Private Label Expansion in Soup Categories: Retailer Strategies and Trends

Private Label Expansion in Shelf-Stable Soup Categories

The positioning of private labels as a substitute for budget-conscious consumers in the soup category is no longer the case. Over the past few years, retailers have pursued premium, organic, and health-positioned soup formulations on the private label channel. This trend is altering the dynamics of negotiations with national brands and compelling a shift in pricing and innovation approach for the category.

Retailers in North America and Europe are observing a steady increase in private label penetration within the center-store grocery categories. Soup, which has long been a legacy brand category, is now one of the categories in which store brands are gaining momentum not only on price but also on positioning.

Strategic Retailer Investment

During the last few years, major grocery retailers have enhanced the quality of their private label soups by increasing the number of their internal product development teams and co-manufacturing partnerships. In the United States, grocery chains like The Kroger Co. and Walmart Inc. have unveiled fresh, upgraded private label soup lines that emphasize natural ingredients and attractive prices.

These grocery chains are figuring out the formulas of national brands and creating differentiated SKUs that align with targeted customer trends, such as organic vegetable soups, gluten-free broths, and reduced-sodium soups. By keeping the formulation and packaging design under their control, grocery retailers experience higher profit margins and generate higher consumer loyalty in their own channel.

Private label soup brands are commonly manufactured through contract manufacturing agreements. This enables grocery retailers to increase volume without necessarily committing to large-scale production infrastructure. For co-manufacturers, such contracts are a stable source of business volume but these may not offer much for brand-building.

Pressure on National Brands

The growth of retailer-owned portfolios is having a direct effect on legacy manufacturers like Campbell Soup Company and The Kraft Heinz Company. The negotiations for shelf space have become more competitive. The retailers often reserve the best space for their own brands, shrinking the visibility of established brands.

National brands are responding to these changes through innovation and marketing differentiation. Limited-edition flavors, organic sub-lines, and packaging overhauls are being launched to support higher price points. Advertising spending is now focusing on heritage, recipe authenticity, and culinary expertise to protect market share against retailer offerings.

Pricing and Margin Realignment

The rise of private label products is changing the price architecture in the soup market. The private label products are normally introduced in the market with a 10 to 25% discount compared to the national brands. During times of consumer price sensitivity, alternative products quickly gain popularity.

National brands have to consider pricing and promotion strategies to ensure that they remain competitive. Multi-packs and loyalty discounts are becoming common. However, excessive price competition could lead to a long-term erosion of margins.

Retailers are experiencing better gross margins from private label products compared to third-party branded products. This is the reason why retailers continue to invest in expanding the product lines. As the private label penetration rises, the bargaining power changes incrementally in favor of the retailers.

Innovation Beyond Price

Contemporary private label offerings go beyond low-cost positioning. Retailers are launching high-end soup brands that are organically certified, sourced responsibly, and packaged sustainably. Some European-based supermarket conglomerates have rolled out carton packaging with lower plastic content for their store brands, which supports ESG agendas.

Innovation in the flavor space is also gaining momentum. Ethnic, plant-protein-based, and limited-edition seasonal offerings are no longer the domain of national brands. Retailers are increasingly using category-level data analytics to identify unmet flavor preferences and accelerate innovation, often moving faster than traditional manufacturer-led product development cycles. This innovation paradigm pushes branded manufacturers to launch new products at a faster pace.

Supply Chain Implications

The expansion of private label products affects procurement and sourcing. Retailers demand visibility of ingredient sourcing and traceability documentation from co-manufacturers. This is similar to requirements for national brands, reducing the perceived quality gap.

Ingredient suppliers benefit from diversified demand between branded and retailer-owned soup lines. Yet, pricing discussions may become more rigid as retailers use their scale to negotiate favorable input prices.

Companies with flexible production lines to handle both branded and private label production can potentially enjoy an operational advantage. Companies with inflexible, legacy-oriented systems may have utilization issues if the branded business declines.

For comprehensive analysis of competitive positioning and private label penetration trends, review the detailed Soup Market Report.

A Competitive Reset in the Soup Aisle

The rise of private labels is changing the competitive landscape in the global soup industry. The role of retailers is no longer limited to being a mere distributor; instead, they are becoming brand owners with increasing power in terms of pricing, innovation, and shelf space.

National manufacturers who adopt a disciplined approach to premiumization and operational efficiency are expected to remain relevant. Those who underappreciate the ambition of retailers risk a gradual loss of market share.