“Retailers with store brands were able to react more quickly to the recession than the large national brands,” says Don Welge, president of the Gilster-Mary Lee Corp., a $960 million private-label manufacturer that produces more than 8,000 items for roughly 200 supermarket chains. Indeed, Gilster-Mary Lee’s sales rose $100 million between 2008 and 2009 as its clients raced to increase their offerings. “Store brands were able to gain a competitive advantage at that time,” Welge says. “Consumers had less money in their pockets and were shopping harder to save money for their families. As a result, some started using store brands who hadn’t tried them before.”
To learn more about the Private Label Manufacturers Association, visit www.storebrandsusa.com
An interesting thing happened this time around, though. Customers who tried store brands for the price increasingly returned for the taste. While shopping at her local Raley’s supermarket in Reno, Nev., lawyer Molly Rezac thought she’d give the lower-priced Raley’s-brand mozzarella sticks a try for her children’s lunch boxes. “When I switched back to the national brand, my children didn’t like it,” she says. “They only want the Raley’s brand now. If the less expensive brand works just as well or better, why wouldn’t I buy it?”
Rezac is not alone in her thinking. “Consumers’ perceptions of private label have changed dramatically,” says Brian Sharoff, president of the PLMA. “Around 1999, 40 to 50 percent of consumers would say private label was as good as the national brand. Now that is up to 65 to 70 percent.” The expert taste testers at Consumer Reports would agree as well. In a study released in August 2013, tasters rated that 33 of 57 store-brand foods tested as good or better than the national brand.
Consumer Reports tested staples such as ketchup, frozen veggies and mayonnaise that long have been available in store brands. However, where store brands are seeing the greatest growth, Sharoff says, is with value-added products, not budget items. For example, Whole Foods broadened its 365 Everyday Value line with 40 globally inspired appetizers, from pot stickers to wood-fired pizzas. ALDI introduced a Specially Selected line of premium cheeses and imported coffee that it already sells in Europe, where store brands account for 40 percent of grocery sales across the continent. In the periphery of the grocery store — deli, seafood, bakery — store brands are filling niches overlooked by the national brands.