Chips, bottled water spark Casey’s ‘phenomenal’ private label performance

Dive Brief:

Casey’s General Stores’ private label growth has been “phenomenal” over the past year, highlighted by a 31% sales increase last quarter compared to the same period in 2022, President and CEO Darren Rebelez said during the company’s recent fourth-quarter earnings call.
Private label chips performed exceptionally well, with an 80% jump in sales compared to the same period last year, while bottled water also saw “a lot of good success” during the period, Rebelez said.
Casey’s has more than 300 SKUs in its private label portfolio, and Rebelez said the company plans to add another 40 items over the next calendar year as it remains bullish on that part of the business.

Dive Insight:

Consumer price sensitivity amid inflation has given private label products the runway to get ahead of national brands. Sales of private label items outpaced that of national-brand products at c-stores over the first three quarters of 2022, according to IRI, now Circana.

Rebelez noted that the price increases seen in national brands in the past year have highlighted the value proposition for private label brands and have “widened that price delta between the two.”

“As consumers get a little more penny pinched, they’re starting to look for those private brands,” Rebelez said.

Overall, Casey’s private label penetration surpassed 9% in the grocery and general merchandise category on both units and gross profit for fiscal 2023, according to the company’s earnings report. Additionally, Casey’s private label unit share and gross profit dollar share were both around 10%, Rebelez said during the earnings call.

This increased private label penetration helped Casey’s raise its total inside margins by 20 basis points for the quarter, according to the earnings report. Moreover, Casey’s private label margins helped overcome the “drag” from the tobacco category, which experienced flat sales from a dollar perspective and a mid-single-digit drop in unit volume, according to executives in the call.

“[Private label] certainly is a quite accretive category in general for us to continue to push,” Steve Bramlage, chief financial officer at Casey’s, said during the earnings call.

Ankeny, Iowa-based Casey’s operates more than 2,500 c-stores in 16 states and is the third-largest c-store chain in the U.S. by store count.