Private label used to be the cheap option people bought when money was tight, then traded back out of when things improved. That's no longer how it works. Australian shoppers have moved to store brands in large numbers, and the evidence says many of them aren't coming back.

For branded FMCG businesses, this is the structural question of the next few years. And the commercial leaders who built their careers on premium positioning and trade spend aren't always the people equipped to answer it.

The Numbers Have Moved

Private label now makes up around 36% of total FMCG sales in Australia, roughly $46 billion worth, according to Circana, and it's growing faster than national brands. That's more than a third of the basket.

The driver is cost of living, and it's deep. A December 2025 report found 94% of Australian consumers have adjusted their shopping behaviour to cope with cost-of-living pressure, with 37% switching to more supermarket-branded products. A separate study put 42% of shoppers choosing private label specifically because of price, value or cost-of-living pressure.

The behaviour shows up in how people shop. As at mid-2026, the average household was spending $169 a week on groceries, with 83% taking active steps to cut weekly costs and 31% switching to lower-priced supermarkets. ABS data backs the pattern, with non-discretionary spending falling month on month even as overall household spending rose year on year. People are buying what they need and looking hard for value while they do it.

The Retailers Are Pushing It Hard

This isn't only a demand-side story. The major supermarkets are investing in their own brands because the margins and the loyalty are better.

Coles is a clear example. In its FY25 results, own brand delivered about $13.7 billion in sales, around 34% of total revenue, with more than one in three items sold now a Coles brand. And it isn't just the value end. The premium Coles Finest range grew 13.6% over the year, roughly triple the rate of overall supermarket sales growth. The retailer is building own brand at both the budget and the premium ends of the shelf.

Aldi, whose model is built around private label, grew sales to $13.94 billion in 2025, up 4.8%. And the value of strong own-brand programmes is now visible at the brand level. Kmart's Anko private label saw its retail brand value grow 66% to $3.2 billion in the 2025 Brand Finance rankings, while Woolworths as a brand fell 17%.

So the shopper is reaching for store brands, and the retailer is making them better, broader and more prominent. Both sides of the equation are working against the national brand.

Why This Is a Leadership Problem

The old defence of a branded position rested on a few things. Heavy advertising to build awareness. Trade spend to hold shelf space and drive promotions. Premium pricing justified by perceived quality. That playbook assumed the shopper believed the brand was worth more.

The shift in private label perception breaks that assumption. When a third of the basket is store brand, and a meaningful share of shoppers have decided own brand is good enough, spending more on advertising and deeper promotions doesn't fix the problem. It often just trains shoppers to buy on deal and erodes the margin further.

Competing now requires a different set of commercial skills:

• Building genuine product and innovation advantages that private label can't quickly copy
• Managing price and pack architecture so the brand stays accessible without destroying margin
• Deciding where to compete on value and where to hold a premium, by category, with discipline
• Reading category data well enough to see where private label is taking share and where the brand can still win
  
  

That's a harder commercial job than running a promotional calendar and a media budget. It needs leaders who understand the economics of the category, where the pricing, cost and margin decisions get made.

The Capability Gap

In my experience running FMCG businesses, the commercial leaders who struggled most in tight markets were the ones whose instinct was to spend their way out. More advertising, deeper deals, bigger displays. In a market where the shopper has already decided store brands are acceptable, that instinct burns cash and buys little.

The leaders who do well in this environment think differently. They protect margin while staying competitive on value. They invest in the product and the innovation pipeline. And they make hard calls about which categories and price tiers are worth defending and which aren't.

For branded FMCG businesses, particularly the mid-tier ones without the scale of a multinational behind them, the question is whether the current commercial leadership has that capability. The skill set that grew the brand in a more forgiving market may not be the skill set that defends it now.

What This Means for Hiring

Private label isn't a phase that passes when inflation eases. The share has shifted, the retailers are committed, and the shopper habits formed under cost-of-living pressure tend to stick.

Branded FMCG businesses that treat this as a structural change, and put commercial leadership in place to match, will be better positioned than those waiting for the market to swing back. That means commercial and marketing leaders who can compete on product and value at the same time, who read category economics closely, and who have the discipline to protect margin under pressure.

For some businesses, that's a development question for the existing team. For others, it's a hiring decision, bringing in commercial leadership that has actually defended a brand against private label and knows what works.

If you're a founder, CEO, or board member in branded FMCG and you're not confident your commercial leadership is built for this market, it's worth working through that before private label takes more of your shelf.

ELR Executive is a specialist executive search firm focused exclusively on FMCG, food and beverage manufacturing, and fresh produce. If you’re making a senior leadership decision and want clarity on what capability your business needs, a conversation with John Elliott is a good place to start.