Private label products have become household staples, from Trader Joe’s snacks to Amazon Basics gadgets and Kirkland Signature essentials. Consumers appreciate their value, and retailers benefit from significantly higher margins compared to national brands.
In 2024, the private label industry reached a record $271 billion in sales revenue, a 23% 4-year CAGR, signaling fierce competition for market share with traditional branded CPG. Several factors are driving this momentum: Discount and club stores, which heavily feature private label products, are capturing more market share; Gen Z is embracing private label at a greater rate than any previous generation; and inflation has made previously overlooked categories viable for new product entry. At the same time, retailers are shifting from imitation to differentiation, elevating their store brands into distinct, high-quality offerings.
Consequently, the private label transformation goes beyond consumers—it calls for a new level of talent to drive innovation and competitiveness. Despite the positive momentum, not all players in the private label segment are growing at the same pace. The industry is in flux. Ownership is changing hands, with new investors pouring capital into private label, driving significant consolidation and strategic combinations. The fastest-growing companies are moving quickly, often with private capital infusions, to capture not only the necessary capacity and technology assets required to compete, but also the strong commercial and strategic leadership required to adapt to fast-changing consumer behavior and customer expectations. Those lagging often struggle with outdated infrastructure, siloed teams, and reactive decision-making, unable to adapt to market shifts.
Success requires a dynamic approach to leadership—one that makes bold capital allocations to seize the moment, builds sharp commercial teams fueled by actionable insights, disrupts siloed functions and galvanizes the organization under a unified growth agenda—while aligning with the long-term interests of retail customers.
This article’s insights draw from our work with CEOs in this space.
What It Takes to Win: From Operations-Driven to Customer-Centric Models
Private label players, whether incumbent companies or new entrants, are no longer just competing on price, quality, and capacity—those are table stakes. The real differentiators today are insight, innovation, and service. To succeed, private label companies must undergo a transformation like the shift towards customer-centricity that the CPG industry experienced in the early 2000s. Customers expect their partners to understand consumer adoption curves and lifetime value; they expect category insights, customization, and product development pipelines. What’s more, retailers expect private label manufacturers to know their store brands inside-and-out—their quality requirements, personality, and value proposition. Similar to CPG leaders who care for a portfolio of brands, private label leaders care for a portfolio of customers—each with their own personalities, requirements, and value propositions. Winning requires top talent that can balance operational efficiency with strategic growth.
- Shaping strategy: The number one capability we hear private label Boards and CEOs demand in their top commercial leaders is an ability to shape strategy. Despite the variation in organizational structure, the best CCOs, CMOs, or CGOs today have held roles not only in category or sales strategy, but also enterprise strategy, influencing, for example, M&A, supply chain, or digital transformation. They understand how to align with a retailer’s strategic goals, and they can translate that back into their companies as actionable strategic imperatives, all while balancing the need for scale and a tight margin profile. To acquire this capability, our clients have looked beyond the industry to more customer-obsessed models.
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Building customer value: Rising costs and inflation are pressuring retailer margins, forcing private label suppliers to reassess strategies. The leaders in this space will be sitting right beside their customers helping them assess their options. Where should the focus be—on expanding the range or rationalizing SKUs? Should innovation play a different role at a new pace? Is the brand identity still relevant?
Insights and category expertise are now essential, and while it's possible to compete without these, it won't be on the price-war front. The challenge here is to deliver market leading insights while operating with a leaner structure compared to branded players who can tolerate higher levels of SG&A. This means finding talent that loves to be scrappy, can prioritize effectively, leverage data, and adopt resourceful methods to demonstrate value. The goal isn't to replicate the branded CPG model of innovation, insight, and category management, rather to adapt these functions to fit the private label model.
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Leading innovation: Private label is no longer just about offering a cheaper alternative. Retailers expect differentiation. Consumers expect to be delighted. Whether it’s bringing premium offerings to market, leveraging novel ingredients, or designing standout packaging, commercial leaders must integrate R&D, insights, and marketing into a compelling innovation pipeline. Without this, companies risk being locked into a race to the bottom on price. Commercial leaders who are in highest demand are those that have a proven track record of developing and delivering compelling pipelines of breakthrough innovation. -
Driving change: In private label, flexibility is as critical as flawless execution. Firms that can shift from an operations-driven culture to consumer and customer-driven companies will win in the long run. Whether it’s rapidly delivering product samples during a bid or bringing vital category insights into the conversation, excellent customer-centricity, service and agile operations are essential. This necessitates not only changing ways, but also minds. Commercial leaders must be able to bridge manufacturing, supply chain, marketing, and sales to ensure seamless execution. CEOs are relying more heavily on their growth leaders to drive meaningful change to the operating model to create relevant and adaptive organizations.
- Co-Manufacturers: Traditionally, co-manufacturers have focused on the industrial side of the business, primarily supplying CPGs rather than retailers. Today they are expanding their capabilities to collaborate more directly with store brands. By investing in R&D and marketing, they are evolving from order fillers to strategic innovation partners.
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Ingredient Companies: Historically focused on supplying raw materials, ingredient companies are leveraging their control over key inputs to enter manufacturing. By vertically integrating, they can offer better pricing, more supply chain transparency and greater supply stability, positioning themselves as attractive partners for private label brands. With deep R&D expertise and access to premium ingredients, these companies are well-equipped to develop high-quality, innovative private label products. -
Branded CPG: Some branded players are stepping into private label, leveraging their deep consumer insights to shape retailer strategies. Their expertise in branding and shopper behavior allows them to help retailers position private label products effectively, creating premium offerings that can compete with national brands. Yet these companies must still contend with the age-old dilemma: as they become more transparent about production costs to win private label bids, they risk weakening their ability to negotiate higher margins for their own branded products.
The New Talent Imperative: Leading for Growth & Profitability
Success in private label today requires commercial leadership that goes beyond the traditional sales and marketing archetypes. CEOs are demanding talent that brings both the perspective and the ability to shape strategy for the company, drive change in the operating model, build customer value that is differentiated, and lead innovation in organizations that have historically been operations-centric cultures.
Given the industry’s rapid evolution, the most effective executives are those who understand where commerce, customers, and consumers are going. They bring deep market insight, they innovate against emerging consumer trends, and they deliver the highest levels of service to customers despite either rigid organizational structures or sacred cows. As the industry continues to earn market share, and companies seek to profit from the opportunity, the need for this kind of leadership has never been more apparent.
