Is private label the future of CPG? What Post Holdings, Kroger, and Target are betting on

Why Are Retail Giants Doubling Down on Private Label Strategies in 2025?

Post Holdings, Inc. (NYSE: POST), The Kroger Co. (NYSE: KR), and Target Corporation (NYSE: TGT) are leading a significant transformation in the consumer packaged goods (CPG) sector by aggressively expanding their private label product portfolios. This shift is being driven by mounting economic pressures, evolving consumer priorities, and a strategic push toward margin-enhancing categories across grocery and household staples.

Post Holdings’ recent $880 million agreement to acquire 8th Avenue Food & Provisions exemplifies this trend. By internalizing the production of Peter Pan® peanut butter and acquiring established private label capabilities in pasta, nut butters, and granola, Post is making a calculated move to control manufacturing and diversify price points in a high-stakes consumer market.

Kroger is following a similar trajectory, having committed to launching more than 900 new private label items in 2025, while Target continues to consolidate strength through its high-performing owned brands like Good & Gather and Cat & Jack. All three companies are reshaping their value chains and competitive strategies through a renewed focus on private label dominance.

What’s Driving the Surge in Consumer Demand for Private Label Products?

Private label adoption is accelerating across both developed and emerging markets. A recent NielsenIQ study found that 69% of global consumers now believe store brands offer better value for money, while 68% view them as equivalent or better alternatives to national brands. In the United States alone, private label sales reached a record $271 billion in 2024, growing 3.9% year-over-year—far outpacing the 1% growth for national brands during the same period.

This consumer tilt is being fueled by prolonged inflation, economic uncertainty, and a discernible shift in buyer psychology that favors affordability, transparency, and brand trust via retailers themselves. Store brands, once dismissed as low-tier or generic, are now perceived as intentional, curated, and even aspirational—particularly in categories like organic foods, functional beverages, and sustainable household items.

How Are Companies Like Post, Kroger, and Target Building Winning Private Label Portfolios?

Retailers are no longer treating private labels as mere budget alternatives. Instead, they are curating differentiated offerings tailored to health-conscious, environmentally aware, and quality-driven consumers.

Post Holdings is leveraging the 8th Avenue acquisition to internalize manufacturing and improve control over brand experiences in categories like peanut butter and granola, while gaining new entry into the dry pasta space through the Ronzoni® brand. This vertical integration strategy allows Post to respond faster to demand fluctuations, reduce external manufacturing costs, and increase innovation cycles across its product lines.

Kroger, through its Simple Truth and Private Selection labels, is pushing deeper into trend-based products such as mushroom-infused beverages and premium spice blends. These moves reinforce Kroger’s objective to compete not only on price but also on taste, nutrition, and consumer experience.

Target continues to lean on its brand equity in private labels, with owned-brand sales surpassing $30 billion annually. The Good & Gather line has already exceeded $2 billion in sales, powered by a focus on clean labels, modern design, and competitive pricing that consistently undercuts national brands while maintaining parity on quality.

What Is the Financial Impact of Private Label Expansion on These Firms?

The financial incentives behind private label expansion are compelling. Private label SKUs typically generate gross margins 10–15% higher than national brands. For vertically integrated firms like Post Holdings, this margin enhancement is even more pronounced, especially when manufacturing is in-house.

Following the acquisition of 8th Avenue, Post expects the business to deliver $115 million in Adjusted EBITDA in the twelve months post-close, with cost synergies of $15 million annually by FY26. These estimates have led Post to revise its full-year FY25 Adjusted EBITDA guidance upward to $1,460–$1,500 million, from a previous $1,430–$1,470 million range. This improved outlook reflects investor confidence in the earnings visibility and cash flow strength enabled by private label scale.

Kroger, which now sees nearly 30% of grocery sales coming from private label lines, is realizing superior retention and basket size per shopper. Target, with its multi-category brand ownership, is unlocking cross-sell opportunities and driving store loyalty at a time when discretionary retail is under pressure.

Investor sentiment across these firms has been relatively bullish in 2025. While Post Holdings’ stock (NYSE: POST) fell 0.9% to $109.21 on the day of the announcement, institutional activity suggests this is being viewed as a medium-term cash flow accretive deal, rather than a short-term risk event. Target and Kroger stocks have shown more stability, with analysts continuing to highlight private labels as key pillars of long-term growth.

Are National Brands Losing Their Grip on Grocery Shelves?

The increasing sophistication of private labels is eroding the traditional dominance of legacy national brands. Companies like Nestlé and Unilever have been forced to moderate price increases in the U.S. as shoppers migrate toward lower-priced alternatives with perceived equal quality. In response, some national brands are exploring co-manufacturing partnerships with large retailers or rebranding legacy SKUs to compete on new terms.

However, in categories where innovation is essential—such as plant-based meat alternatives, clinical nutrition, and fortified snacks—national brands still hold a first-mover advantage. That said, the margin squeeze from competing with powerful retail-owned brands is growing, and many CPG giants are rethinking product assortment and promotion strategies to defend shelf space.

What’s the Outlook for Private Label in the CPG Sector Beyond 2025?

The private label market is expected to keep expanding, especially as AI and advanced analytics improve demand forecasting, personalized product development, and supply chain optimization. Retailers are using data-driven insights to fill white space gaps faster than national brands, and to test concepts with rapid feedback loops in-store and online.

Post Holdings is expected to further explore vertical integration in categories like nut butters, snack bars, and frozen foods. Kroger may leverage its planned merger with Albertsons to consolidate private label logistics and enhance supplier leverage, subject to regulatory approvals. Target is likely to deepen its omnichannel penetration of owned brands, using its in-house studios to iterate quickly on packaging, flavor variants, and format extensions.

Analysts broadly agree that the era of passive private labels is over. The future of CPG belongs to those who can turn store brands into strategic assets—not just margin plays, but core innovation drivers.