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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Having worked in the food industry, a number of products have standards of identity in the USA. These include mayonnaise, peanut butter, butter, margarine, ice cream, etc. Since the food has a standard of identity, it is not difficult to make something similar. For instance, peanut butter has a standard of at least 90% roasted peanuts, sugar (or honey), salt, and possibly a stabilizer of partially hydrogenized vegetable oil. It doesn’t take a genius to reverse engineer that.
Yes, sometimes the big companies also make their competitor products. I was in a meeting with the margarine leader who said that their facility did make some competitor products. But he noted that they made sure that the competitor was inferior. Basically, we know the melting characteristics of our product, so we make sure that the competitors do not match that. Poor melting characteristics equals a waxy mouthfeel.
Also a big difference is consistency. The big manufacturers tend to have quality control of the products to make sure that it is always consistent (though there have been screw ups). The store brands or minor brands can be much less consistent, leading to a good jar this week and a funky one next week. This is what leads to brand loyalty, probably more than anything. Why save 5% on cost, when you really don’t know what you might get.
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