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Private Labels

A private-label brand (also called a reseller, store, house, or distributor brand) is a brand that retailers and wholesalers develop. In grocery stores in Europe and Canada, store brands account for as much as 40 percent of the items sold. In Britain, roughly half of what Sainsbury and Tesco, the largest food chains, sell is store-label goods. Germany and Spain are also European markets with a high percentage of private-label sales.13 According to the Private Label Manufacturers’ Association, store brands now account for one of every five items sold in U.S. supermarkets, drug chains, and mass merchandisers. The stakes in private-label marketing are high. A one-percentage-point shift from national brands to private labels in food and beverages is estimated to add $5.5 billion in revenue for supermarket chains.14

Private labels are rapidly gaining ground in a way that has many manufacturers of name brands running scared. Recessions increase private-label sales, and once some consumers switch to a private label, they don’t always go back.15 But some experts believe 50 percent is the natural limit on how much private-label volume to carry because consumers prefer certain national brands, and many product categories are not feasible or attractive on a private- label basis.

 
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