Some swear by authentic Heinz ketchup. It’s not about choosing a bottle from another brand to save a dollar or two. Other households only buy Lay’s potato chips. Sometimes it’s Le Sieur peas that would never be replaced by a can of other colors. Everyone has their likes.
Posted at 7:17 pm
But the moment inflation hits us head-on at every grocery row, the whims and demands evaporate.
Whether in Europe, at home or, to a lesser extent, in the United States, all supermarkets are seeing the same phenomenon. Their customers fight inflation by privileging what’s on sale, of course, and flocking to so-called house or private labels. It is these brands that belong to retailers. Think President’s Choice at Maxi and Provigo, Irresistibles at Metro and Super C or Compliments at IGA.
Their prices are often lower than national brands, which explains the sudden jump in popularity.
In a few months, consumers have changed their habits enough for the president of Loblaw (Maxi and Provigo) to mention the phenomenon during a talk with financial analysts in May. Galen Weston then clarified that sales of the no-name brand (the famous bright yellow packaging) “are reaching unprecedented levels.” However, he did not quantify the increase in sales.
On the IGA side, the house brands “are on fire right now,” a senior executive recently revealed to shareholders. And its sales growth “is much faster than that of national brands.”
The scenario is similar in Metro, where we also see that private brands ” they are doing very well”, according to President Eric La Flèche.
In France, consumers have adopted the same behavior, notes the data firm Kantar. The turn to private labels mainly affects mustard, pasta or oils, three foods whose prices have skyrocketed especially due to the weather and the war in Ukraine.
“National brands took advantage of COVID-19 because consumers were looking for more security, but also a little comfort. But in March, this trend was reversed: all the ground that the brands had gained, they lost in one month. It’s huge,” a vice president of Belgian supermarkets Delhaize told the trade publication. RetailerDetailin May.
In the United States, the phenomenon is more mixed, but it is still present: 21% of consumers turned to private brands to combat inflation, according to a study carried out by the firms Caddle and IRI Canada, in April. This compares to 47% of Canadians.
For the shareholders of the three Canadian food giants, the statistics on sales of private label products are not insignificant. Because they generate higher profits than national brands like Kraft, Heinz, Ritz, Lay’s, Oreo, Campbell’s, Philadelphia, Coca-Cola or Hunt’s. When you control the entire chain and eliminate intermediaries, it necessarily costs less. Less expensive ingredients or packaging can also be chosen.
In short, although the consumer saves, the supermarket pockets more money.
So it’s no coincidence that Loblaw is so confident in his President’s Choice brand. Their new products are promoted through a magazine. The most recent, distributed in May, includes 100 novelties. Its launch is accompanied by a television and radio advertising campaign starring Galen Weston.
Own brands already generate between 30 and 40% of total sales for the Ontario giant, which launched 850 new products in 2021 (pharmacy products included). It’s huge.
Metro and IGA are more discreet. But Metro is showcasing both its Selection and Irresistibles brands extensively in its brochures these days.
These brands are a good solution to lower your grocery bill. At Maxi and Provigo, the President’s Choice brand is 20% cheaper than the national brand, while the no-name brand offers a 40% discount, says Loblaw Quebec spokeswoman Johanne Héroux. In Metro we speak of an average saving of 15%, while IGA has not wanted to give a figure, since it “varies”.
Take the example of ketchup, the quintessential summer hot dog condiment.
When the shopping cart overflows every week, every dollar saved ends up making a noticeable difference. The same for inflation: each small increase that is added to the previous one ends up appearing in the budget.
Especially since the pace of the rise has accelerated since the fall. The last time food inflation was below 3% was in August.
We haven’t seen such an increase in prices since the fall of 1981.
Inevitably, such a shock causes unprecedented reactions in lightning. It remains to be seen whether the new habits will take root and how the multinationals will react.
Something new in your fridge?
Have you changed your habits in the supermarket by adopting more private label products? do you resist? Why ?
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