Grocery Stores Go Head-to-Head With Popular Name Brands

Industry analyst says economy, product improvements have led to more store brands


With the economy sputtering, grocery stores have continued to expand their private-label offerings to take business away from more expensive brands.

"There's a lot of competition going on between national brand and private brands to recapture their customer base," said Bill Bradshaw of Buxton, a leading retail industry research company.

He said private-label manufacturing is exploding because of the economy and product improvements.

"The quality has become so much better over the years, and once you get people to try the product, they understand that the quality is just as good, but it's less cost," Bradshaw said.

He said many domestic grocers are eying how European groceries have created specialty lines.

"They have about 40, 45 percent of market share compared to private-label penetration here in the U.S., which is about 20 percent," he said.

Bradshaw said some private brands are manufactured by big-name companies such as ConAgra Foods, which makes Orville Redenbacker popcorn and the Healthy Choice food line.

Kroger spokesman Gary Huddleston also said there is often cross-pollination between brand-name manufacturers and private labels.

"In some cases, yes, the generic brand would be manufactured by a national brand," he said. "There may be slight differences in formula."

Kroger has an agreement not to reveal who manufactures its Kroger brand products.

"In some cases, the formula would be virtually identical, and it might be a difference in the graphics on the package," Huddleston said.

Bradshaw said Kroger -- with three different tiers of private-label products including an organic line -- is one of the stronger private label brands.

The grocery chain offers customers a national brand product for free if they buy and do not like a Kroger product.

In the price war, private label brands typically win out. Kroger peanut butter sells for $1.99, while Jiff sells for $2.98. Kroger whole wheat bread sells for $1.79, but Nature's Own whole wheat sells for $2.99 per loaf.

But many shoppers are willing to pay a higher price for name-brand products they like.

"I grew up eating Cheerios," shopper Rick Harris said. "The value is in the taste not in the cost."

But while he may prefer some name brands, he also had Kroger potato chips in his grocery basket.

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