Supermarkets are battlegrounds when it comes to shelf space. Well-known iconic products we have grown up with sit on one side, with quietly confident private label on the other…once seen as cheap versions, now enjoying a major transformation.
We’re witnessing a shift, whether in consumer preferences or the way retailers are prioritising margins and shelf space. There is a dynamic push and pull where price, perception, and performance all play a part. The question of dominance may be a stretch; the new bet is on how each earns its place in the modern basket. This isn’t a war - it’s a negotiation, one that plays out in real time with every scan at the till.
So, where should grocers and shoppers place their bets? The answer is more nuanced than the logic of ‘brand = quality, private label = price’.
The rise and rise of private label
According to NielsenIQ, private label now account for a third of total FMCG sales in the UK, with sales surpassing £45 billion in 2024. While some attribute this to inflation, penny pinching has never been the sole reason. Kantar data reveals that about 72% of the UK shoppers believe that private label ranges offer the same quality as branded alternatives.
On paper, private label yield better profit margins due to tighter supply chain controls and near to nothing marketing costs. But going all in on private label may risk being perceived as ‘cheap’.
The big names still have game
A YouGov study found that 67% of UK consumers would miss their favorite brands if they disappeared, and 69% of UK adults consider brand trust when making purchases. There is a practical reason why Heinz, Weetabix, Walkers and Coca Cola remain category captains, carrying cultural clout, with decades of trust and innovation.
Categories linked to performance or nostalgia, like healthcare, baby food or pet care, tend to dominate and drive loyalty. Hero brands pour money into R&D, in-store activations, above-the-line marketing and digital-first campaigns, ensuring they stay top of mind.
The 2024 Olympic and Paralympic Games Coca Cola campaign “It’s Magic When the World Comes Together” clocked in at over 20 million pounds, and was credited with lifting its value share by 4.2% in Q1.
Meanwhile, Consultancy.uk recently reported that 63.8% of Brits cite costs as their primary concern, down from 72.3% in 2023, suggesting a shift towards value, not just price.
SAP Emarsys’s recent research adds that 58% of UK consumers exhibit ‘silent loyalty’- quietly allocating basket space to the brands they know and trust, without shouting about it.
The historical pivot
Private label weren’t always the contenders that they are today. Their journey in the UK, from basic bargain-bin staples to serious shelf challengers, began in the 1960s and 70s ,when they were only seen as a subpar substitutes of the national brands.
Kwik Save’s ‘No Frills’ was a range so bare bones that it became shorthand for rock bottom quality. Fine Fare’s yellow pack with garish yellow packaging, became synonymous with low-cost, no-frills grocery essentials. Another familiar face in the independent stores during the 80s - Happy Shopper, became a symbol of ‘cheap and cheerful’ goods - functional, but rarely desirable.
The goal was to beat brands on price, not on quality.
But the end of 1990s saw Tesco, Sainsbury’s, Asda and Morrisons introducing tiered own-label, keeping in mind to serve the shopper -from value conscious to premium-seeking. The iconic rollout of Tesco of its Value, Standard, and Finest ranges set a new blueprint for private label strategy. With Tesco’s launch of Finest Range in 1998, private label were no longer limited to instant noodles and tinned tomatoes. They now included hand made crisps, luxury ready meals, regional cheeses and even artisan breads.
Sainsbury’s soon followed the trend with its ‘Taste the difference’, Asda with ‘Extra Special’, and Morrisons with ‘The Best’.
Once overlooked as budget-only chains, discount retailers like Aldi and Lidl stepped confidently into the pool and launched ‘Specially Selected’ and ‘Deluxe’ ranges, respectively.
Fast forward to today, private label are leading in many categories with bolder designs, clearer stories and better quality perception.
The new concept of ‘blended basket’
Consumers don’t always stick to one side. A recent IGD study has revealed 83% of us dance between the two based on occasions, category and promotions. Look closely and you might spot a branded ketchup beside own-label chopped tomatoes, or Kellogg's for breakfast and supermarket muesli for the weekends.
But often the cultural factor taps in. Branded products are still our little ‘treats’- affordable indulgences carrying emotional weight. A beloved cereal, a favorite chocolate bar, or even a premium sauce brand is harder to replace when they are tied to nostalgia. Smart alternatives haven’t yet carved their place in the ‘core memories’ aisle.
Innovation has a new address and it is shared
Disruptive innovation and category creation gives brands an edge. Today, retailers are no longer mere stockists, they’re creators too. With access to exclusive shopper data, trend forecasting and several internal development teams, they are bringing innovation in house.
Products like Huel, Oatly and Tony’s Chocolonely didn’t just ride trends-they helped define them.
According to Mintel, a total of 61% of all the new category launches in 2023-2024 came from branded companies, especially in fast evolving spaces like low-alcohol beverages, plant based options and functional foods.
So, what is the verdict?
If you are a retailer, your private label must behave like a brand - with design flair, clarity and purpose.
If you are a brand, you need to prove your added value- not just through proven heritage but also through constant real innovation and emotional connection.
At Mercieca, we believe that the future lies in honest storytelling and smart segmentations.
There is space for both on the shelf. The real question is:
Are you giving each the space to shine?
Reference Note: Sources by NielsenIQ, Mintel, YouGov, IGD, SAP Emarsys, Consultancy.uk, IPA dataBANK