The switch to own-label products will fuel profits at the supermarket giants who make much more on these items than on the big brands.

Brits are increasingly opting for supermarket own-brand products in a bid to keep their food bills down, with these items flying off the shelves at an unprecedented rate. According to new data from Kantar, own-brand products now account for 52.3% of all sales – a record high – as consumers seek better value amidst the ongoing cost-of-living crisis.

In addition to this, supermarkets have been offering more discounts, with January witnessing a £274 million increase in promotional spending, the highest level since 2021. Fraser McKevitt, a retail expert at Kantar, commented: “Supermarkets were dishing out the discounts this New Year, and consumers responded.”

He added: “Spending on promotions rose year-on-year by £274 million, accounting for 27.2% of sales – the highest level in January since 2021. People also turned to non-branded products to help keep costs down, with own-label as a proportion of sales hitting a record high of 52.3% in January. Spending on supermarkets’ own lines was up 5.4%, helped by consumers buying premium own label products in the couple of days leading up to New Year’s Eve.”

This shift towards own-label products is set to boost profits for supermarket giants who typically make more from these items than from big brands. Tesco is predicted to increase its profits to over £2.9 billion for the current fiscal year, while Sainsbury’s is expected to make more than £1 billion.

However, despite these potential profit increases, major supermarkets have recently announced thousands of job cuts and warned of price hikes due to tax increases. In a bit of a financial breather, the latest figures show that grocery price inflation has dipped slightly from 3.7% to 3.3%, offering some respite for households feeling the pinch. The most significant price drops have been seen in ambient cooking sauces, household paper goods, and cat food.

On the flip side, chocolate, chilled smoothies and juices, as well as butters and spreads are on the rise. Kantar’s insights reveal that consumers are keeping their purse strings tight, hunting for deals and leaning towards healthier options. Fresh fruit and vegetable sales soared in January, with over £1.2 billion spent – a £193 million increase from December, indicating a push for healthier lifestyles at the start of the year.

Nathan Ward, Kantar’s consumer expert, noted: “Over a quarter of food and drink purchases in January were made with health in mind.”

Even the beverage sector is seeing a trend towards moderation, with low and no-alcohol drinks sales climbing by 7%, suggesting Brits are keen to cut down on alcohol post-holidays. The supermarket scene remains fiercely competitive. Lidl continues its upward trajectory, marking three years of growth with a 7.4% sales increase and capturing a 7.2% market share.

Aldi isn’t far behind, enjoying a 4.2% rise and now commands 10.2% of the market. Tesco still leads the pack, securing 28.5% of total sales – its strongest showing since April 2024. Meanwhile, Ocado emerges as the fastest-growing retailer, with an impressive 11.3% surge, buoyed by the boom in online grocery shopping, partly thanks to its partnership with Marks & Spencer.