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Gen Z Embraces Private Brands

For a generation that wants hope more than hype, the time has come for private brands.

By 2026, Generation Z is estimated to be the largest generation in North America. Gen Z-ers (born between 1997 and 2012) will make up most of the work force by 2030 and will wield $360B in disposable income. But this new cohort spend money very differently than others before them. Contending with inflation, high living costs and a changing world, they are super savvy shoppers, and prioritize value and innovation.

For this hyper-informed generation, private brands are often a preferred choice. Private brand food and beverage share is on the move – a 2 % increase in share of grocery dollars since before the pandemic (according Circana market research), and this trend is certainly fueled by the growing purchasing power of Generation Z. Here are some of the reasons why:

Pressure on Finances

According to a Bank of America study from September 2023, almost three quarters of Gen-Zers say it’s hard to save money right now, and 56% say inflation has created more financial stress in their lives. Nevertheless, they want to manage their financial destiny: a 2023 study by the research company Leger360, reveals that they are focused on managing finances and costs. The study revealed that over two thirds were focused on saving money, and over half believed that careful food purchases would help them do this. According to an Ernst and Young study, 60% said that they will choose a private brand over the comparable national brand to help manage their food spending dollars.

Research vs. Loyalty

According to recent FMI research, Gen Z shoppers have less loyalty to supermarkets than other generations, and shop across several channels, including mass and digital.

For Generation Z, product knowledge goes beyond retailers and is everywhere. They spend a lot of time on on-line research: comparing brands and prices, hunting for deals, and using grocery apps. They are looking for value, innovation and variety and appreciate finding it in private brands. 46% of Gen Z-ers view private brands as better than national brands when it comes to offering new and innovative products.


Sustainability Matters

Amongst Gen Z-ers, in 2023 there was a notable increase in climate change worries vs the previous year. According to Leger’s annual Youth Study, 60% of Gen Z respondents are worried about climate change vs 53% last year. This concern makes its way to consumer choices. Private brands trying to address sustainability have an opportunity in categories where brand leaders are not. Gen Z-ers pay attention to the use of plastics and opt for brands with strong ingredient standards, like free-from artificial preservatives and ingredients, and minimally processed. Private brands that can also serve up products that meet planet-conscious needs like plant-based diets will find an active audience with younger shoppers.

Healthy Cynicism

Gen Z consumers make decisions based on different criteria and bring a healthy dose of cynicism to advertising and marketing. They want to know the real deal. What are the ingredients? How is it made? Is this a responsible company? As the first truly digital native generation, Gen Z-ers can verify all the information that brands place in front of them. 70% turn to peer-generated content first when making purchase decisions. 82% prefer targeted and personalized messaging and are generally less concerned about privacy.

Generation Z doesn’t quantify product categories and their shopping habits aren’t defined by separating national or consumer brands from generic or private brands. All brands are considered equally to them: the word term “generic,” doesn’t exist. Gen Z-ers make up their own minds and use their own social media to champion their favorites: TikTok and Reddit are filled with young people hyping private brand items from Aldi and Trader Joe’s.

With social media as a top influence for younger shopper purchasing, retailers should be investing in TikTok and Instagram engagement to drive store choice, and serve up content like recipes incorporating private brands, deals on trending items, and working with influencers to increase brand awareness and appeal.

With innovation, good value and messaging that matters, your private brand will get on the radar of Generation Z.

Let’s talk about how…

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