Better-known brands are losing ground to store brands as budget-conscious families have been favoring bargains in a tough economy.Private-label grocery brands have come a long way since their humble "plain wrap" beginnings in the late 1970s. These brands, including the Kroger (KR) Value line, Wal-Mart's (WMT) Great Value brand and Trader Joe's wide range of self-badged food products, have continued to gain popularity in tough economic times.

According to a Nielson report released last week, cash-strapped families looking to cut their food costs have been increasingly eschewing well-known brands for their slightly cheaper counterparts.

Private-label brands accounted for 17.4% of the total U.S. dollar share of food products last year, up from 15.2% in 2006, Nielsen says.

"Given the recent economic slowdown in developed markets, the value-conscious shopper is more visible across store aisles than ever before," according to the report. "No doubt, this trend will continue even as economies stagger out of the recession and rehabilitate."

Store Brands Serve Up a Higher Portion of Food

Store-brand products, which make up a whopping $90 billion industry in the U.S., now account for almost 30% of the total servings of food products sold. That represents a big surge from the period between 1984 and 2003, when their servings market share remained firmly in the 20% range.

Back then, it might have been hard to imagine that store brands could attain such heights, as the concept of buying budget brands faced the hurdles of social stigma.

The economy in the last few years has decidedly boosted private-label purchases, but the rise in the popularity of store brands actually began back in the early 2000s -- when the economy was still going strong, but the typical family's purchasing power began to slip, says Harry Balzer, chief industry analyst at NPD Group.

While the economy can affect the type of food that gets purchased, it doesn't have a big impact on the amount of food people eat. "There will never be a recession in eating; there will just be winners and losers," Balzer says. "But we will never let food costs rise faster than our income."

Humble Beginnings

The concept of private-label brands began more than three decades ago, when Ralphs, a California supermarket chain now owned by Kroger, launched its Plain Wrap brand with about two dozen products aimed at budget-minded customers back in 1978.

Other grocery chains soon followed suit, and the trend picked up steam when big-box retailers, like Walmart (WMT) and Target (TGT) jumped into the grocery market with their own branded products. So-called "supercenters" made up 27% of the grocery market in 2009, up from 22% in 2005, according to Arlington, Va.-based Food Marketing Institute.

Meanwhile, grocery chains like Trader Joe's took cues from the grocery industry in Western Europe, where store brands make up almost twice as much of the market as in the U.S., and expanded into a wide range of self-branded food products.

Cheap is In

Along the way, private-label brands appeared to have shed much of their budget stigma. More than two-thirds of those who participated in Nielsen's U.S. survey said they thought private-label goods had the same or better quality than name brands. And just 10% said such products weren't suitable "when quality matters," although 17% indicated that private-label brands have "cheap-looking packaging."

The few packaging and quality concerns are unlikely to deter customers in the future, even if the economy continues to improve and gives more families the luxury of returning to better-known -- and often pricier -- brands. More than nine in 10 Americans surveyed by Nielsen said they would continue buying private-label brands even if the economy improves.

"Whoever offered you a deal tended to win this last decade," Balzer says. "The majority of brands will still have to deal with how do to beat these private-label products even when all of this is done."


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Lloyd D. Domres

I always buy Targets own brand on a lot of stuff. Theirs are "Market Pantry" and "Archer Farms". More often than not it is always just as good as the name brand. This saves me a lot of money and I get quality product too.

March 12 2011 at 7:47 AM Report abuse +1 rate up rate down Reply
KIMBERLY

From a person that works for a name brand product co. most generic products are made by their competitive brands and packaged in the private label wrappers. Breads, cookies etc.

March 11 2011 at 11:16 PM Report abuse +2 rate up rate down Reply
sugarcreekchile

The quality of the store brand all depends on the chain you are buying it from. Our Smith's grocery had great store brands. When Kroger bought the chain, the quality of the store brands deteriorated substantially, some to the point of being inedible. After trying a few of the Kroger Smith's brands, I decided never to buy them again. About a year ago, I relented when I didn't want to pay the inflated price on the name brand for French Fried Onion Rings so I bought the Kroger brand figuring they couldn't mess those up. Boy, was I wrong! There wasn't a "ring" in the can that was filled with singed and half burnt french fried onion crumbles. Lesson relearned...never buy the Kroger brand. Except for a quick run in, even though the Smith's is closer, I drive an extra mile to go to Albertson's for groceries for a variety of reasons, one being that their house brands are good. Sometimes,I honestly think Kroger must be outsourcing the production of their house brands to 3rd world countries. I haven't bought meat at Kroger ever since I read the label on a hamburger package saying it may have come from Mexico and we all know how low sanitation standards are there. Store brands can be good when for product placement and volume ordered, name brand companies give stores cut rates for the name brand in a different wrapper but bad when the retailer gets their store brands from lower quality producers or buy seconds.

March 11 2011 at 10:31 PM Report abuse +3 rate up rate down Reply
michiganreader

I have been buying store brands and some generic brands of groceries since the mid 1970s, most store brands/generic brands are usually brand names using a different label. I cannot tell the difference in a generic/store brand of diced tomatoes from a national manufacturer brand. Same goes for canned vegetables, boxes of pasta or rice, flour, sugar and cooking oils. Thank goodness for Sav-A-Lot and Aldi's. Sav-A-Lot carries some brand names and allows coupon use also. Aldi's has their own store brand which is a very good quality. Aldi's cream soups have a richer, creamier consistency and taste, than the national red and white label. And what I cannot get at Aldi's I can find at Walmart. There are very few national brand name products in my refrigerator or pantry shelves, and those are purchased on sale with a coupon. Along with my loss leader buys in meat department we enjoy a large variety of dishes. And our friends and relatives love to eat my homemade, from scratch dishes. We entertain often, but I spend less on groceries than most of the folks I know. So I feel we do very well with our food budget and living frugally on a retirement income of less than $34,000 per year.

March 11 2011 at 10:12 PM Report abuse +3 rate up rate down Reply
Vinny

To surfr45.
If you have never lived in Europe with a Democratic Socialism way of life you don't know what you are talking about. To believe that 'capitalism' is the best one needs to be either blind or stupid, or both. We have 'capitalism' here in the US and please don't equate it wih 'freedom' because one only has to look around and all we see is decay and poverty and crime. Using Mexico as an example of the failure of 'socialism' is rather mindless, however, it does have a better health service for its citizens than we do. Lets face it and be honest. 'Capitalism' has FAILED in the US and to deny it is being blind to reality. We are continuing to FAIL under the banner of 'Captilism' or if you wish 'The Free Market'. Our kids are not being educated. Over 40,000 Americans die needlessly every year because they have NO health coverage. Our infrastructure is falling apart and Republican morons like Rick Scott in FRlorida GAVE AWAY $2.5 BILLION to California because he is too backward and stupid to realize that a high speed train would benefit his state. So, blame the Democrats or 'socialism' (even though you don't know the meaning of the word') but PLAESE educate yourself....if that's possible.

March 11 2011 at 9:24 PM Report abuse rate up rate down Reply
darinw40@mail.com

Thank you Sav-a-lot stores for great quality products at low off brand prices..at least I can still afford to eat, despite all the efforts of the Republican party to put the working man into bankruptcy and on the street with their wage reductions

March 11 2011 at 8:50 PM Report abuse +5 rate up rate down Reply
gafea9

I find a distinct difference in quality. If it's cheaper, it's a reason. In my area, the brand name items ahve the price jacked way up to make the store brand look better. Unfortunately, with a store brand you never really know what you're getting until you get home and tryit. While they may be manufactured in the same facilities, these items have been for years simply end of run,sometimes diluted in quality to make the complete order. Anyone working for a manufacturer will tell you that's the case. With a store brand you may get an excellent product from one manufacturer this week and junk from someone else the next. It's cheaper because it's cheaper.

March 11 2011 at 8:23 PM Report abuse -3 rate up rate down Reply
1 reply to gafea9's comment
michiganreader

My father worked in a factory that canned vegetables and fruits, according to him the products are the same, just the labels are different on different days.

March 11 2011 at 10:14 PM Report abuse +4 rate up rate down Reply
Vinny

I buy Wal-Mart's 'Great Value' products and I don't see any difference in quality over the high priced 'name brands'. Keep in mind that Wal-Mart and Sam's Club food products are manufactured in the same facilities as the 'name brand' products, sometimes on the same production lines. Locally in Atlanta Wal-Mart has contracted with Mayfield Dairies to produce it's dairy products. The difference is Wal-Mart's 'Great Value' brand milk, produced in the same plant, is over a $1.50 less per gallon than the 'name brand' Mayfield Dairies milk. Both have the same high quality, the difference is price only.

March 11 2011 at 8:01 PM Report abuse +3 rate up rate down Reply
patsbest1

i hate store brands i tried some and in the garbage they went how can anyone say they are just as good as the real brands

March 11 2011 at 8:00 PM Report abuse -2 rate up rate down Reply
2 replies to patsbest1's comment
Vinny

Because, dear reader, they are produced in the same plant's as your higher priced 'name brands'. Wal-Mart operates very few plants in the US. (I know of only two Sams Club beverage plants)and they contract with the major 'name brands' to produce their products mostly on the same production lines. In most instances all that changes is the label or the carton. This allows the 'name brand' plants to run more efficiently because it absorbs excess production capacity that most plants have available. Kroger owns their own food and beverage production plants, also their own dairies and they are as efficient, clean and well run as the 'major brands'. So does Publix Supermarkets in Lakeland Florida. Their store brands are excellent and their plants are literally 'showplaces' as far as clenleness and quality control is concerned. Winn-Dixie also produces much of their own 'store brand' food and beverage products and their facilities are excellent with strict quality control. So don't hesitate to buy 'store brands' because most of the regional 'store brands' are as good, or sometimes even better than the 'name brands' that have to spend billions on national advertising that the regional 'store brands' don't have to do. The difference is less expensive products.

March 11 2011 at 8:22 PM Report abuse +3 rate up rate down Reply
michiganreader

I agree some of the products are different, I can taste a difference in mayo and some ketchups, box mac n cheese dinners, and other prepackaged items. But basic staples like canned goods, flour, sugar, pastas and rice I don't notice a difference.

March 11 2011 at 10:17 PM Report abuse +5 rate up rate down Reply
slick

Making gasoline out of corn has brought food prices up.........its a no brainer quit making gas with corn the tax payer has to subsidize the corn farmer anyway and we cant afford it........drill more wells in areas where the tree huggers have made it impossible to drill

March 11 2011 at 7:19 PM Report abuse +5 rate up rate down Reply