Private label products in Latin America

Private Label Products in Latin America: A Growing Trend and Market Expansion

In recent years, private label products have steadily gained popularity across Latin America, significantly impacting the retail market. By 2023, these products accounted for 10-15% of grocery sales through modern retailers, with e-commerce boosting this growth. For instance, Carrefour Brazil saw its sales from private labels rise from 9.8% in early 2022 to 13.7% by late 2023. Although still behind Europe and North America, this growth signals strong potential for further expansion in the region. As a result, the outlook for these products in Latin America remains promising.

Key Factors Driving the Growth of Store Brands in Latin America

Several factors are contributing to the rise of private label products in Latin America. These include economic pressures, evolving retail landscapes, and shifting consumer preferences. Therefore, store brands are becoming an increasingly attractive option for both consumers and retailers.

The Impact of Inflation on the Demand for Affordable Alternatives

A major factor behind the growth of these products is inflation. With prices rising across the region, consumers are looking for more affordable alternatives. In this context, private labels provide a cost-effective solution without sacrificing quality. This trend is especially evident in countries like Argentina and Brazil, where inflation has significantly impacted household budgets. Consequently, private labels are emerging as a smart choice for consumers seeking both value and reliability.

Retail Shifts and the Growing Popularity of House Brands

The retail environment is rapidly changing, with modern retailers gaining ground over traditional grocery stores. Discount chains, such as Colombia’s D1 and Ara, are capitalizing on the growing demand for affordable alternatives, which frequently include house brands. In particular, this shift in consumer behavior is one of the most significant factors contributing to the growth of store brands in Latin America. Thus, private label products are gaining a larger market share.

Retailer Advantages from Offering Store Brands

Retailers stand to benefit greatly from offering private label products. Not only can they improve their profit margins, but they also gain more control over the supply chain. Moreover, store brands allow retailers to build stronger relationships with customers by providing high-quality, budget-friendly alternatives to national brands. This helps retailers meet the evolving needs of price-conscious consumers.

The Rise of Premium Store Brands in Latin America

Another significant trend is the increasing popularity of premium store brands. As these products improve in quality, they are attracting a wider consumer base. In response, retailers are now able to offer both budget-friendly and premium alternatives, appealing to a broader range of shoppers. This change broadens the market for private labels, showing that they are not just for budget-conscious shoppers anymore.

E-Commerce and the Expansion of Store Brands

The rise of e-commerce has played a key role in expanding the reach of store brands. Online shopping makes it easier for consumers to compare prices and find quality alternatives. Furthermore, retailers benefit from lower operational costs, enabling them to offer more competitive prices on their private label products. As a result, e-commerce is further accelerating the growth of these products across Latin America.

Conclusion: The Bright Future for Store Brands in Latin America

In conclusion, private label products are steadily gaining popularity in Latin America, driven by economic pressures, shifting consumer behavior, and changes in the retail environment. As inflation persists and demand for affordable options grows, store brands are likely to expand even further. Moreover, with improvements in both quality and variety, these products will become even more attractive to consumers. Retailers who focus on quality, price, and consumer loyalty will be well-positioned to succeed in this dynamic market.

Text adapted by: Rhennan Caldeira

Source: Euromonitor International