Saturday, June 6, 2009


Since the recession began, private label food branding has become a major threat, biting into food earnings among companies like Kellogg's, Heinz Foods and Kraft. Now, with signs of an economic recovery on the horizon, price increases abating and consumer confidence on the rise, sales of store non-branded products—though still growing—are tapering off, analysts say.
While most of the nation’s largest food purveyors aren’t dropping their guard against private label anytime soon, market factors are lessening private labels menace—if only a bit. The Congressional Budget Office, for instance, now expects an official end to the recession by the second half of 2009—and that’s without the trillion-dollar stimulus.
The prevailing opinion is that private labels uptick had no direct correlation with the current economic slowdown, though consumers may be more prone to trade down in times of financial duress. Instead, much of private labels gains stem from the “sticker shock” experienced in realizing in the rapid and sudden food price increases we experienced the last quarter. With price growth slowing down, it seems that more economically stressed consumers are now returning to branded goods, once again preferring quality over price points, at least in the food sector.

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