Premium private label: the battleground for growth

Premium private label is one of the UK’s strongest growth areas. Retailers have moved beyond viewing premium tiers as seasonal or discretionary; they are now structural drivers of value perception, quality authority and margin mix.

The shift is visible across the market. At a time when inflation is the primary driver of growth , Worldpanel by Numerator reported that premium private label grew 9% at Christmas 2025, surpassing £1 billion in sales and appearing in 92% of baskets, signalling mass adoption rather than selective trading.

Crucially, discounters are not ceding premium territory. Aldi Specially Selected delivered 12% growth over Christmas 2025, while Lidl Deluxe’s sales increased 11%.

Premium private label is now a core strategic growth engine.

Improving operating margins

As copy-cat loyalty schemes and discounter price‑matching flatten price differentiation, retailers need profitable volume growth from elsewhere. By lifting the average selling price without undermining retailers’ value credentials, premium private label improves retailers’ margin mix.

It achieves this by shifting spend into higher‑margin categories such as fresh meat, chilled entertaining and added‑value ready meals.

Tesco successfully growing through premium private label

Tesco Finest delivered over £2.5 billion in annual sales and 16% growth in its 2024/25 financial year, supporting margin expansion and stronger operating profit performance. Similarly, Waitrose’s operating margin uplift in its 2025/26 financial year was supported by No.1’s strong 30% growth, reinforcing the commercial link between premium range performance and improved EBIT.

Premium ranges are becoming retailers’ most reliable levers for margin growth in a market where promotional intensity and price transparency limit options elsewhere.

Standing out in a crowded market

Standing out from rivals increasingly comes down to aspects such as quality perception, product authority and trust, which are all reinforced by premium private label.

Retailers are investing in recipe upgrades, packaging, provenance and innovation pipelines to deliver ranges that act as flagship brands. The result has seen premium private labels account for almost half of new seasonal products at the likes of Tesco and Sainsbury’s.

Premium private label helps retailers assert a distinct quality story at a time when branded ranges alone cannot deliver meaningful competitive separation.

The continued targeting of the away from home shopper

One of the  longest-lasting impacts from lockdowns and the cost-of-living crisis has been the shift of spending from away from home to in‑home dining.

With their elevated premium propositions, retailers are directly capturing spend from restaurant, café and casual dining missions. Tesco has explicitly linked Finest's growth to shoppers treating themselves at home rather than going out.

Retailers see dine‑in as a high‑margin trade‑up mission where premium ranges can command strong price points without compromising value perception.

As dining‑in normalises, premium private label becomes the mechanism supermarkets use to target higher‑value, occasion‑led missions; date‑night, hosting, seasonal entertaining, all traditionally served by casual dining operators.

The brand response: as premium private label accelerates what are the levers for growth?

Despite premiumisation within private label, brands have meaningful routes to growth if they adjust the levers they pull.

As quality perceptions for premium private label improve, brands should redefine superiority and quality credentials by creating a clear space in technical, functional or sensory areas.

With more occasions taking place in the home, brands can complement or elevate private label rather than compete directly on core lines. Anchoring propositions to high‑value missions such as breakfast routines, snacking, evening treats, and hosting.

Use category expertise to lead on new formats, benefits or cross-category experiences that create incremental consumption or attract younger shoppers.

What comes next?

Premium private label is no longer a supplementary tier; it is now a primary engine of growth, margin and differentiation.

Looking ahead at the next 18 months, premium private label will only see its position strengthened as retailers use it to win at key seasonal occasions and grow the dine-in occasion. 

Brands that thrive against this increased competition will focus on innovation that grows categories, target occasions where brand trust provides an advantage, and invest in retail media networks to maintain visibility and better target core shoppers.

 

Looking for more insight?

Subscribers can:

• Visit our UK hub.

• Read our report on How private label keeps outpacing the market: H1 2026 update.

• See How private label trends are playing out in Europe.