eli5, how do “store brands” work?
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Something I’ve noticed about store vs brand names is that if you take a look at the container size they’ll be the same height and general shape, this lets the brand name manufacturer run store brands with no adjustments to their processing machinery, the only thing they have to do is change the labels in the applicator. It gives you a good clue as to who made the store brand.
To become a “great value” brand at Walmart, you MUST win a blind taste test against the national brand. You must supply your product and pay for the test. They are dead serious about the ingredients, shelf life and taste.
I work in paper manufacturing. If everything runs smoothly and we are making first quality paper we apply that to our normal customer orders. If we have a hiccup, we will sell that paper that doesn’t quite meet specs to somebody else at a discount. This lower quality paper can be used to make things that are off brand, or sold to somebody in other parts of the world where the buyers are not as strict. A lot of our off quality paper on one machine I used to work on went to India. Our tightest and most specific spec was from a customer in China.
One thing left out in other comments is the role of revenue smoothing. When stores buy Domino sugar and package it as Store Brand Sugar on the shelf right next to Domino, they’ve signed a contract with Domino’s manufacturer for a certain amount at a certain price, all in advance. Domino’s manufacturer gets to enjoy the peace of mind of that stable, locked-in revenue, at least until they negotiate the next contract.
Follow up question- for those who work in the industry besides sugar (what I’m seeing on here) what are other products that you should (not) get store/name brand?
Hey! I make private label paper towels! Basically a store needs paper towels made with their brand name and we make it. They get higher margins than someone like bounty or brawny can command so they like the private label to be “just as good”.
Where I live, the local “Superstore” grocery chain has No Name potato chips that are very good. That’s because they are made in the same factory by a big brand (Old Dutch).
A bag of Old Dutch is usually around $3-$3.50 while the no name ones are $1-$1.25.
I worked for a major US brewery for about 8 years. They had their own brands but also contract brewed other regional beers for them. It’s all about volume in a manufacturing plant and if contract work can fill in gaps in thieir own brands volume they will do the contract work. In the case of the place I worked the contract beers were all the exact same beer we just changed cans in packaging.
Baked beans, store brand, more sauce less beans and less colourful labels. Market brands, more beans and more colourful labels, also more flavours.
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