While organic and premium sales have foundered of late, the big four supermarkets’ budget own-label lines have been flying off the shelves, sales growing at more than 35% year-on-year at their peak.

But the budget boom may be at an end. New Nielsen figures, revealed exclusively to The Grocer, show budget own-label’s growth has more than halved in the first six months of this year – and that premium own-label is back in the black.

Sales of premium own-label ranges, such as Tesco’s Finest, had been in decline since August 2008, with sales down 11.6% year-on-year at their lowest ebb. But a combination of clever promotional activity and customers trading up from standard has restored the category to growth, with sales up 4.5% year-on-year [Nielsen Scantrack 4w/e 27/6/09].

Conversely, the juggernaut growth of budget own-label has tailed off sharply. At Christmas, budget own-label sales were up more than 35% on the previous year. The growth of these ranges has now slowed to 13.7%, a level last seen in May 2008, before the recession.

The sales figures have scotched the findings of last week’s uSwitch survey, which suggested millions of consumers were trading down and buying more own-label and fewer branded and premium own-label lines.

In fact, the reverse appears to be true, according to the Nielsen data and new results from two of the UK’s biggest branded suppliers, which showed solid volume growth for their leading brands.

Premium own-label was poised for continued growth because of the way the category was promoted, Nielsen analyst Mike Watkins said.

“For brand owners, there is a risk that any increase in promotional activity will erode consumer perceptions of value for money leading to a decline in base sales,” he said. “But for retailers, promoting own-label represents an opportunity to both enhance price competitiveness and deliver on the wider values of the retailer.”