Store brands savor respect

03/08/2014 12:00 AM

03/07/2014 4:37 PM

By 1988, Nabisco’s Chips Ahoy had been on the market for a quarter-century. Two years later, the brand would knock Oreos off the podium as the company’s top-selling cookies; it was already at No. 1 across all of Canada. And Dave Nichol, the man responsible for marketing at that nation’s largest grocery chain, was not happy about it.

He challenged his team at Loblaws to build a better chocolate chip cookie. Use real butter, he said. Twice the chocolate. Package it attractively, and sell it for less.

They did. Under Loblaws’ own President’s Choice label, the Decadent Chocolate Chip Cookie became a sweet testament to the power of a store brand and celebrated a silver anniversary of its own last year.

Tom Stephens remembers it well, because that’s when the career marketeer brought President’s Choice products to American grocers from coast to coast. “At that time, the U.S. guys wanted the cheapest stuff they could get,” he says, referring to the private labels that earned the term “off brands,” which looked “generic and were poor quality.”

The President’s Choice line represents one turning point in the annals of “American Hustle”-era store brands. When people were discoing in printed polyester, cartons of commodity-type foods were wallflowers in plain white, with simple black lettering. Once retailers began to offer options that undercut name-brand prices and emulated the flavor profile and even the look of name brands, cost-conscious shoppers opened up to them.

The result: a public that today is less loyal to name brands overall, and one that increasingly rates store brands in consumer surveys as superior or equal to the products with millions of advertising dollars behind them. Retailers are grabbing their share of the premium-brand pie, too, by creating goods in niche categories such as all-natural and gluten-free. The theory goes something like this: Establish consumer confidence with a good-quality store brand, and shoppers will be more apt to try store brands across the aisles.

When we find the 365 Everyday canned beans at Whole Foods next to Eden Foods Organic beans, or HT Traders Prairie Harvest Crunch close to the Grape-Nuts at Harris Teeter, we welcome the options. Brian Sharoff sees the very segmentation of America in play.

“Social and economic strata of the past 10 or 15 years drive what retailers put on the shelves,” says the longtime president of the international Private Label Manufacturers Association. Retailers “have the ability to negotiate good prices for their own brands and display them the most efficient way.”

Private labels evolve

Packaging and pricing of store brands go hand in hand, he says. “If you are an average shopper who likes to go to Giant or Kroger, we know two things about you. You shop there on a regular basis; there’s a degree of familiarity and loyalty. And you have decided what you’re going to buy before you get there. You might choose a different-size bottle of Coca-Cola, but you’re going to buy the Coke.”

So retailers sell their store brands for considerably less and try to make them look as appealing as possible, Sharoff says. National name brands used to dominate commercial television time and our consumer awareness. The very nature of how we watch TV shows – often skipping commercials altogether or binge-watching via Netflix – has diminished the reach of brand-name marketing, Sharoff says.

There are exceptions. Cheerios and Heinz ketchup are far from being unseated. But the evolution of private-label brands seems to follow the Loblaws chocolate chip cookie model: better quality, better packaging, better value.

A visit to any of the Washington area’s dozen Aldi stores proves the point. The German-owned grocery chain established a foothold in the United States more than three decades ago, yet it remains a bit of a mystery even to those who think they know the score.

Familiar and safe

For a place that rents its carts, won’t take credit cards, charges for bags and offers no loyalty program, Aldi attracts its share of regular, satisfied customers – all the more remarkable because more than 90 percent of its stock is private-label brands that mostly tout “made in the USA.” Chances are good those brand names won’t ring a bell, because they are exclusive to Aldi. However, they are designed to sound like safe bets: Baker’s Choice, Friendly Farms, Simply Nature, Mama Cozzi’s Pizza Kitchen.

Unlike favorite items that can go AWOL at Trader Joe’s, the 28-ounce cans of Happy Harvest crushed tomatoes are at Aldi every day – and they are the only kind and size of crushed tomatoes in the store.

If you’re not familiar with Happy Harvest, though, why buy it? It takes either a leap of faith or Aldi’s guarantee of double your money back. The chain does not divulge its manufacturers or producers.

“It comes down to a matter of intellectual property,” marketer Tom Stephens says. “Retailers put a lot of effort into their private-label programs. They don’t want other retailers to know who their sources are; that would be a competitive advantage.”

Harris Teeter is not as guarded, at least when it comes to the provenance of its canned crushed tomatoes. A quality assurance supervisor based in the company’s Matthews headquarters happily confirmed that the Harris Teeter brand is packed by Red Gold in Elwood, Ind., the largest privately held “fresh-pack” tomato processor in the country.

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