.

The New Brand Battleground

Companies that want to remain relevant will need to focus on:

• Constant innovation.

• Simplifying overly complex portfolios.

• Building communities and emotional bonds.

• Creating differentiated experiences.

• Developing new direct-to-consumer channels.

• Building value propositions that are difficult to copy.

  
  

Because the real problem is not that private label is cheaper.

The real problem is that more and more consumers feel the price difference no longer justifies the difference in value.

And when that happens, the battle stops being purely commercial and becomes a battle for positioning.

A battle in which many brands will have to redefine who they are, what they bring to the table and why they still deserve to occupy a privileged place in consumers’ minds — and in their shopping baskets.