Brand names boost defenses against in-store rivals

The makers of brand-name products such as Tide detergent and Kraft Macaroni & Cheese are bolstering their defenses against store-brand rivals like Walmart’s Great Value products as shoppers’ budgets start to show signs of strain due to persistent inflation.

Executives at Clorox Co. said in a Monday evening earnings call that they have seen private-label rivals make “marginal improvement” in market share. The bleach maker’s CEO, Linda Rendle, said Clorox would increase promotions — now already higher than last year — if shoppers’ wallets show more signs of stress, a tactic for competing with cheaper store-brand products.

The roughly $361 billion U.S. packaged-food and household- products sector is on alert as shoppers start to buckle under multiple rounds of price hikes, with more in the pipeline. Retailers including Walmart are partners with brand-name product makers like Clorox and Kraft-Heinz Co as much as they are rivals selling less costly storebrand goods. A bottle of 64-load Tide “Free & Gentle” laundry detergent cost $12.97 on Walmart.com on April 25, while Walmart’s Great Value “Free & Clear” brand costs $8.67 for the same number of washes, for instance.

A survey from financial services firm Jefferies found that roughly 72% of 3,500 consumers are buying cheaper grocery and household items. Inflation “will ratchet private label growth,” said Jim Wisner, founder of marketing and research firm Wisner Marketing in Gurnee, Ill. “It most definitely is a moment.”

Separately, Dawn dish soap maker Procter & Gamble Co is shifting its marketing to make more “overt” claims about the value in its costlier products, finance chief Andre Schulten said in a call with media in April, another strategy aimed at warding off popular private-label rivals.

P&G and some other companies such as Kimberly- Clark Corp that make brand-name pantry and household staples are easing in price hikes at a slower rate than store-brand competitors, according to Nielsen data analyzed by Bernstein.

On a rolling average basis, in the 12 weeks ended March 26, price hikes on private-label household care goods such as laundry detergent outpaced the increases from big brands, compared with the same time period last year, according to a Reuters analysis of exclusive Nielsen figures. Average prices for store-brand household goods rose by 15% in the same period, while major brands climbed 11.7%.

U.S. private-label household goods and beverages lost market share during the pandemic because consumers had more money from stimulus checks and were spending less outside the home, Bernstein analysts wrote.