How stores’ private labels went from cheap goods to premium products

The Washington PostMarch 7, 2014 

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 disco dancing in 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.

We have guys like Stephens, who now runs a brand-consulting firm based in Toronto, to thank for that. Those pre-Internet mass coupon mailings might have helped as well, enticing us to try lesser-known name brands at significant savings.

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. 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.”

Packaging and price 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, of course. Icons such as 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.

Nine store trips and a can opener found little difference in quality and flavor among the store-brand, 28-ounce canned crushed tomatoes from Aldi, Wegmans, Target, Walmart, Food Lion, Giant, Harris Teeter, Shoppers Food and Pharmacy, and Snider’s; the latter two carry the same Essential Everyday store brand. Price was another story. Aldi’s brand cost 20 to 79 cents less.

“It comes down to a mix” of store and name brands for Allison Collins, who runs training and development for Tiny Chefs, which offers children’s cooking classes and camps. The Culinary Institute of America graduate says “I’ve never noticed a difference in quality. I like Trader Joe’s vanilla, and my husband loves Harris Teeter creamy peanut butter. It tastes just like the kind he had when he was little.”

Bonnie S. Benwick writes for The Washington Post.

The News Tribune is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service