Smart Spending: Lifting the veil on store brands
NEW YORK -- Supermarkets including Kroger, Safeway and Whole Foods are improving the image of their store brands with better packaging and more distinctive offerings. But where exactly do these products come from?
It's a question a growing number of people may have as retailers increasingly develop their store brands as a way to cultivate loyalty among shoppers.
Safeway, for example, offers versions of Doritos, Cheetos and other salty snacks. But rather than merely imitating the look of their big-name counterparts, the "Snack Artist" line comes in distinctive, earth-tone bags made to look more like a premium brand. The Safeway logo appears only a small strip at the bottom.
"In many cases, people are buying some of our brands and think it's a national brand," said Diane Dietz, chief marketing officer for Safeway.
The rise of store brands -- known in the industry as "private-label" products -- became apparent last year when ConAgra Foods Inc. said it was buying Ralcorp Holdings Inc. Although it's not a household name, Ralcorp makes pasta, granola bars and other foods for a wide array of retailers.
ConAgra executives note that there's still plenty of room for growth, with store brands representing just 18 percent of packaged foods in the U.S., compared with 36 percent in the United Kingdom and 44 percent in the Netherlands.
Supermarkets often work with a network hundreds of suppliers to produce their store brands. These include national name-brand companies that make store brands on the side as well as businesses that specialize in making store brands.
And not all store brands are made by outside companies. Kroger, for instance, has 37 plants that churn out about 40 percent of its store brands. Safeway also makes some of its own brands.
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