When Own-Label Closes the Quality Gap
TL;DR: Own-label now accounts for roughly half of UK grocery spend, and shoppers increasingly rate it on a par with brands for quality and taste — so the question for brand owners is no longer price, but whether their premium still buys anything.
The quality gap has closed
For decades, brands justified their price premium with a simple promise: we are better. Own-label was the cheaper, slightly worse alternative you bought when money was tight. That bargain is breaking. Own-label now makes up around half of UK grocery spend, and a growing body of research, in the UK and across Europe, finds shoppers rate private label on a par with brands for quality and taste.
Aldi and Lidl have pushed this hardest, turning own-label from a fallback into a destination; Aldi's Specially Selected range wins awards outright. In Germany, studies now show private-label quality and taste perceived as broadly equal to brands, weakening the differentiation brands long took for granted.
An existential question, not a pricing one
When a shopper believed the brand was genuinely better, the premium bought reassurance. When they believe own-label is just as good, the premium buys what, exactly? That is the uncomfortable question every brand owner now has to answer. A price gap without a perceived quality gap is not a premium; it is a tax the shopper is increasingly unwilling to pay.
The brands most exposed are the ones in the middle — not cheap enough to win on price, not distinctive enough to justify the premium. The retailer's own-label, sitting on the same shelf with the retailer's data and media behind it, squeezes them from below and the side at once.
What still justifies a premium
Three things reliably still do. The first is genuine, demonstrable product superiority — a formulation, ingredient or performance a shopper can actually notice. The second is brand meaning: identity, values and emotional association that own-label, by design, does not carry. The third is distinctive brand assets — the colours, characters, shapes and sounds that make a brand instantly recognisable and mentally available at the moment of choice.
What no longer works is a premium resting on the assumption that shoppers will simply trust the brand is better. That assumption is the thing that has quietly expired.
What this means for your business
Audit your premium honestly. Ask what a customer gets for the extra money, and whether they can perceive it. If the answer is a real, noticeable difference or a genuine brand meaning, invest behind it hard. If the answer is only habit and heritage, you are living on borrowed time — and the fix is not a discount war you will lose to the retailer, but a reason to believe that a store's own label cannot copy.
Quick FAQ
Is own-label really as good as branded products now?
For many everyday categories, shoppers increasingly think so. Research in the UK and Europe shows private label rated on a par with brands for quality and taste in a growing number of categories — though genuinely differentiated products still command a premium.
How can a brand justify a price premium against own-label?
Three things still work: demonstrable product superiority a shopper can notice, genuine brand meaning and values, and distinctive brand assets that make you instantly recognisable at the shelf. A premium based only on habit is the one most at risk.
Own-label used to be where you shopped to save money. Now it is where plenty of people shop because it is genuinely good. That flips the whole question for brand owners: your premium is no longer protected by the assumption that you are better. You have to prove it, make it mean something, or watch it erode. — Daniel Nikolla, Founder of Merx Marketing
A price premium with no perceived quality gap is just a tax shoppers are learning not to pay — brands now have to earn the gap, not assume it.
If a customer put your product next to the supermarket's own-label version, could they tell you why yours costs more?
If you would like to know more about this topic, please contact us on danieln@merxmarketing.co.uk
Based on reporting and research from The Grocer, WARC, Kantar Worldpanel and Horizont.
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Written by Daniel Nikolla, Founder of Merx Marketing Ltd and Marketing Minute
