Who’s Behind “Brand X”?

1 Dec

“Brand X” is the euphemism that is sometimes used to describe a private (store) brand. Store brands are often produced by the big-name manufacturers that occupy shelf space in the store. But, they are also produced by companies that specialize in private brands. One such company is Ralcorp, which is being acquired by food industry giant ConAgra – the maker of such popular brands as Egg Beaters, Healthy Choice, Reddi Whip, Libby’s, Wesson, and many more.

ConAgra’s purchase of Ralcorp reflects the solid popularity for the lower-priced “Brand X” version of products rather than the more expensive manufacturer brands. As Paul Ziobro and Julie Jargon report for the Wall Street Journal: “Once the deal closes, Omaha-based ConAgra will become the largest private-label food manufacturer in the U.S. During the economic downturn that began in 2008, shoppers flocked to budget-friendly store-brand items. Private-label brands—such as Trader Joe’s Joe O’s, which compete with General Mills Inc.’s Cheerios — now make up nearly 22% of packaged-food sales in the U.S., according to Nielsen data, up from 18.4% in 2007. Retailers have reason to love their in-house labels: They have profit margins about 10% to 15% higher than sales of national brands such as Kellogg and Kraft, analysts estimate. Some grocery retailers, like Target  and Safeway have even run ads to promote their store brands.”

Click the photo to read more about ConAgra’s move into private brands.

Source: Bloomberg News

 

11 Responses to “Who’s Behind “Brand X”?”

  1. Xiaming (Harry) Li December 1, 2012 at 11:23 pm #

    More and more retailers tend to sell their own brand products like Kirkland from Costco and Great value from Walmart. For the advantage of the distribution, they get more profit margin. Sometimes, for food products, the consumers are tire of the general flavor of the big brand products, and the private brand can attract consumers by its new and unique taste.

    • Evans on Marketing December 2, 2012 at 8:48 am #

      good comment

      • michelle baker December 2, 2012 at 4:44 pm #

        sometimes i feel that it is almost irresponsible as a shopper to buy special brand name products all the time. i believe it is one thing if you specifically really like that brand because its product suits you the best from all others but for something like cheerios, condiments or even drinks that are a dime a dozen, they will taste the same as the expensive brand names sometimes even better. i work at starbucks and sometimes i am shocked at the money people spend on their drinks regularly, up to $6. i think it is way too overrated. Sometimes we get so caught up in the brand name that it hurts our bank account and is not even worth the price.

  2. Greg Shapiro December 2, 2012 at 3:49 pm #

    A few years ago I had a business that was trying to get a marinade onto the market. From what I have learned from that experience is almost no store produces their own private label, it is the exact same product as the name brand, with little to no change. Stores like it as they can offer the product cheaper to its customers and buy at a deeper discount (which accounts for their higher profit margins). For the manufacturer the way they offer private labels profitably is they use volume discounts based on the volume orders they are receiving for the private label (on top of regular branded orders) and they save money usually on labels, transportation and marketing costs for the private label brands. Bottom line for the consumer, buy the private labels your going to get the same quality in most cases as the name brand items and save big money.

  3. Konstantinos December 3, 2012 at 12:25 am #

    I strongly agree with the article. Usually Private Label products are moved in an one to two years difference after the successful introduction of a Brand name product. However, the situation in the US is much smoother for the Brand products than in Europe and especially in the UK. In comparison with the US where the major retailers besides Wal-Mart and Target which are holding a big portion of the market, the rest of the retailers have a smaller influence and are competing openly for consumers preference. In England the six major retailers meaning Tesco, Waitrose, Asda (Wal-Mart in the UK), Sainsbury’s, etc. are controlling almost 60% of the market. Making difficult for new Brand companies to penetrate in the market.

  4. Jiadong Zheng December 3, 2012 at 6:07 pm #

    Big retail company always prefer use their own brands to attract consumer, such as target and stop&shop.

  5. Ezekiel Arrington December 3, 2012 at 10:12 pm #

    I grew up with private brands and when I began my adult life I decided to see what all the fuss was about for these name brand products and I found that private is not only the same quality but in some cases better (in my opinion). I even went as far as applying this concept to my clothing selections. I do not shop for clothing much but when I do I off brands.

  6. Traci December 5, 2012 at 10:18 am #

    I’ve always found it so interesting the “brand” vs “generic”. Once I found out they are usually the same if not similar, I could never understand the need to buy brand name. It is almost wired in our brains that a brand name means better quality, and we look down on generic and the people that buy them. The fact that some manufacturers produce both was something that really shocked me. And the scary part is, although I know all this now, I still refuse to buy private brands. It’s almost a peer pressure thing. Very interesting.

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