Private-label products enjoy popularity amid high cost of living

A model poses with cooked rice, seaweed, cereals and other private-label products of CU, a convenience store chain, in this undated file photo. Yonhap

Kim Min-ju, a salaried worker in her late 30s, says she increasingly buys private-label instant noodles and packaged foods at Lotte Mart, a retail store chain, due to the soaring cost of living.

Kim also says drinking private-label coffee at a CU convenience store on her way home after work is becoming part of her regular routine after being a frequent Starbucks customer since her college years.

“It may not make a big difference in terms of spending on a daily basis, but by the end of the month, the amount of money saved can be more than 100,000 won ($74),” she said. “It matters a lot to me because I can save money to pay bills, rent and other expenses for living that are becoming more costly."

Kim represents a growing number of consumers who purchase private brands — exclusively manufactured for a retailer — as they are offered at more affordable prices than ordinary brands and thus help consumers save money.

This spending trend coincides with the prices of essential grocery items continuing to remain high for many households, even though consumer inflation fell below 3 percent for the first time in six months in January, according to data.

“The private brand market has shown exponential growth correspondingly,” the Korea Chamber of Commerce and Industry (KCCI) noted in its analysis of sales data on 6,500 retail stores in Korea, obtained from NielsenIQ, a global consumer market research firm.

Sales of private brands soared 11.8 percent year-on-year between October 2022 and September 2023, whereas those of ordinary brands increased 1.9 percent over the same time period.

The year-on-year sales growth for private brands was steepest at convenience stores, where it was at 19.3 percent, compared to supermarkets’ 10.3 percent and retail store chains’ 5.7 percent.

The KCCI said ready-to-eat meals, or home meal replacement products, topped the list of most-sought-after items as an increasing number of salaried workers are living alone and find it too tiring to cook after they return home.

Sales of private-label coffee and desserts of convenience stores are also growing fast.

For instance, CU marked a 104.4 percent year-on-year growth in its brewed coffee sales last year.

During the same period, GS25, another convenience store chain, reported a 24.1 percent increase for its coffee, while 7-Eleven posted a 30 percent growth.

Regarding desserts, CU said it sold more than 50 million cream buns named after Yonsei University — one of Korea’s top universities — in less than two years after the buns were introduced on the market.

A separate private-label cream bun of GS25 has surpassed 45 million sales since January 2021 when the company started selling them.

The convenience stores, in the meantime, picked the quality of their private-label products as the reason behind their success, over inflation and consumers’ tendency to buy cheaper items.