Do they have food scientists just guessing and checking with taste testers? Or do they know the exact recipe somehow and just tweak it to avoid lawsuits? Or do big box stores require name brands to hand over their recipes as part of a contract to shelf their brand along with their own store brand? Do the name brands try to keep it a secret but they keep getting bested? I have no idea how this works.
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It varies, but this is one way things are done.
I am General Mills, and I sell Cheerios for $4 a box. Many people love and trust my brand, and I make the cereal in a factory. Most of my potential customers can afford the $4 a box, and I make a nice margin. Not everyone can afford it, but I still want their money and don’t want to diminish my brand or profit margins on Cheerios.
So what do I do? I manufacture nearly the same cereal, in the same factory, but with slightly cheaper and less quality ingredients. I work out a deal with the supermarket chains to have a store label for it. I sell it for cheaper, but I have saved money on ingredients, marketing, and branding. This allows me to get the money from the people who can’t afford the $4 box, and my main brand stays intact.
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