eli5, how do “store brands” work?
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Kirkland is a fun example: Costco puts out for tender the manufacture of many things, but their requirements are very strict:
To win the contract your product needs to be better, or as good as, the market leader. Usually only the market leader can achieve this.
So when you pick up your Kirkland Minoxidil, it’s probably made in the Rogaine factory by the Rogaine team.
i work in a sugar factory.
store brand sugar is the exact same as the name brand sugar. just in different packages. nothing is different. its made to the exact sane standards, the machines that put it inti the bags are the same as the expensive stuff. we dont clean them and put different product in. we change the paper..
LG makes televisions; they also sell a lot of their components to other manufacturers to make their televisions. This is called OEM.
A store contracts LG to make televisions for them, often using less sophisticated components they may have used on previous generations of LG televisions, or OEM components. LG manufactures the televisions, slaps the store’s branding on them (called private label), sells them to the store for slightly less than shelf price.
Any examples of same quality products from a store brand? I am aware that mostly Kirkland products are very good. The rumor is that their vodka is actually Gray Goose
After working for Walmart, one of the ways that they are able to produce a decent store brand is by pressuring name-brand manufacturers to do it for them by pushing their retail weight around. They can afford to start their own plant, find out overall costs of production, and then negotiate with name-brand companies to produce the exact same product with the Great Value brand or a similar opening price point (OPP) item.
For example, name-brand Hiland milk and Great Value milk are the same milk produced and packaged in the same plant, just labeled differently. It is cheaper for Walmart to partner with Hiland for production and delivery than start and run their own GV milk plant, but Walmart would do so if it meant saving money. Hiland agrees because it allows them to keep a large market share. BTW Walmart and Kroger both bought milk bottling plants in 2019-20 to shake things up.
I work in a food manufacturing plant that makes a certain kind of cake. We make local grocers and national brands like Walmart and Albertsons. Each has their own recipe and may share production lines with few altercations Pe tween the product runs. The specialties we make for say The Builtmore Mansion and Beaumont Stake are made completely on their own specifications just a few times a year.
Now ask the difference between Mad Dog 20- 20 and Mogan David wines is another story as one is kosher and the other isn’t but come from the same plant.
Worked in a food factory.
We made many things, as well as processing condiments etc into sachets and single service containers.
So a serving of jam could be in a plastic pot with a peel of lid, destined for diners and truck-stops, or could be a tiny jam jar for Airlines and hotels to show it’s quality.
Same Jam.
I have a friend who used to tour round third world factories for clothing contracts. Designer label jeans and street market specials made on the same line, just different labels (maybe design of stitching too)
Most supermarket liquor is white label of good brands. Often the shape of the bottle gives it away.
News story recently where shoppers bought a multi pack of own brand potato rings at Aldi, and found hula hoops (brand leader) inside.
https://www.mirror.co.uk/news/uk-news/aldi-secret-exposed-after-real-20081252
When I was little after every trip to Costco I would be picturing this amazing, gargantuan, Willy Wonka style Kirkland factory where everything from multivitamins to office equipment to backpacks to cleaning products were all bring manufactured in one big crazy “we make everything in the world” operation.
as someone who creates store brands, it’s actually easy:
as a manufacturer, you have two options:
a) invest heavily into marketing, create your own brand, subsidies it for a first few years through expensive promotions until demand kicks in and then be prepared for unstable demand, as any retailer will kick you off when feels like it (thinks his prices are not good enough).
2) sacrifice some of the profits and have stable demand, no marketing, no fees, just produce your product at agreed upon prices.
retailers also save on marketing, because they don’t do promotions on individual items, just on their store brand. It also raises brand visibility.
A family member of mine used to work for a soda company. They also made “store brand” sodas for several grocery stores in the area. It was literally the same product just in different packaging.
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