Supermaket Wars: Brands Versus Private Labels
Grocery stores across the country are beginning to kick large food retailers such as Kraft Heinz out of their exclusive circles as they focus on creating and distributing their own private food labels. The reason why large stores such as Wegman’s and Whole Foods are working on their own labels is that they offer higher profit-margins. Private labels offer higher profit-margins because the retailers only have to market their labels as comparable to other big-name brands, which saves money on otherwise expensive marketing campaigns.
These private label brands are extremely similar to well-known brands, as the taste and quality are often times indistinguishable. Also, according to data from the market research firm Nielsen, private label products have boasted significant gains year over year, outperforming name brand items for three consecutive years now.
Large supermarket chains and food sellers such as Kroger, Walmart, and Albertson’s have all focused on increasing the amounts of private labels in their stores and have recently seen a large percentage of sales come from these private labels.
This adds onto the heap of problems that large companies such as Kraft Heinz are facing as of late. Now, on top of the constantly needing to create new products and improve on old ones to cater to changes in consumer preferences, they are entering a losing war with private labels.
Kraft Heinz will most likely have to cut prices to earn their shelf space back and focus on differentiating their products from private labels, which if done correctly can lead to an increase in market share. They also need to invest in improving the quality of their products, which will gravitate consumers toward their products and away from private labels.
The Kraft Heinz company has its head just above the water, and if it is not careful, may end up going under. They need to show why their brands are better than knockoff brands by improving their products and taking away market share from the knockoff brands. This will be a costly process but will be the only way that Kraft Heinz can begin to gain momentum back.