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Store-brand food prices rising

Generic products still cost less, on average, than national brands, but the gap is shrinking. Would you pay more for a store brand?

By Giselle Smith Feb 7, 2012 5:56PM

When I was in college, the generic no-name beer with its plain white label and black lettering was a favorite at dorm parties, where we wrote our own names on the blank labels. My tastes have changed since then, but so have generic products.

 

I may not buy no-name beer anymore, but I still reach for private-label grocery brands to stretch my food dollars, and I'm not alone. During the recession, a lot of people turned to store brands to save money -- and many grew to actually prefer those products.

 

In fact, people are sometimes willing to pay more for store brands than their name-brand equivalents, according to The Wall Street Journal.

 

On average, private-label brands are still 29% cheaper than national brands -- but the gap is shrinking, according to a recent report (.pdf file) from SymphonyIRI. Stores have increased prices on their private-label products by an average of 5.3% over the past year, compared with an industry average of 1.9%, says Supermarket News.

 

The price tags on perishable private-label goods are up even more -- 12% last year, compared with 8% for national brands.


But overall sales of store brands have increased as well, the Journal reports:

For decades, generics accounted for about 20% of the foods and beverages consumed in American homes, according to the NPD Group. But their market share has climbed to 29%, and stores are trying to push that figure higher.

 

Separate and not equal

Many generic products are made by the same companies that produce the national brands, such as H.J. Heinz, Tyson Foods and Kimberly-Clark, the Journal says. The manufacturers tend to keep those relationships quiet, however, and they get a smaller cut when the products carry a store label. Post continues below.

For retailers, private-label products offer better profit margins, but they can also be "strategic weapons," according to Supermarket News:

 

Private label products are viewed as differentiators. They are no longer simply "me too" products that offer "the same thing for less money."

 

Some large retailers have effectively branded their private labels with their own identities, attracting consumer loyalty along the way. As Time magazine reports:

A big part of the reason we like store brands more now and in some cases even prefer them over big national brands is that retailers have expended considerable effort branding their own lines of goods. Instead of a no-frills, drab label with only the bare minimum of information printed on it, brands like Target's Archer Farms line of snack foods, beverages and other items have their own colorful logos and distinctive branding.

Chains such as Wal-Mart, Safeway and Kroger are improving the quality and packaging of their store-brand products and establishing their private labels as brands in themselves, the Journal reports. Of course these efforts cost money, which may account for the increased prices of generic goods.

 

A few store brand purchases that cost more than some of their name-brand counterparts, according to the Journal:

"It's much less about value and price than it used to be," Clarkston Consulting analyst Steve Rosenstock told the Journal. Results from his company's recent study on purchasing showed that 28% of consumers chose store-brand products over national brands because of "loyalty and positive experiences" rather than price.

 

Not all generics are going upscale, however. While some products in Target's Archer Farms line are priced slightly higher than the national brands, the retailer carries a second generic line, Market Pantry, that is priced lower.

 

It remains to be seen whether consumers will continue to buy generics as the economy improves, or whether they'll pay more for private labels if the prices keep rising. The national brands, for their part, are not going to sit back and watch the market share for store brands increase.

 

Have you adopted some store brands as your favorites based on quality rather than price? If store-brand prices keep heading up, will you change your shopping habits?

 

More on MSN Money:

45Comments
Feb 7, 2012 7:46PM
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Seriously? I buy generic because the price of food has increased faster than my paycheck! If the name brand is cheaper, I will buy it without any hesitation. Loyalty? RU KIDDING? The only thing Im loyal to is feeding my family!
Feb 7, 2012 8:09PM
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Generic food prices increasing! Lord that is a surprise. Unless you have been living in a cave all prices on everything everywhere in this country have been increasing. Food prices are absolutely ridiculous and it is just going to get considerably worse with what is going to take place with the economy in the near future. And this government has the audacity to issue a cost of living index and not include food and gas prices in it which just happens to be the two most expensive items we are forced to purchase and are raising the fastest. Just another indication of what's on the horizon for us.

Feb 7, 2012 9:17PM
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But, but, but... the FED said that inflation is under control.  Food prices higher, gas prices higher, tuition higher, taxes higher--but peoples' paychecks (if you are lucky enough to get one) are flat.  Hmmm, yet there is no inflation according to the FED, which means they can continue executing policies to "inflate" the economy.  

Like Thomas Jefferson predicted long ago, the future of this country will ultimately be in jeopardy as long as central bankers are allowed to run monetary policy.... write your Congressmen and demand that the powers of the FED be curtailed, if not completely usurped.
Feb 7, 2012 11:05PM
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never met (or heard of) ANY politician who didn't exploit any perk they could get their hands on, Republican/Democrat
Feb 7, 2012 10:48PM
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Instead of worrying about penny pinching for the  rest of our days, lets get a President and administration who don't waste the tax payer's money on "perks" such as the President and First Lady using two jets to fly to their destinations on our dime, hosting HUGE dinners with special "themes", etc.  (And I know that other Presidents did these things, too, however bad times should make for them to save US money, they should feel it, too)  And for congress, how about a little bit of a pay cut there?  One of them said that they were going to give 15% of their income to the national debt, which amounted to $26,000.  If 15% of their income (without perks) is $26,000, I think they all could stand a pay cut for their doing nothing down there!  IT is a travesty that the American people need to cut back while the President, his Administration, and congress don't! 
Feb 7, 2012 10:05PM
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I will buy whichever product costs less, bottom line.  So they can increase their prices, I will decrease my buying.  If they are selling more volume, why do they need to raise prices?
Feb 7, 2012 8:39PM
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There are some generic products that just will not replace name brand... I'ts just a trial and try.  I buy 80% generic though..  Works for me..
Feb 8, 2012 12:28AM
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The white label cans should come back.

 

Instead of paying farmers not to plant their crops,  have our government pay them to do so.

Then put all of these crops into While Label cans and make this the only cans Food Stamps can buy.

 

 

Feb 8, 2012 4:06AM
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i cant seem to understand...our ecomony has gone down the tubes..people dont have jobs..then why are gas prices going up?..food going up?..rent going up?...almost everything is going up....if ya cant afford gas to put in yer car to go look for a job it kinda makes it impossible to get around...food is so overpriced now ,no one is buying it...i watched a meat worker at the local chain store throw away over 400 dollars worth of meat..steaks,ribs,chops,chicken,hamburger,roasts,..he told me it was a daily thing to throw it all away..and he said that all the other stores in the chain do it daily too...what a waste..people are standing in food lines and starving and they (the store)are throwing away enough meat daily, to feed a neighborhood for a month...we need to stop...lower the prices..get back on our feet....then gradually raise things after we are recovered..this trend of everything going up has to stop...no wonder so many people are struggleing..people need to be a little more in tune with their surrondings before they start thinking..i have to raise my prices...lower them and you will have more people spending money...more people spending means more money in use..only way we are going to get back on our feet is to stop this madness.
Feb 8, 2012 2:00AM
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These days I buy whatever is cheaper.........I don't care who it is. I have NO allegiance to any store or brand name.  They can all kiss my A.
Feb 8, 2012 4:27AM
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actually you would be surprised there is no difference in store brand over name brand on a lot of products regardless of what people think,,i work at a bakery that makes kraft and nabisco branded oreos and chips ahoy cookies among the other various products that we make and we use the same product but  just different packaging for walmart,krogers,save-a-lots,and yes even the dollar general and family stores!  We even have what the locals around here call the canning factory that makes canned vegtables(corn,peas,grn beans etc.) that puts the same product in the can but uses different labels as well one day it might be green giant,libbys,del monte,bruces allens and the list goes on. so all you "haters" of generic think twice before you pay that higher price on groceries because i know better
Feb 7, 2012 10:17PM
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Government's count on inflation should exclude high ticket items such as large appliances, electronics, and the like.  Inflation should count the day to day items that the average American purchases such as food, gas, utility costs, housing, ect.  That is a normal purchase.  How often does one buy a TV or a refrigerator...lets get real with inflation--it needs to reflect where paychecks really go.  This may not be a popular comment--but those who must utiilize foodstamps as a means for food for their families also suffer the cost increases because foodstamp allotments have been cut during this time which fairs even worse for these families because generally foodstamps did not provide enough relief in the first place.  Whether it be those on foodstamps or out of paycheck, food increases coupled with cut backs in income sources are increasing hunger.  A person can only keep cutting back so far...
Feb 7, 2012 10:15PM
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Maybe we should all go get food stamps... Has any one got a pay raise lately?
Feb 8, 2012 12:08AM
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yes grocery bills are rising  and they will only go up. i am in the trucking business ,we haul frozen foods. as long as fuel  keeps rising so will food prices, we are cutting operating costs as much as we can and no i dont have new expensive trucks either. they range beween 6 and 10 years old. food  is planted or raised even cattle are cared for using tractors combines and trucks,operates on diesel fuel. if you watch closely trucks bring in the food to the stores, not hybrid or battery powered obama vehicles. its not rocket science. one gallon of milk from the cow to the store my be transported by at least 3 trucks. it is easy to burn up 400 to500 dollars a day in fuel if you count the refrigeration unit. my trucks average around 6 miles to 6 and a half miles to a gallon . if fuel continues to rise so will my prices to offset expences.
Feb 7, 2012 10:08PM
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I do actually like some generics....but, if the prices get competitve with name brands....I probably will just go to my regular brands and call it a day. I am just sorry everything keeps going up, but wages. I will be lucky to continue buying a lot of things in the future.

Feb 7, 2012 10:45PM
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this has nothing to do with whoevers in office, it has everything to do with greed, from wall street with the bets on commodities on down, those who distort the markets for greed want this to be a third world nation of pay so they can live the high life, with all that that entails. and you can't blame all this on unions, since there is only a small fraction of workers who belong to unions.
Feb 8, 2012 12:08AM
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I have always bought store brands, and found them to be better than the name brands.. Regardless of price, i want quality and taste.. I  believe that the name brands have gone down hill, because the brands think consumers will keep coming back because of loyalty... Not true.

YOu want loyalty, keep the product as fresh and good as it used to be..

Feb 7, 2012 10:22PM
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Prices are raising, we have to feed our own children and the fed wants us to pay for others as well.  How are we supposed to survive?  Re elect that person in office and war will break out in this country soon.  There isn't much more we all can take.  Is there?

Feb 7, 2012 8:34PM
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I want to change my shopping habits. I want to shop for the people who raise prices when all of those that are hurting cant afford it. I understand theywant to make a proffit, but cant they wait till the economy gets a little better? Crooks!
Feb 8, 2012 8:43AM
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I buy many store brand items but there are certain things I just don't mess around with; TP for one.  I have three "women" living in my house.  Get the wrong TP and you're dead!

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