Private Label Strategy - Finding the right balance for branded manufacturers

Over the past decade, private label has shifted dramatically. Once seen as low cost alternatives, retailer brands have become credible, high quality propositions that rival national brands on design, innovation and emotional appeal. Private label now accounts for nearly 40% of grocery sales across Europe, with UK penetration above 50% in many major retailers. This reflects stronger retailer capabilities, rising consumer trust and the growing strategic role private label plays in category leadership.

For branded manufacturers, the question is no longer whether private label is a threat, but how to compete in a market where private label is now a brand in its own right. 

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It’s rarely a simple topic. Private label is one of the most emotionally charged and strategically contested decisions a branded business can face. Yet when approached with clarity and intent, it can also unlock growth, strengthen customer relationships, and sharpen the role of the brand itself.

The key is finding the strategic “sweet spot”. 

Why Private Label Is Such a Challenging Topic

For most branded organisations, private label isn’t a small tactical decision – it sits right at the crossroads of brand equity, retailer relationships, and commercial performance.

Private label is a model where a manufacturer develops and produces products on behalf of a retailer, which are then sold exclusively under the retailer’s brand.  The retailer owns the proposition, pricing and customer relationship; the manufacturer provides the capability, scale and execution behind the scenes.

Part of the challenge is emotional. Private label can feel like a threat to brand integrity for some teams, while for others it represents a pragmatic route to stronger customer partnerships or operational efficiencies. Different functions naturally view the topic through different lenses, which means conversations can become polarised quickly. And because there is rarely a universal “right answer”, leaders often find themselves navigating shades of grey rather than clear-cut strategic directives.

Category nuance adds another layer. Private Label penetration varies sharply by category. Staple, low emotion categories such as ambient food, snacks and perishables now reach nearly 47% Private Label share across Europe. Whereas categories like chocolate and personal care remain far more branded, both sitting at approximately 20% market share. Alcohol is less again, with approximately 1% of beer sales and 7% of spirits coming from private label.

It’s precisely because of these tensions that private label strategy deserves intentional, structured thinking when it comes to your overall business strategy. 

Finding The Sweet Spot: Balancing Opportunity With Brand Protection

When organisations talk about private label, they often frame it as a binary choice – to participate or not. But in reality, the most value sits between the extremes.

Say “yes” too often and a business risks eroding its own differentiation, confusing shoppers, and cannibalising its brands. Say “no” too instinctively and it may find itself disadvantaged in trading terms, missing incremental opportunities, or simply failing to meet retailers where the category is going.

The sweet spot lies in balancing these competing truths. It’s about protecting what makes the brand valuable while remaining open to the commercial opportunities that private label can offer – whether that’s stronger customer relationships, efficient use of capacity, or strategic participation in specific parts of the category. For most manufacturers, this balance shifts over time as markets evolve, consumer behaviour changes, and their own portfolios mature.

One of the clearest examples is chilled ready meals in the UK. What began as a brand-led convenience category has gradually become retailer-led, with private label now accounting for over 90% of sales. In categories like this, retailers have effectively become the primary brand owners - investing in innovation, premium tiers, and differentiated ranges that compete directly with traditional manufacturers 

What Typically Triggers a Rethink

Most businesses revisit their private label approach for one of three reasons. Either their own strategic priorities have shifted – for example, a renewed focus on brand equity, sharper commercial targets, maximising manufacturing capacity or a change in long-term growth ambition.  

Or the operating environment around them has moved, whether through evolving retailer expectations, category dynamics, consumer behaviour, or competitor actions.

When either of these shifts occur, leaders often sense it’s the right moment to pause and ask: Are we still in the right place, and do our current boundaries still serve us?

A Spectrum of Participation

Every branded manufacturer sits somewhere on a spectrum of private label involvement. At one end are those who participate not at all, preserving absolute brand purity but limiting commercial flexibility. At the other are manufacturers who treat private label as a scaled commercial engine, participating broadly across categories, customers, or formats. Most sit somewhere between – perhaps playing in less brand-sensitive categories, or partnering selectively with certain retailers, or participating only in specific geographies or price tiers.

The point isn’t to categorise businesses, but to recognise that each position reflects deliberate trade-offs. Understanding where you sit – and why – is often the first step toward finding the right balance. 

Rethinking Private Label strategy Through a More Coherent Lens

The critical question is not simply where a business sits on this spectrum, but whether that position is deliberate and aligned with its broader business strategy. Private label participation should not be determined opportunistically or in isolation, but as part of a clear portfolio strategy that defines the role of branded and private label activities within the organisation’s overall growth ambitions.

The most successful manufacturers treat it as a strategic conversation shaped by a few grounded reflections:

• First, they ensure the conversation begins with facts, not instinct. Opinions tend to dominate early thinking, so establishing a shared picture of the category, consumer shifts, retailer motivations, competitive patterns, and current internal participation is essential. When teams see the same reality, they make better decisions.
• They also work hard to clarify the hierarchy of decisions. Not all categories matter equally; not all price tiers signal the same things; not all customers have the same strategic value. Being honest about where brand distinctiveness must be protected – and where private label can play a healthy, complementary role – helps avoid confusion and creep.
• Good business strategies also define the “clear water” between branded propositions and private label participation. These boundaries don’t need to be rigid, but they do need to be understood. When teams know what is off limits, the conversations with retailers – and the decisions made under pressure – become far more confident.
• Above all, these manufacturers accept that private label strategy isn’t about eliminating tension; it’s about navigating it. The sweet spot is rarely a neat equation. It’s an informed balance between commercial opportunity and the long-term health of the category and brand. When leadership teams engage openly with that balance, rather than avoiding it, they tend to reach a more coherent, resilient position.
• And finally, they invest early in alignment. Because private label is emotive and cross-functional, misalignment doesn't just slow progress – it amplifies risk. Bringing those tensions into the open and shaping a shared view is often the single biggest unlock. 

Shaping a Confident Path Forward

Private label is not a yes/no decision. It is a strategic choice that shapes how a branded manufacturer shows up with retailers, how it competes, and how it protects its long-term brand equity.

The best organisations approach the topic with curiosity, clarity, and openness. They seek to understand the current landscape, they challenge their assumptions, and they structure the conversation around the real tensions at play. And in doing so, they create strategies that balance risk with opportunity – and position the business to grow with confidence.