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Do you buy store brand or name brand items?

Discussion in 'BBS Hangout' started by Rockets34Legend, Nov 14, 2003.

  1. Rockets34Legend

    Rockets34Legend Contributing Member

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    Private-label soft drinks bubble up
    'Retailer brands' gain ground on giants Coke and Pepsi


    In a Wal-Mart store in Marietta, the beverage aisle is arranged in a competitive face-off.

    On one side, you'll find big-name brands from Coca-Cola and Pepsi. On the other, cheap-priced knockoffs labeled for Sam's Choice, Wal-Mart's own brand.

    Guess who's gaining ground?

    While Coke and Pepsi still own the biggest market shares nationwide, private-label brands like Sam's are growing strongly. They've also helped in the renaissance of one of the beverage industry's growing players, a low-profile company named Cott Corp.

    Research from ACNielsen shows that private-label brands across several product categories -- from soft drinks to paper products -- grew twice as fast in dollar sales as branded products from 1997 to 2002.

    And while the core buyers remain the same -- large families and people with lower incomes -- the slack economy has prompted more people to try private-label products.

    The greater acceptance has been a boon to Cott, the biggest maker of private-label soft drinks and the fourth-largest manufacturer overall in the U.S. market.

    The Toronto-based company struggled through much of the 1990s. Last year, however, Cott's U.S. sales volume jumped 11.5 percent. While half of that was due to acquisitions, it was still far more than the growth for the industry's big three: Coke, Pepsi and Dr Pepper/Seven Up.

    Cott's stock price has climbed, too -- about 50 percent so far this year, tops in growth among the big companies in the North American beverage industry. On Thursday, Cott shares set a 52-week high.

    "We believe Cott offers retailers the best private-label program," said analyst Dara Mohsenian of J.P. Morgan in a recent report.

    Cott makes many drinks that copy the success of better-known products. Sam's Choice, for example, has versions that include Mountain Lightning, which harkens to Pepsi's Mountain Dew.

    So why try it? "The price," said Sharon Dubenion of Marietta, who picked up four 2-liter bottles of various Sam's Choice drinks during a stop at Wal-Mart this week.

    Normally, she buys Pepsi or other familiar brands. But at 58 cents for a 2-liter bottle, Sam's Choice soda was selling at less than half the price Wal-Mart was charging for Coke and Pepsi products.

    And the quality is solid. Brian Wansink, a professor of marketing and nutritional science at the University of Illinois, said most of today's private-label products taste good and are packaged nicely.

    "Even the bottom rung has improved," he said.

    Today's respect for the private-label business is quite a departure from the old days, when many consumers considered the products déclassé and the sector was derided by those who make name brands.

    In 1994, for example, former Coca-Cola Chairman and Chief Executive Officer Douglas Ivester dismissed private-label manufacturers as "parasites."

    Since then, the world has changed. The retailing sector has become more consolidated, and Wal-Mart is now the nation's biggest food seller -- and a major player in private-label goods.

    And you won't hear the term parasite used anymore.

    "Private label has been around for many years, and we respect and aggressively compete with all of our competitors," said Ben Deutsch, a spokesman for Coca-Cola.

    Shelf space

    In stores like the Wal-Mart on Cobb Parkway in Marietta, Sam's Choice soft drinks are allotted nearly as much shelf space as Coca-Cola products, and even more room than drinks sold by Pepsi and Dr Pepper/Seven Up, which is part of Cadbury Schweppes.

    John Sheppard, Cott's president and chief operating officer, spends a great deal of his time telling retailers they should give even more space to his products.

    But he said Coke and Pepsi aren't the real targets. "There's still a perception out there that we're trying to steal share from the major brands," Sheppard said.

    Instead, he said, the big brands are important because they attract shoppers. Private-label products -- Sheppard prefers to call them "retailer brands" -- complement those from Coke and Pepsi.

    Mohsenian, of J.P. Morgan, believes Cott will gain market share at the expense of lesser brands. "The big losers in this scenario are Cadbury Schweppes and regional brands," he said.

    But it seems likely that private-label products also will lure consumers away from brands made by Coke and Pepsi. "In supermarkets, the overall carbonated soft drink industry is down, and private label is up strongly," said John Sicher, editor and publisher of Beverage Digest. "It is taking share from some brands."

    Long experience

    Sheppard certainly knows the big-brand landscape, thanks to working at Coke for 20 years. He's been at Cott since 2002 and is now seen as heir apparent to succeed the company's respected chairman and CEO, Frank Weise.

    Cott finds itself in good shape, with many analysts predicting growth.

    "Retailers we surveyed indicated they see private-label brand share increasing to about 20 percent," said Caroline Levy, an analyst for UBS Warburg.

    At the moment, it is about 12 percent in supermarkets.

    The barrier to growth is that brands still matter, especially in certain categories.

    ACNielsen's figures show that the biggest-selling private-label categories are milk and bread/baked goods. Soft drinks are down the list.

    Wansink, who studies branding at the University of Illinois, has found signs of how durable soft drink brands can be. Last year, for example, he pitted Coke against Sam's Choice in an annual event he dubs "Battle of the Brands."

    As part of the test, Wansink tried a trick on students who took the test: He put Sam's Choice cola in a package labeled for Coke. Many people liked the choice branded for Coke better, even though it was Sam's.

    Nonetheless, Sheppard thinks private-label products will keep gaining. "The majority of consumers are now looking at retailer brands in a different way," he said. "I don't see anything to stop retailer brands from growing."
     
  2. Nomar

    Nomar Member

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    Depends on the product.

    Shampoo and soap, toothpaste, I use name brand.

    Mouthwash, store brand. Also like band aids and stuff like that.
     
  3. A-Train

    A-Train Contributing Member

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    Hell yeah! My whole kitchen is FULL of Kroger and Wal Mart Brands!

    Kroger makes some excellent sodas. Dr. K is my favorite, and the Big K Koolers are awesome.

    A couple things that aren't good with the store brands:

    Soy Sauce: Kikkoman only...everything else pales in comparison
    Mac and Cheese: Kraft or Velveeta

    Sandwich Bags: For some reason, I always have a hard time closing the cheap sandwich bags
     
  4. A-Train

    A-Train Contributing Member

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  5. RocketMan Tex

    RocketMan Tex Contributing Member

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    Depends on the product.
     
  6. mrpaige

    mrpaige Contributing Member

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    I will often buy private label brands. I've even bought the Sam Choice colas from time to time, mostly for my kids in the past.
     
  7. Smokey

    Smokey Contributing Member

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    Hill Country Fare Sweetened Iced Tea found in the refrigerated section is really good. I could drink gallons of it. I noticed the quality decrease as sales increased though. I can't find it in Houston.
     
  8. tierre_brown

    tierre_brown Contributing Member

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    Living in Austin, I have to say the BEST store brand (I think it's a store brand, I've only seen it at HEB) has got to b Hill Country Fare. They make everything, and for pretty cheap...
     
  9. pgabriel

    pgabriel Educated Negro

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    I'm so with you on this.
     
  10. Isabel

    Isabel Member

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    I try to save money by buying store brands, but sometimes there's a difference in quality. Cereals, for example, vegetables, and sodas. On the other hand, some things - like medicines - have exactly the same active ingredients. You can save a bunch of money on that.
     
  11. bigtexxx

    bigtexxx Contributing Member

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    I usually will buy one nice 1.75l of booze, drink that, and then from that point on refill it with the cheap stuff. I entertain a lot, and nobody can tell the difference between a Grey Goose and soda and a McCormick and soda..... NOBODY

    Other than that I purchase the store brand contact solution and store brand milk.
     
  12. Uprising

    Uprising Contributing Member

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    Depends on the Product. I don't buy store brand sodas. Dr. Pepper is all I buy.

    Most grocceries I buy are from the strore brand since they are cheaper. I shop at HEB a lot and when I go back down to Houston I shop at Cost Co.
     
  13. MR. MEOWGI

    MR. MEOWGI Contributing Member

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    I just buy the big cans that say nothing but "food" on them. Yummy.
     

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