NEW YORK, July 16 — On the shelves of any American grocery store, a quiet war is being fought for the shopper’s dollar. It is a war between the glossy, familiar logos of national brands and the simpler, often cheaper packaging of the store’s own label. These private-label brands — Kroger’s Simple Truth, Walmart’s Great Value, Dollar General’s Clover Valley, Target’s Market Pantry, and Aldi’s Specially Selected — are not products of a faceless factory.
They are the result of a deliberate, often secretive, supply-chain strategy that has been reshaping retail for decades.
The Mechanics of the Store Brand
A private-label product is owned by the retailer but manufactured by a third party. This is distinct from a white-label product, which a manufacturer builds to its own specifications and then sells to multiple retailers under their own brands. With private label, the retailer sets the specifications, creating an exclusive product.
Most of these goods are outsourced. Kroger’s vice president stated in 2018 that about 60% of its private-label products are made by outside manufacturers, while the remaining 40% are produced internally at the company’s 38 plants, which include 19 dairy farms, 10 bakeries, and 2 butcheries.
Safeway, as of 2012, owned 32 plants.
The Hidden Hand of the Supplier
Retailers guard the identities of their suppliers closely, often using non-disclosure clauses to keep the information confidential. But some manufacturers are publicly known. Costco’s Kirkland Signature coffee, for instance, is labeled ‘Custom roasted by Starbucks.’ In other cases, the same manufacturer produces both the national brand and the store-brand version.
Kimberly-Clark makes Huggies diapers and a Walmart budget version. The complexity of this system was laid bare during a 2007 pet food recall.
The incident revealed that Menu Foods Inc., based in Ontario, Canada, produced over 100 brands, both premium and private-label, with different recipes for each client.
A History of Quality and Price
Private-label brands are not a new phenomenon. They emerged in the 19th century, initially focusing on offering quality at lower prices. But their quality dropped in the first half of the 20th century.
During economic slowdowns, consumers switch to store brands to save money, boosting their market share. The shopper at the checkout counter, choosing between a Great Value can of beans and a national brand, is the final arbiter of this long-running conflict.
The decision, as always, comes down to price and trust.
