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#1
Old 03-24-2012, 02:31 AM
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Generics, store brands, name brands, and price.

In the late 70's/early 80's, when inflation was a horrible scourge, there were many products that were made as "generic" or 'store brand".

You know what I'm talking about.

Back then, the quality of such products was, many times, terrible. Tuna that looked/smelled/tasted like what one would imagine cat food looked/smelled/tasted like. Even macaroni & cheese that was like @#q$% and *&k%.

Today the quality of store brands and brands such as found at Aldis are as good as, if not better, than name brands. I bought a 12 pack of Roundys diet cola at Pick n Save and it tasted identical to Diet Coke yet was only $1.99 compared to $4.65. The quality of the items at Aldis is remarkable. For example: I cannot tell the difference between the Fruit Rounds cereal they sell compared to Kelloggs Froot Loops, with the exception of the $2.20 price difference.

*Why/how did the quality of non-name brand products rise so in just the past few years. What took so long?

*Is this proof that the price of name brand items is artificial, completely driven by advertisements and not quality?

*Will such entities like Aldis eventually significantly affect prices of "name brand" products?

*What internal/external conflict is created for a store (like Pick n Save) to sell their own product at a lower price than a name brand product that they also carry? Especially when both products appear to be identical?

*Is the average person, earning the average income, so influenced by commercials and "name brand" recognition, that they would pay 50 to 100% more for a product when they could have an identical product for half the price? If so, is there any data to suggest any change in this norm from, say, 30, 40, 0r 50 years ago?

Last edited by pkbites; 03-24-2012 at 02:36 AM. Reason: There was a coupon. It expired today. I had to redeem it.
#2
Old 03-24-2012, 04:30 AM
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Quote:
Originally Posted by pkbites View Post
*Why/how did the quality of non-name brand products rise so in just the past few years. What took so long?

[...]

*Will such entities like Aldis eventually significantly affect prices of "name brand" products?

*What internal/external conflict is created for a store (like Pick n Save) to sell their own product at a lower price than a name brand product that they also carry? Especially when both products appear to be identical?
I apologize for cutting the questions on pricing and shopping driven by advertisements; those aren't subjects with which I've had experience, so I'll let someone else comment on them. I do have about 20 years' experience (retail manager, buyer, etc.) to feel comfortable touching on the ones I did quote.

Generics were becoming quite high-quality a while back. Wal-Mart introduced their "high quality store brand" Sam's Choice label 21 years ago, and I recall both Kroger and Target doing the same (creating a "high quality" store label above Cost Cutter and Target labels, respectively) about 15 years ago. And Aldi's has provided high-quality generics in the US since 1976, and Trader Joe's since 1979. Quality products have been available for private labels for at least 35 years.

(A little bit of personal experience on retail front lines here.) Probably the reason that they weren't common until before 1990 (outside of Aldi/Trader Joe's) is that few retail chains were large enough to make the investment in developing their own brands. If a chain was going to then stock basic generics, they just stocked the lower-cost, lower-quality generics. Wal-Mart didn't really become a national chain until 1990 or so, and didn't start going into cities until a little while later; it was specifically the fact that the chain had "matured" that encouraged them to invest a relatively large part of their profits (at the time) to develop in-house brands and do sourcing. Kroger and Target were just regional chains, too small to warrant development of a store label that could compete on a national level. They (and other regionals) did have store brands, but they weren't really developed nor of uniform quality across products, which is why all the chains had to create new labels to reflect "uniform quality" when they decided to make the investment.

Finally, once these labels were created, products were added to the mix over time, rather than risking inclusion of substandard products by buying suppliers' ranges en masse. The folks who first enjoyed high quality generics were probably those who had large families, did "stocking up," buying the available staples. It took a while before things like gnocchi in pesto frozen entrees became available, while quality soups and sodas had been around for ages.

So, short answer to the first question quoted: higher quality generics have been possible for at least 35 years (Aldi's) but weren't more common before 1990 because the big chains didn't/couldn't make the substantial R&D investment to create high quality generics lines. Finally, it's taken time for these private label brands to expand to include wide varieties of merchandise, so the high quality of existing generics may not have been visible to consumers who were looking for other, unavailable products.

For the second question quoted: I doubt that the generics will affect name brand prices much. Most chains store multiple tiers of products--low-end generics, high-end generics, low-end brands, high-end brands--and products are placed in each tier based on the willingness of the distributor to balance per-unit profit versus volume. Quite often, the same product is packaged and sold in multiple tiers, which allow a distributor to capture multiple markets and even play them off of each other to maximize profit.

Third: there is nearly no conflict for the store between name brand and generic. Most chains (Wal-Mart noticeably excepted) are paid by manufacturers to allot shelf space for name brand product, so the chains aren't too concerned with name brand sell-through; they'll make money even with no sales. Name brands draw customers into stores, especially thanks to coupon and TV advertising. Plus, the availability of name brands draws attention to the generic, so it behooves the store to continue stocking brands. The profit margins on generics are insane; the profit margin on the generic can be 75%, while the margin on name brands could be 10%, and the store will generally net more profit on the sale of a generic versus a name brand, so it really behooves the store to carry a generic when possible.
#3
Old 03-24-2012, 09:34 AM
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The OP's experience is different to my impression of how things are in the UK. As long as I can remember, store-branded goods have been, on average, nearly as good as name brands, occasionally better. That said, at least one of the major chains has responded to the threat from Aldi et al by creating another tier of store branding, slightly cheaper than their middle tier and full of made-up brands just like those you find in Aldi. Some of it seems to be exactly the same product as the regular stuff, but in different packaging.
#4
Old 03-24-2012, 10:11 AM
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In the 70's I worked at a Green Giant Co plant. With the same product sometimes the labeling would be changed from Green Giant to a store lable mid shift.
#5
Old 03-24-2012, 10:40 AM
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There was a difference between store brands and generics.

Store brands have been around for decades (when I was growing up in the 50s and 60s, there was "Ann Page," the store brand of A&P where I lived, which existed back in the 1930s). They were generally made by the same manufacturers who made brand names, except with a different label. In some cases, like canned vegetables, they used the vegetables that were not top quality, but still good (say, the beans were a little blemish), but generally they were still a good choice. Most of the difference in price was due to the fact that the packagers didn't spend money advertising their store brands (the store might, but not them) and they didn't have to pay stocking fees.

In the 70s, generic food were a passing fad. They were cheap and low quality and usually packaged in black and white containers. Their quality usually low and not even their lower prices could make up for it. It's hard to find a generic brand any more: it's all now store brands because of the bad reputation and jokes about generic food (see Repo Man, where everything except for a plate o' shrimp was generic).

Sometime "generic" is used to refer to store brands, but there is a difference.

About a decade ago, stores started creating an upscale store brand, usually with a different name than their regular brand. Around here, Price Chopper has the Price Chopper brand for their regular store brand and "Central Market" as their upscale store brand.
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#6
Old 03-24-2012, 12:10 PM
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It's funny how peoples' selective memories shape the past. Generics were a short-lived aberration that were an utter failure yet still define the category. But asking why store brands have gotten better since generics is a little like asking why compact cars have gotten so much better because the first one - the Yugo - was so bad.

Tiered pricing of low, medium, and higher quality items goes back probably forever. Macy's made it into an institution. There's a cute story in And the Price is Right by Margaret Case Harriman. In those days nothing was left out for shoppers to paw at. Everything sat (unpriced) inside glass counters and sales girls stood behind them and handed merchandise to the customers when asked. A shipment of $5.94 French gloves came in that were thought to be too expensive. But they advertised them and told the sales girls to show the customers the $2.94 and $3.94 gloves first. When they finally brought out the French gloves the difference in quality was so great that they sold out the first day. Or so they claimed.

A good book just came out on A&P as well, The Great A&P and the Struggle for Small Business in America by Marc Levinson. A&P made the big push to a national chain in the 1920s. The stores would be unrecognizable today. They were 30' by 20', had no refrigeration, no meat or fish, no non-food products. Yet they were denounced in terms that are word for word identical to what you hear about Wal-mart today.*

Even at that size they adhered to the three-tier pricing for most items. And they had a number of house brands. Ann Page became famous but so did Eight O'Clock coffee, their best seller. They did a lot of vertical integration, buying up canning plants and wholesalers and delivery companies when that was still legal.

The chain cratered after 1960 and barely survives today under several names. Even the store brands like Ann Page were too musty to keep. All the A&P store brand now have different names from the past glories.

As Chuck said, poor food quality is a killer no matter what the pricing level is. Store brands have good quality and keep prices low because of the use of slightly irregular but still good food and no advertising or stocking fees built in. They will always live side-by-side with the name brands, who have the budget to develop new items, brand extensions, and better techniques.The trade-offs are so huge that you have to know and try every brand in a category to get a feel for which is acceptable to you. They are seldom identical, even when produced by the same company on the same lines. There are always ways to save a penny or two.


*We don't remember today but a number of states introduced punitive taxation on chain stores, up to $500 per store for every store the company owned even if that store wasn't in the state. The Supreme Court batted those down several times but a Senator made it a crusade and they finally allowed it. Since A&P had 18000 stores at the time and a small store might gross - not net - $1500 a year they eventually had to give up the tiny store concept and make every store bigger to survive. Not the intended consequence. Those taxes are now illegal again.
#7
Old 03-24-2012, 04:09 PM
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One quick thought - there has been grumblings in the media over the last couple of years in Norway that store brand products are basically carbon copys of name brand products, and can be sold cheaper because there is no R&D costs to recoup. The name brands, at least here in Norway, basically has to accept this because the three or four national store chains hold all the power when they decide which brand names to allow into their stores.

How much of a truth there is in this allegation I'm unsure of tough, as I have zilch experience with the grocery bidniss.
#8
Old 03-24-2012, 05:16 PM
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Quote:
Originally Posted by Exapno Mapcase View Post
It's funny how peoples' selective memories shape the past. Generics were a short-lived aberration that were an utter failure yet still define the category. But asking why store brands have gotten better since generics is a little like asking why compact cars have gotten so much better because the first one - the Yugo - was so bad.
Just a nitpick, the Yugo was a sub-compact and was far from the first of the type.

The Crosley, VW Beetle, Saab 92, and the Nash come to mind.

Last edited by rat avatar; 03-24-2012 at 05:18 PM.
#9
Old 03-24-2012, 05:40 PM
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Originally Posted by rat avatar View Post
Just a nitpick, the Yugo was a sub-compact and was far from the first of the type.

The Crosley, VW Beetle, Saab 92, and the Nash come to mind.
I believe that was the point. The compact or sub compact started with the Yugo about the same way generic/store brand groceries started in the 70's.
#10
Old 03-24-2012, 06:09 PM
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This is based on a casual conversation I had with some of the higher-ups in a supermarket chain in Australia quite a few years back. Things may have changed, so take it for what it's worth.

According to them, the store brands usually aren't made in the same factories as the name brands (that was my question). They're mostly made by newer, smaller companies that aren't yet in a position to put their own brand on the supermarket shelves. Selling your product in a supermarket involves all sorts of contracts, slotting fees and commitments that a smaller manufacturer often can't meet. So the supermarket chains sometimes let them make store brand products for them - it's a foot in the door for the manufacturer, and the supermarket can easily switch to someone else if they can't keep up supply or quality.
#11
Old 03-24-2012, 06:37 PM
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Quote:
Originally Posted by tellyworth View Post
This is based on a casual conversation I had with some of the higher-ups in a supermarket chain in Australia quite a few years back. Things may have changed, so take it for what it's worth.

According to them, the store brands usually aren't made in the same factories as the name brands (that was my question). They're mostly made by newer, smaller companies that aren't yet in a position to put their own brand on the supermarket shelves. Selling your product in a supermarket involves all sorts of contracts, slotting fees and commitments that a smaller manufacturer often can't meet. So the supermarket chains sometimes let them make store brand products for them - it's a foot in the door for the manufacturer, and the supermarket can easily switch to someone else if they can't keep up supply or quality.
I can't speak to Australia, but generally speaking this is not true for the U.S. It may happen for some goods but it's well known that single plants make national and store brands.
#12
Old 03-24-2012, 06:51 PM
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Originally Posted by Exapno Mapcase View Post
I can't speak to Australia, but generally speaking this is not true for the U.S. It may happen for some goods but it's well known that single plants make national and store brands.
Are you sure? That's widely believed in Australia, but it's mostly not true (or wasn't in the late 90's when I asked).
#13
Old 03-24-2012, 07:12 PM
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Quote:
Originally Posted by tellyworth View Post
Are you sure? That's widely believed in Australia, but it's mostly not true (or wasn't in the late 90's when I asked).
It has been well documented in many food recalls.

http://fda.gov/Safety/Recalls/ucm290212.htm
#14
Old 03-24-2012, 07:18 PM
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The problem is that it is hard to know which ones are made in the same place and which ones are made in a different place and are terrible.

Most of the higher quality store brands are pretty decent, but I've tasted some off-brand cereals that were pretty poor representations of the original. Of course, one could say that the off-brand was not actually bad quality, it just tasted different, and people define different as "not as good".

That is why I tend to stick to name brands probably more than I should. I've had bad experiences.
#15
Old 03-24-2012, 08:13 PM
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It seems hard to believe the profit margin is higher for the store brands. If it was, you'ld think
places like Wal-mart would carry more of them, and not constantly run out of the store brands
they do carry.

For example, at my local wallyworld, the "Great Value" brands are out of stock more than half
the time. I was there yesterday and they didn't have the GV brand corn chips, yougurt, frozen waffles, ect. meaning I had to pay for the name brand. I always laugh when I go by the spice rack section...EVERY GV slot is always empty...not once have they had the GV spices in...you'ld think they would just give up and not leave an empty slot and quit pretending they
ever get their GV brand in.
#16
Old 03-24-2012, 08:52 PM
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Quote:
Originally Posted by rock party View Post
It seems hard to believe the profit margin is higher for the store brands. If it was, you'ld think places like Wal-mart would carry more of them, and not constantly run out of the store brands they do carry.

For example, at my local wallyworld, the "Great Value" brands are out of stock more than half the time. I was there yesterday and they didn't have the GV brand corn chips, yougurt, frozen waffles, ect. meaning I had to pay for the name brand. I always laugh when I go by the spice rack section...EVERY GV slot is always empty...not once have they had the GV spices in...you'ld think they would just give up and not leave an empty slot and quit pretending they
ever get their GV brand in.
That's because one of the things you pay for when you buy a name brand is its distribution network. The folks from Coca Cola, Frito Lay, Birdseye, etc. are responsible for making sure there's product on the shelves, and they usually do a good job of it.

By contrast, Wal-Mart takes care of stocking its own brands. They come on the regular truck along with the disposable diapers and store-brand aspirin. Given Wal-Mart's legendary reputation for inventory control I'm a little surprised you have those kinds of stocking problems at your neighborhood superstore, but that's why the Eggo waffles are in stock and the store brand isn't.
#17
Old 03-27-2012, 08:38 AM
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Consumer Reports generally reported that store brands were made by the same suppliers as national brands. Generics may be different, but I still buy a few unbranded things (notably powdered milk. And I buy a store brand chocolate (72% cocoa) for 1/3 to 1/2 the price of nationally branded and cannot tell the difference (about $7.50 a pound).
#18
Old 03-27-2012, 09:48 AM
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Quote:
Originally Posted by pkbites View Post
In the late 70's/early 80's, when inflation was a horrible scourge, there were many products that were made as "generic" or 'store brand".

You know what I'm talking about.

Back then, the quality of such products was, many times, terrible. Tuna that looked/smelled/tasted like what one would imagine cat food looked/smelled/tasted like. Even macaroni & cheese that was like @#q$% and *&k%.

Today the quality of store brands and brands such as found at Aldis are as good as, if not better, than name brands.
There's some "apples and oranges" here. The 70's-80's "generic" was a different animal from store brands. It was its own brand, with stark white box/black letters packaging. If you looked closely, you could find the brand name somewhere on the box (I don't recall the name, but it might have had the word "generic" in it). To my understanding it was an attempt to capitalize on the concept of generic pharmaceuticals, which was a growing popular movement at the time. So while it tried to give the impression of an almost-as-good-but-much-much-cheaper non-corporate alternative to the well-known corporate products, it was in actuality a not-nearly-as-good corporate product from a low-profile corporation. Store brands had a passing similarity in a low price point, but as others have discussed have their own separate history and quality.
#19
Old 03-29-2012, 09:18 AM
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I think it varies a lot from item to item. We buy much of our food from Aldi's and a lot of little miscellaneous health items from Dollar General. Some of the Aldi's stuff we bought once and never again. Most of it is just fine. Besides, if something is half or less as much, you can compromise a little. Come on, I drive a Cavalier, not a Lexus.

Also, yes there are many cases where stuff comes off the same line differing only by label. The wire and cable company I once worked for only put a UL code on their wire. 500' coils of 12-2 NM went in one box, and 50' coils in another with no change in materials or any else but the box. A 500' coil with a bad spot might be cut up into nine 50' coils. Many electricians had strong opinions about the different brands.

Still, it is quite possible to change over materials and processing from one product to the next. I have also seen product with certain specs shipped to one customer, but not the next. As you get away from food, some of your house brands are made to the customer's specs by the low bidder each time the contract is let. I buy Heinz ketchup I am assuming it is made by Heinz and just the same as the last bottle. Burmans from Aldi's? Didn't they used to sell Big Tom or some such brand? I haven't noticed any difference.

In the big dog recall a few years ago, it turned out nearly all the canned dog food was being made by Menu Foods no matter what brand, and most of it was bad. Even what wasn't was pulled off the shelves until it could be checked. Most of the brands that escaped recalls were the ones small companies only offering kibble. Of course, dog foods are made to many different formulations with little SD on the health of the dogs as long as they leave out the melamine.

In general, house brands have always been available and I think a lot of their popularity varies with the economy. Take ketchup. As a boy, I always whined for Heinz because because it tasted better to me. Really making ketchup isn't rocket science. Other companies have found they can match the taste by using more vinegar and sugar. After all, ketchup started out as a sweet and sour sauce.
#20
Old 03-29-2012, 01:58 PM
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The largest cost component of branded consumer products is advertising and promotion. Packaging is probably the second highest per unit cost. Many product manufacturers probably make a higher net operating profit per unit on producing goods under contract for store brands than they do under their own supported brand, because they don't have to spend all of the advertising and promotion to support the store branded products.
#21
Old 04-01-2012, 11:49 AM
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Quote:
Originally Posted by rock party View Post
I was there yesterday and they didn't have the GV brand corn chips, yougurt, frozen waffles, ect. meaning I had to pay for the name brand. I always laugh when I go by the spice rack section...EVERY GV slot is always empty...not once have they had the GV spices in...you'ld think they would just give up and not leave an empty slot and quit pretending they
ever get their GV brand in.
My GV ratings:

Corn chips, sub par.

Yogurt, sub par.

Aspartame sweetener, equal to the name brand.

Instant coffee, may be military surplus from WWII C rations.
#22
Old 04-01-2012, 01:53 PM
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I really can't get over how incredibly cheaper Aldi is than name brands, or even Walmart or Target brands. Chips are around a dollar, compared to $3-4 anywhere else. Canned food, bread, fruit and veg, cheese, most things are at least half the price and I think there's been 2 things I've bought that I'd never buy again (Priano breaded veal cutlets, which is a specialty item, and the regular crinkle cut french fries).

How is everyone NOT shopping here? The only reason I can think of is that there are less choices, which I kind of like, and that the locations in the city are a little gross. The two locations I frequent, in first ring Minneapolis suburbs, are really nice. And you can even get fancier items, as long as you're flexible. I've gotten brie, Greek yogurt, kiefer, butter lettuce and capicola at a significant discount.
#23
Old 04-01-2012, 02:11 PM
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It also depends on the chain and the product. Some items, especially staples, are basically parity products, which means that they're essentially the same no matter which brand you buy. Butter, oil, milk, flour, meats, and so forth fall into this category. There may be slight differences but not enough to justify spending more on a name brand unless I have a coupon or some other incentive. (I do buy Over the Moon or Skim Plus milk, though, because it doesn't taste like blue water.)

Other products, like cereal, are more variable and depend on the chain. Among my local chains, I rate Wegman's store brand higher than Giant's. The quality of both are good, but Wegman's labels are more specific so I know what I'm buying without having to scrutinize the ingredients. Giant's stuff is also pretty good. Weis-brand products? Forget it. (I also don't like the local Weis for other reasons.) And some of Wegman's products are fantastic, but some are so-so and some aren't worth it. Same for Giant.

The upshot is that it's a matter of personal preference and a lot of trial-and-error. Some things are worth it, and some aren't.
#24
Old 04-01-2012, 11:11 PM
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Originally Posted by Zjestika View Post
I really can't get over how incredibly cheaper Aldi is than name brands, or even Walmart or Target brands. Chips are around a dollar, compared to $3-4 anywhere else. Canned food, bread, fruit and veg, cheese, most things are at least half the price and I think there's been 2 things I've bought that I'd never buy again (Priano breaded veal cutlets, which is a specialty item, and the regular crinkle cut french fries).

How is everyone NOT shopping here? The only reason I can think of is that there are less choices, which I kind of like, and that the locations in the city are a little gross. The two locations I frequent, in first ring Minneapolis suburbs, are really nice. And you can even get fancier items, as long as you're flexible. I've gotten brie, Greek yogurt, kiefer, butter lettuce and capicola at a significant discount.
Some people are totally horrified at the though of ever being cheap. They won't even buy their name brand stuff at Walmart.

Others may see Aldi's as too good to be true. Still others may not look at prices. It took me a while to catch on to them.
#25
Old 04-02-2012, 04:02 AM
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Originally Posted by Zjestika View Post
I really can't get over how incredibly cheaper Aldi is than name brands, or even Walmart or Target brands..........

How is everyone NOT shopping here?
About 90% of our shopping is done at Aldis and the additional 10% is at Walmart or the dollar stores. Only specialized items like liquor and updoc are purchased at other outlets.
#26
Old 04-02-2012, 05:09 AM
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Originally Posted by Mopal View Post
Instant coffee, may be military surplus from WWII C rations.
So... about average, then?

Last edited by Derleth; 04-02-2012 at 05:10 AM.
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