South African households reeling under the high cost of living are switching to no-name brands, which are more affordable and are improving in quality.
Kelly Mac Innes, market insights lead for Nielsen IQ in South Africa, told Business Times many consumers can no longer afford to routinely buy branded products.
"The popularity [of no-name brands] is definitely raised by the cost of living," she said.
"We see that we are still in a relatively high unemployment rate. A lot of the South African economy relies on grants, and it’s due to the high unemployment rate. A lot of the economy is really struggling.
"We know we’ve hit a wage stagnation where the cost of living has gone up higher than wages across the board."
According to Nielsen IQ’s 2025 global outlook on private label and branded products, private labels sales amounted to almost R100bn in South Africa last year, a 7.5% year-on-year increase. They accounted for about 18% of total fast-moving consumer goods sales for the year.
"We see that a lot of people shop on promotion and are looking for a good deal. On average, branded products are up to 26% more expensive than their private label counterparts," Mac Innes said.
She said at least 75% of consumers see private label products as offering good quality, 72% see them as a good alternative to branded products and 39% are now "more likely" to buy private label products than they have been in the past.
Nielsen IQ research found that consumers are becoming more loyal to private label products and end up trusting them more than the average branded label. In many instances private labels are surpassing branded products in growth.
"South Africa has historically been a bit behind the Western countries in terms of private label, but that’s caught up in the past five years. We have seen private label grow and go into new categories of products," Mac Innes said.
She said private label products were broadly divided between typical "no-name products" and "confined label" products, such as Checkers’ Forage & Feast and Simple Truth, which compete directly with a branded label on price and quality.
"We have seen more confined labels coming into play where the retailer has their own brand and they are investing in that brand and ensuring that it becomes a strong product.
"Retailers have invested more into their private label products to the point where people seek out the private label for price, but then become loyal to it because of its quality."
Pick n Pay said it was seeing encouraging year-on-year growth in sales of private label products, which were outperforming branded alternatives.
"This is largely due to our continued focus on quality, affordability, and innovation," the retailer said. "Demand for private label products continues to rise, particularly in the current economic climate, where customers are seeking ways to manage their grocery spend without sacrificing quality."
The retailer said its no-name range, especially in commodity categories, remains a popular choice, with strong customer loyalty. The grocer’s confined-label offerings include In Bloom flowers and plants, Nutriphase for pet food, PnP BRU for soft drinks and The Roastery for speciality coffee.
"Our product developers and technologists work closely with local private label suppliers to ensure consistent quality and price competitiveness," Pick n Pay said. "This allows us to deliver reliable, affordable products that customers can always trust, even in tough economic times."
Shoprite said private labels have been one of the group’s strategic drivers since 2017 and continue to play a central role in delivering value to its customers.
"In the past financial year, private label sales grew 12.8%, contributing 21.3% to our supermarket sales in South Africa, excluding liquor. This is up from 12% six years ago, demonstrating consistent and growing consumer trust in our private label offerings.
"In the past year, we launched five new private label brands, bringing our total to 169 across all categories. Despite consolidating the number of brands from 184 to 169 over the past three years, total annual private label revenue has grown from R20.9bn to R32.3bn — evidence of the increasing value and reach of our private label offerings."
Private label ranges in Shoprite, Checkers and Usave supermarkets offered more affordable alternatives, the retailer said.
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