Your Halloween Fright: Private Label Is Scarier Than Ever

Halloween is the one time of year we go looking for a good scare. So here's ours, and it isn't a costume. If you sell a national brand at Kroger, private label today is scarier than it has ever been. If that doesn't frighten you, it should.

That's not a knock on Kroger. Our Brands is one of the best private label programs in the country, and shoppers love it. But Kroger just told Wall Street exactly how much bigger it wants that program to get, and every point of growth has to come from somewhere. For a lot of brands, that somewhere is their shelf slot.

The Numbers Behind the Fright

At Investor Day on October 20, Kroger put real numbers on its private label plans:

• 35% to 40%. Kroger's goal is to lift Our Brands penetration from about 35% to 40%.
• About 1,000 new items. That's how many new Our Brands products Kroger plans to launch over the next three years, across every tier.
• 35 plants. Kroger's own manufacturing network gives it control over quality, cost, and speed to shelf.
• About $39 billion. That's roughly the size of Our Brands today, a business already outpacing national brands.

Now do the shelf math. A thousand new items need a thousand homes, in the DC and on the shelf. Stores don't grow new shelves because Kroger launched new products. Those slots come out of today's planograms, and today's planograms are full of national brands.

Why This Year Is Scarier Than Most

Private label growth is nothing new. What makes this moment different is everything happening around it at the same time:

• A $5 billion price investment. Kroger committed to lower prices and simpler promotions through 2029. Our Brands is the most natural way to deliver everyday value without giving away margin.
• SKU and brand rationalization. Kroger is already trimming items and brands that don't earn their space. Private label growth and rationalization work together.
• Harder supplier negotiations. Kroger has said it will press harder on cost and lean further into direct sourcing. An Our Brands option on the shelf is leverage in every one of those conversations.
• A shopper who is watching every dollar. When budgets are tight, the price gap between your item and the Kroger brand next to it gets a lot more attention.

The Math of a Swap

Here's why the swap is so tempting for Kroger, even when the category gets smaller. Picture one shelf slot over 12 months. A national brand sells 40,000 units at $5.00, and Kroger earns a 30% margin. The brand also brings $25,000 a year in promo, KPM, and coupon support.

Kroger replaces it with an Our Brands item at $4.00, 20% lower, earning an assumed 48% margin once you include the manufacturing profit on items made in Kroger plants. Then the shoppers sort themselves out. In our example, 70% switch to the Kroger brand, 15% move to another national brand, and 15% walk.

That's the scary part. The category loses $58,000 at that one slot, and Kroger still makes more margin dollars. Less volume, more profit. Multiply that across a thousand new items and you can see why the plan makes sense from Kroger's side of the desk.

The Tipping Point Is Loyalty

The swap only works if enough of your shoppers accept the Kroger brand. Keep the prices the same, change only the switching rate, and watch what happens:

In this example, the breakeven is about 66% switching. Below that, the swap costs Kroger money, and that's before counting the $25,000 in vendor support that walks out the door with your item. Kroger has the 84.51 shopper data to estimate your switching rate. The question is whether you know it too. We covered how Kroger models that risk in How Kroger Models the Risk of Cutting Your Item.

These are illustrative numbers built on assumptions, not Kroger's books. Your category's numbers will be different, but the shape of the math holds.

Who Gets Haunted First

Not every brand is equally exposed. The items most likely to be replaced tend to share a few traits:

• A copycat item in a segment where shoppers buy on price
• Third place or lower in its segment on velocity
• Something Kroger can make in its own plants or easily source
• Light or inconsistent promo, KPM, and coupon support
• A scorecard with case fill or delivery problems that give the Category Manager an easy reason
• A category review coming up while Our Brands growth is a company priority

On the other side, the swap tends to backfire when your item has loyal households who leave without it, brings shoppers Our Brands can't attract, is truly unique in flavor, format, or claim, drives trips, or is growing faster than its segment.

"We Make the Private Label, So We're Safe." Mostly.

There's one group of suppliers who can watch this trend with a little less fear: the companies that make Our Brands products. If your plant fills those packages, private label growth can be volume growth for you. Plenty of smart brands run both businesses for exactly that reason.

But don't mistake a private label contract for a safe house. That side of the business has its own ghosts:

• Contracts end. Private label supply typically runs on contracts with set terms. When the term is up, the business goes back on the table.
• Open bid wars. Private label is often awarded through competitive bids, and price usually leads the decision. Every renewal, you are competing against other manufacturers who would love your volume, sometimes at a price that barely covers their costs.
• The retailer owns the brand. Kroger owns the label, the spec, and the shopper. If a bid goes to someone else, the shopper never notices the change, and you lose the volume overnight.
• Kroger makes its own. With 35 plants, Kroger can move some production in house when the math works.
• Thin margins and fixed prices. Contract pricing can leave you carrying commodity, packaging, and freight swings until the next negotiation.
• Capacity risk. Lines built or staffed for a private label program can sit idle if that program moves.

So yes, making the private label lets you sleep a little better. Just keep a light on.

Private label isn't the monster under the bed. It's a smart, well run business that Kroger is investing in, and it's growing for good reasons. The fright comes from ignoring it. The brands that come through this just fine will be the ones who know their numbers, know their shoppers, and give Kroger a reason to keep them on the shelf that a lower price can't replace.

Happy Halloween. Now go check your switching rate.

As always, we won't get everything right. If you've lived through a private label swap, or you make private label and see it differently, we'd love to hear it in the comments.

Found this helpful? Pass it along to a colleague who works with Kroger. Great insights are better shared.

Sources: Kroger 2026 Investor Day materials and coverage (FoodNavigator, Grocery Dive, Reuters); Kroger Q1 fiscal 2026 results; Kroger fiscal 2025 results. Swap and switching examples are illustrative and based on assumptions, not Kroger data.

From Cincinnati CPG Edge, keeping you in the Kroger know.