MDD - PRIVATE LABEL
Definition
Private label, or MDD, refers to products sold under a brand owned by the retail chain, as opposed to national brands manufactured and marketed by independent manufacturers
Private labels cover a wide range: low-end, low-price products; mid-range products positioned as alternatives to national brands; premium private labels with a focus on quality; and themed private labels (gluten-free, vegan)
In 2024, private label products accounted for approximately 35% of food sales in France.
A private-label brand that's cheaper but more profitable per tablet
Chocolates — Premium private label vs. leading national brand
unit margin for the private label (€3.10 vs. €2.70) — it captured 22% of the volume in 18 months without unseating the market leader (38% of the market).
Why it matters
- Offer distributors a higher margin —compared to national brands (on average, +10 to +15 points)—thanks to the absence of marketing intermediaries.
- Provide consumers with a price benchmark: more affordable than national brands, often with comparable quality.
- Building a brand relationship: between the retailer and the customer: a successful private label builds customer loyalty and sets the retailer apart.
Real-world example
A grocery chain is launching a premium private-label chocolate line priced at €4.90 per bar, compared to €6.90 for the equivalent national market leader
The private label’s cost of goods sold is €1.80, compared to an estimated purchase cost of €4.20 for the market leader
The unit margin rises from €2.70 for the market leader to €3.10 for the private label, a 15% increase
Over 18 months, the private label captures 22% of the category’s volume without completely cannibalizing the market leader (which retains 38% of the market thanks to its brand recognition).
How to measure and use it
Developing an effective private-label pricing strategy requires clearly positioning the private label relative to national brands (target price differential, advertised quality level), defining a product line architecture (how many private label tiers: entry-level, mid-range, premium), and to continuously monitor the competitive position against both national brands and the private labels of competing retailers
Analytics tools horizontally link the private label to the prices of equivalent national brands
Our dedicated article details how to manage differentiated pricing rules between private labels and national brands, rather than a single margin target per category.
Common pitfalls
- Maximizing the price gap between private-label and national-brand products: a price gap that is too wide raises suspicions of lower quality, which hinders adoption.
- Underinvesting in the quality of private-label products: A private-label product perceived as mediocre erodes trust and hinders future sales.
- Expanding the number of private-label products: without a consistent product lineup—having 8 different private-label brands under the same retailer’s banner—confuses customers.
For more information, see our article on calculating price elasticity using data.
FAQ
Private label, or PL, refers to products sold under a brand owned by the retailer, as opposed to national brands manufactured and marketed by independent manufacturers. Private labels cover a wide range: low-end, low-price products; mid-range products positioned as alternatives to national brands; premium private labels with a focus on quality; and themed private labels (gluten-free, vegan).
Varies by retailer
In the food sector in France: between 25% (traditional Carrefour) and 95% (Lidl)
The appropriate level depends on the retailer’s positioning and the identity that the private label is intended to convey.
There is no distinction in everyday French; the two terms are synonymous
The term “own brand” is sometimes used when the brand name does not include the retailer’s name (e.g., Reflets de France for Carrefour), and “private label” is used when it does (e.g., Carrefour Bio).
Depending on the target spread, one can either lower the private label price to maintain the spread or allow the spread to narrow to preserve the private label margin. The decision depends on the elasticity of the private label and the retailer’s strategy.
The method consists of calculating price elasticity using data by cross-referencing sales history and price variations observed over a stable period, free of interfering promotional effects.
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An effective pricing strategy relies on a rigorous segmentation between image products (KVI) and margin drivers to maximize profitability. By balancing perceived value and competitive data, this approach can increase EBITDA by up to 15%. This strategy then translates into a concrete pricing policy that is applied on a daily basis. Clear governance and automated rules ensure consistent execution despite market fluctuations.
Strategic pricing establishes the profitability framework and long-term brand image, while tactical pricing executes this vision through agile, short-term actions. This alignment protects your margins while allowing you to respond swiftly to inventory levels and competition. A 15% growth target perfectly illustrates this synergy.