Kroger has a generic branded version of pretty much everything in their store. How do they make all of it? There are different recipes, molds, and entirely different production processes for most of this stuff. Do they buy each product off of someone else and put on their own packaging, or do they really make it all themselves? (And if so, where are all these factories?)
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Many of the responses that I’ve read are very accurate, but one thing is missing. Big Brands add huge marketing/advertising expenses to their costs. So say Kleenex buys facial tissue from Factory A for $0.30 per box. Then Kleenex sells that box for $2 wholesale to Kroger who sells it at a $3.49 retail. That $2 wholesale includes $0.50 to pay for all the marketing Kleenex does, commercials, sponsorships, etc. But for Kroger’s own brand, they can buy that box for maybe $0.40 (they pay a bit more because they don’t purchase near the same volume as Kleenex brand does), but then their lower cost structure with no marketing expense means their internal wholesale cost is maybe $1.50 allowing Kroger to sell it for say $2.99. They make the same amount of $ per sale at a lower retail, with a higher % margin.
All these numbers are completely made up for illustrative purposes, I’ve never been in the facial tissue business, just making the point that a large part of the cost of name brand goods goes towards marketing, which store brand products don’t have.
I did work in private label for a manufacturer who also made name brand products. Sometimes the name brands were made to higher specifications, other times they were dumbed down. But either way, when I saw the name brand product on store shelves, I was always shocked at how much higher it was priced than our ‘generic’ version which in some cases was merchandised side by side with the name brand version.
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