Why We’re Now Paying More For Generic Groceries

moneyland.time.com ^ | 2-2-12 | Martha C. White

[rawhide]

When the economy hit the skids a few years ago, we responded with tactics that have gotten us through previous recessions: We stopped eating out and traveling as much, curbed our discretionary spending and chose generic items for basics like groceries.

But then something strange happened: We began to prefer many of those store brands. Increasingly, we’re willing to pay even more for them.

What’s going on here? According to the Wall Street Journal, stores have raised the prices of private-label nonperishable food by 5.3%, compared to a 1.9% increase for goods made by national brands. Store-brand versions of perishable goods rose in price by 12%, compared to 8% for name brands. Although generics still cost an average of 29% less than name brands, stores are closing that gap quickly.

The Journal says the number of exceptions to this rule — instances where store brands cost more than name brands — are growing.

A big part of the reason we like store brands more now and in some cases even prefer them over big national brands is that retailers have expended considerable effort branding their own lines of goods. Instead of a no-frills, drab label with only the bare minimum of information printed on it, brands like Target’s Archer Farms line of snack foods, beverages and other items have their own colorful logos and distinctive branding.

The article singles out Archer Farms as one example of a private-label brand that has done a particularly good job creating an upscale generic image and raising prices accordingly. For instance, its roasted almonds cost a penny more per ounce than the same product made by Planters.

This trend may spell trouble for big manufacturers of name-brand groceries, if consumers have grown used to and developed loyalty toward store brands.

[RC one]

this isn't helping to keep grocery prices low. The price of a bushel of corn has doubled since Obama took office. That's good news for farmers I guess but bad news for the rest of us.

[I still care]

Another Walmart bad brand was their marshmallows. It was amazing, but they didn’t melt! We were making Rice Krispie Treats, and the marshmellow, no matter how much we cooked them, would NOT melt.

I think I’ll bookmark this thread.

[9YearLurker]

Depends on what type of farmers you’re talking about.

[Freddd]

In 2006

2006

Canned Hams — Sam’s club has a 3 pack of the DAK imported, canned hams $7.06 for three 1 lb cans. Also check your local Walgreen’s drug store since they periodically put them on sale for $2 to $3 each.

Bacon - Costco has Tyson’s Bacon (shelf stable) 44 slices for $8.89 and Sam’s Club has the Hormel (shelf stable) bacon 70 slices for $7.88. -—————

Unbelievable today. The rises and drips of prices going up, camaflauged by ‘sale’ prices, and the actual food price has tripled, quadrupled etc. And then Obama and the media constantly drubbing the ‘news’ that there is no inflation...all to keep the masses calm as they continue to fleece taxpayers.

[panaxanax]

First rule in marketing. Raise the price of the lesser quality item and you’ll sell more of the higher profit name brand product.

A good example of this would be in the meat/butcher department. If total volume of sales for hamburger are down, raise the price 25 cents @ lb. while raising the price of steak $1.00 @ lb. Hamburger sales will increase immediately.

Watch this cycle happen every other week. People say to themselves “Why would I pay $4.59 for hamburger when for a buck more per pound we can have steak”?

[RC one]

well, hopefully the voters will have a moment of clarity when they’re standing in the voting booth next November. Gas is currently approaching $4/gallon here in Ohio and it’s only February! That means gas will approach $5/gallon by labor day, right before the elections. That ought to clarify the thought processes of a few million voters.

[beaversmom]

Thanks for the tip. I’ll steer clear of their marshmallows too.

[newzjunkey]

I’ve seen the same ‘scam’ across different stores in different states. It’s surprising regulators haven’t gotten involved.

[j_tull]

That is why I go to Costco ...I find their Kirkland Signature Brand private label stuff to be of excellent quality. It's the only private label I've found that I prefer to national. Gotta be careful around here though, lots of Costco haters on FR.