A long-term perspective on the NB-PL price gap: what has changed from 2014 to 2024?
In the average category, National Brands (NBs) sell at a 90% premium vs their Private Label (PL) counterparts, but the premium varies and is not systematically linked to the strength of PL in the category
Stable NB vs PL category price gaps
Across roughly 1,000 categories in 12 European countries, NBs on average charge prices about 90% higher than PLs. This overall gap has barely changed over the past ten years. However, it masks substantial differences between categories – and significant movements within them. In almost 25% of all categories, the relative price index between NBs and PLs has shifted by more than 25% in either direction.
Do you know in which direction your category is moving?
NB twice as expensive as PL in one third of all categories
NBs typically charge more than PLs for the same volume or unit. How much more varies – a lot. In about 7% of all categories, the average NB price is at least three times higher than the PL price. In roughly one third of categories, the price index exceeds a factor of two.
Part of this variation is driven by category dynamics. We will take a closer look at these category differences next week.
Price gaps are similar in high- and low-PL-share categories
PL success in a category could influence the relative prices charged by NBs in several, partly opposing, ways:
1. In categories with low PL shares, one might expect NBs to:
- keep prices relatively low to prevent shoppers from switching to PLs.
- Or charge higher prices because they deliver enough added value to justify a premium.
2. In categories with high PL shares, NBs might:
- Reduce prices to slow further share erosion.
- Or maintain high prices to compensate for revenue losses resulting from lower volumes.
Our data suggests that all of these mechanisms may be at work – but differently from category to category. On average, however, there is little difference in the NB–PL price premium between high- and low-PL-share categories.
The implication: understanding the specific dynamics in your category is essential to assess whether your current pricing is fit for purpose.
