1 Unexpected Loser From This Huge Trend
Jan 3rd 2013 3:20PM
Updated Jan 3rd 2013 3:28PM
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Eric Bleeker: Many consumers might see private-label stuff for a long time. You don't necessarily think of it as a trend, but you talk about the growth rates, it's very impressive.
You mentioned Ralcorp as being a winner with this. Should people be avoiding a supplier with big purchasing power, like a Procter & Gamble, from this or does it have its limits?
Austin Smith: I think it's interesting, because Procter & Gamble is sort of the model of "Your brand is your company." Tide detergent, Gillette, really made that company what it is, but even they saw a lot of private-label weakness, especially in their detergent line.
They got disrupted by other consumer goods companies, like Unilever, that went for the lower end of the spectrum and started to actually disrupt those sales, so no. This extends across the entire consumer goods spectrum.
That's not to say Procter & Gamble's going to collapse under the weight of this, but it certainly takes a big chunk out of what they're able to do. It removes some pricing power, maybe removes a little bit of volume growth that they previously enjoyed.
It's something that, if you're looking at investing in this space, you need to be aware of. There's going to be a lot of disruption going on over the next few years, and I expect this trend is going to continue.
The article 1 Unexpected Loser From This Huge Trend originally appeared on Fool.com.Andrew Tonner has no positions in the stocks mentioned above. Austin Smith owns shares of Unilever. Eric Bleeker has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend The Procter & Gamble Company and Unilever. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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