By: Mhlengi Thabete – Supermarket & Retailer

Backstory:

Published on Investing.com, writer Pratyush Thakur says, Kraft Heinz margin threatened from private labels and price wars, in an article published recently.

If you are not familiar with Kraft Heinz, they are an American multinational food company formed by the merger of Kraft Foods Group, Inc. and the H.J. Heinz Company, a globally trusted producer of delicious foods. The Kraft Heinz Company provides high quality, great taste and nutrition for all eating occasions whether at home, in restaurants or on-the-go.

Kraft Heinz products, especially Heinz Tomato Ketchup, Mayonnaise, and other sauces, are widely available in South Africa through major retailers like Pick n Pay and Makro, though some local operations (like Heinz Foods SA) have been integrated into Pioneer Foods (now part of PepsiCo), still manufacturing popular items like Heinz Ketchup and Wellington's sauces under license.

Overview:

What we are witnessing now is, brands that are familiar and trusted by many consumers, which was proven by the sales and margins, not only by word of mouth. Kraft Heinz's sales are around R416 billion annually (which is about $26 billion), with recent periods showing inconsistent but relatively stable revenue, while facing pressures from weakening consumer demand and moving away from processed foods, leading to lower 2025 forecasts and some brand damage charges. In 2024, they reported net sales near R416 billion ($26 billion), with the U.S. contributing around R284.32 billion (about $17.77 billion), and projections for 2025 anticipate organic sales declines of 3-3.5%. 

Recent Performance & Outlook:

• 2024 Annual Sales: Approximately $25.85 billion.
• 2025 Forecasts: Expecting organic net sales to decrease by 3% to 3.5%.
• Key Challenges: Stressed demand for CPGs (Consumer Packaged Goods, referring to everyday, frequently purchased items like food, drinks etc.) consumer pushback on processed foods, and budget-conscious shoppers impacting sales. 

Given these statistics already, then include the pressures coming from private labels on the shelves. That says private label growth is there and in the SA context it is becoming increasingly prevalent.

Upon research it is showing that more South African shoppers are opting for private label brands; the thing is, it’s not just about the price. New research by NIQ shows sales of store-branded products have topped R98 billion annually, and it is consumers who are driving this dramatic shift.

Speaking on HOT Business, on HOT 102.7 with Jeremy Maggs and MoneyWeb, NIQ Market Insights Lead, Kelly Mac Innes said that South Africans are not only accepting label brands for affordability, but more for quality, diversity, and even respect. Once seen as budget-friendly alternatives, store brands are now seen as credible, even at times better—options to traditional and familiar name brands.

It is said that this change we are seeing is better seen specifically among the younger shoppers, millennials and Gen Z consumers, usually balancing financial strain, looking for accessible and affordable indulgence. Increasingly gravitating towards premium level private label brands, in that way spoil themselves, looking at these products as good lifestyle choices that provide best of both worlds, being value and a sense of status.  

SA landscape of private labels

In South Africa, price remains the deciding factor, with loyalty programs playing a big role in buying decisions. Many consumers use several loyalty cards to make ends meet, while these incentives make it quite easy to decide on store brands that compensate them without compromising on quality. Most importantly, this change does not mean brand loyalty is gone, not at all. As much as thousands of shoppers are still buying their favourite name brands and household favourites; many are also open and keen to mixing and matching different brands, given the occasion, demand or budget.

Today’s landscapes shows that shoppers have become more empowered and informed than before. Shoppers are making their choices with intent, juggling quality, price, personal choice and convenience. While private labels are continuing to advance and expand, it is evident that the contemporary shopper in SA, is changing the rules and norms of brand loyalty. ---

Big players in the SA retail industry are aggressively growing their private label portfolios and investing in value and variation. For example, Shoprite reported private label sales increased by 12.8%, with private label brands contributing above 21% of supermarket sales; significant growth seen over the past couple of years as private labels developed into core value drivers. Spar and Pick n Pay are also part of the retailers that use private label brands to improve competitiveness, provide variety and note price-conscious sections, with methods ranging from improved in-store visibility to local production collaborations.

Many forces are at the forefront of driving this change. Inflation is one of them, salary and wage stand still has also pushed for price-sensitive consumers in the direction of lower-priced options, with private labels usually being notably cheaper than branded and familiar goods.

Increasing quality observations, better product development, and wide ranges. This includes premium restricted labels like Checkers’ Forage & Feast, Checkers' Forage and Feast is an exclusive, premium private label range featuring high-quality, artisan-sourced products endorsed by Michelin-star chef Jan Hendrik van der Westhuizen, offering items from artisanal cheeses, frozen seafood (salmon, tuna), gourmet ice creams, sauces, and baked goods like fig & almond cake, focusing on quality ingredients and seasonality, available at Checkers and Sixty60.

With this range, the aim is to assist private label items to overcome the old stigma of being “budget only” Shoppers are growing more loyal and keener to buy private labels across wider and vast categories (not just with sweets and treats, everyday essentials), more than before. Given that the expectations are met, which are quality and value, shoppers are often open to give it a try.

Future of private labels in SA

Looking forward, the trajectory of private label in SA looks hopeful however requires strategic action. Retailers and suppliers should zoom in on:

• Quality and variation — shifting beyond basic value offerings into premium segments that challenge national brands on quality, not price alone
• Category expansion — step into new areas such as baby products, liquor and health & beauty, where private labels have less footprint and penetration but rising consumer openness.
• Local sourcing and innovation — partnerships with local producers improve freshness narratives, decrease supply costs and grow community relevance. For example, Shoprite’s Homegrown range sources products from SMMEs, boosting local economic participation.
• Omnichannel presence — as e-commerce grows, private label products must be featured significantly in online assortments and digital promotions to meet progressing shopper journeys.

Conclusion

In closing, private labels in SA have changed from being seen as low-cost or budget friendly options to strategic profits drivers and reasonable differentiators. With smart investment, innovation and quality assurance, they are set to tap into even larger market share and keep restructuring the competitive space, challenging familiar and favourite brands while meeting shoppers everchanging expectations, demands of value and quality. This rise in preference for private label brands displays a huge change in shopper behaviour. Highly driven by adaptability, value and knowledge. South Africans are increasingly and actively aware and assessing items by mixing and matching familiar name brands with premium store options. Retailers are now aware and slowly adapting to these global changes.

Whatsapp