Unit sales for private label grew by 2.3%, while national brands saw a decline of -0.6%, capturing a 23.1% unit share.
Unit sales for private label grew by 2.3%, while national brands saw a decline of -0.6%, capturing a 23.1% unit share.
Despite this impressive momentum, the U.S. private label market is still underpenetrated compared to global markets, where private label holds over 30% of share. This leaves untapped potential for manufacturers and retailers alike.
While global markets have long embraced private label as a trusted alternative to national brands, U.S. consumers are beginning to see store brands as more than just budget options. The rise of premium private label products—like organic beverages, functional drinks, and those with sustainable sourcing—is closing the gap, creating exciting opportunities to innovate and build high-value, differentiated offerings.
With consumer perceptions shifting and inflation pressures pushing shoppers to reconsider where they spend their money, the time is now for private label to step up and seize the opportunity to lead the next wave of premium, functional, and sustainable innovation in the U.S. market.
Economic Indicators Contributing to PL Growth
Key Trends Shaping Food & Beverage Innovation
Consumer expectations of premium have evolved from indulgent to functional, with a growing focus on health, performance, and sustainability.
- Protein Power: Demand for muscle health, satiety, and immunity fuels protein fortification across categories.
- Gut Health Gains: Prebiotics, probiotics, and fiber enrichment are transforming flavored waters, juices, and functional beverages.
- Sugar Shift: Alternative sweeteners and reduced-sugar formulations address rising health concerns.
- Hydration 2.0: Boosted hydration innovations enhance absorption, benefiting athletes and active consumers.
- Sensory experiences: Texture, mouthfeel, and visual appeal elevate the drinking experience.
- Sustainability Matters: Consumers seek responsibly sourced ingredients and eco-conscious production.
As these trends accelerate, brands that innovate with purpose will lead the future of food and beverage.
Key Trends Shaping the Functional Beverage Space
Kombucha: A Category in Transition
- While 92.2% of sales come from the top five brands, the category is experiencing mixed performance.
- Health-Ade is the only major brand gaining ground (+16.8% YoY), while others, like KeVita (-13.4%) and Humm (-23.8%), are losing share.
- Kombucha’s functional benefits align well with growing demand for gut health, hydration, and natural energy—key drivers for shoppers prioritizing wellness.
- GLP-1 Medication Impact: With millions of Americans using GLP-1 drugs (e.g., Ozempic, Wegovy), functional beverages could see increased demand as part of post-medication lifestyle choices.
The Rise of Cold Brew: A Must-Have for Retailers
- Cold Brew now accounts for 44.1% of all refrigerated RTD coffee sales, with a solid 8.3% CAGR.
- Stok (+15.5%) and Bizzy (+28.3%) are fueling category growth, while Califia Farms and Chameleon struggle to keep pace.
- Consumer sentiment is strong:
- 51% of Americans believe coffee is good for their health.
- 21% drink cold brew weekly.
- 40% of Gen Z prefers cold brew, making this a high-potential segment with long-term loyalty opportunities.
Functional Soda: The Next Big Disruptor
- Functional soda is shaking up the refrigerated and traditional CSD aisles, with an explosive 126% 3-year CAGR.
- The success of Poppi and Olipop has led to increased competition, including:
- Coca-Cola launching Simply Pop after an attempted Poppi acquisition.
- Suja revamping nostalgic brand Slice into a functional soda.
- Health-Ade re-entering the space with SunSip after past iterations fell flat.
- Consumers are looking for low-sugar, gut-friendly, and nostalgia-driven beverages, making this an essential segment to watch.
- Retail Implications: As functional soda challenges traditional refrigerated and shelf-stable beverage formats, category buyers should prepare for increased competition and dynamic shifts in planogram strategies.
Shaping the Future: Private Label’s Growth and Consumer Shifts
Between sales numbers and growth potential, private label is shaping the future of grocery, outpacing national brands. Consumers are no longer choosing based on price alone; they’re looking for quality, transparency, and innovation at a fair cost. This shift is especially evident in the functional beverage space, where private label is making a major impact.
Consumers are reaching for beverages that hydrate, support gut health, immunity, and overall well-being. All of this is happening against a backdrop of broader economic shifts—inflation is easing to 3.0%, and GDP growth remains steady at 2.7% in 2025, giving consumers more spending power. Still, grocery prices remain high, making value perception more critical than ever. Retailers who recognize this shift and offer private-label beverages that balance functionality, affordability, and quality will be best positioned to meet evolving consumer expectations and drive growth in the year ahead.
