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Store-brand products can cut grocery bill 28%

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Published:   |   Updated: March 21, 2013 at 05:35 PM
TAMPA -

With food prices continuing to rise, more people are buying generic brands to save money – and grocery stores are taking note.

Generic brands, known as "private labels" in the grocery business, now account for almost a quarter of consumer spending on food, beverages and personal care items, according to a recent study from Arizona State University.

Even if shoppers aren't buying generic brands, just having those products in the store is likely saving them money, the study concluded.

"When grocery stores offer these competitive store-brand products, it forces the brand-name companies to lower the wholesale prices they charge the grocery stores," Timothy Richards, the W. P. Carey School of Business professor who headed the study, said in a statement.

"Part of the savings is then passed on to the customers who buy the brand names."

So, how much could ditching your favorite name brand product save you? To get a sense of the savings offered by generic brands, our Market Basket shoppers compared generics against several name-brand items this week.

We found the biggest savings on pasta sauce.

On average, 26-ounce jars of store-brand pasta sauce are 42 percent cheaper than Ragu pasta sauce this week at the stores Market Basket surveys each week – Publix, Sweetbay, Winn Dixie, Target and Walmart.

The biggest savings is at Walmart, where a jar of Ragu is selling for $2.84, compared to $1.66 for the store brand.

Store brands don't automatically mean savings, though: Target's is actually 40 cents more expensive than Ragu. The Publix store brand is cheapest at $1.47.

Soda is another product shoppers can save on by buying generic.

On average, 2 liters of store-brand colas are selling for 31 percent less than Pepsi this week.

The biggest difference is at Sweetbay, where the generic cola is selling for 89 cents, compared to $1.50 for Pepsi. The difference is typically greater at Publix and Winn Dixie, but sales on Pepsi have evened out the prices this week.

At Publix, for example, Pepsi is selling for $1.25 this week, compared to 89 cents for the store brand. But Pepsi normally sells for $1.89.

The Walmart brand is cheapest at 78 cents.

On average, the five generic products compared against name-brand competitors were 28 percent cheaper. Here's how the other items stacked up:

Mayonnaise (16 ounces): The store brands were 29 percent cheaper, on average, than Kraft mayonnaise. Walmart's store brand is the cheapest overall at $1.66, and Sweetbay's offered the biggest savings over Kraft – $1.99 versus $3.29.

Sandwich cookies (18 oz.): The store brands were 18 percent cheaper, on average, than Oreos. Target has the cheapest price, at $1.67 and also the biggest price difference between the generic price and the price of Oreos ($2.99). Because of sales, the Winn-Dixie brand priced out the same as Oreos ($3.19), while Publix's store brand, at $2.59, was 9 cents more expensive than Oreos.

Vegetable oil (24 oz.): Store brand vegetable oil was, on average, 14 percent cheaper than Wesson. That figure is somewhat off because Sweetbay and Publix don't sell the same-sized bottles. But even there, the 32-ounce bottles of store brand oil were cheaper than the 24-ounce bottle of Wesson oil. Best price: $1.42 for Target's store brand.

Aside from offering customers discount prices, stores are using their private labels to distinguish themselves from the competition, counting on higher-quality generic products to bring back customers, the Arizona State study concluded.

In some cases, the generic versions are just the same as their name-brand counterparts. Some are even made in the same plants.

"Many stores also offer good, better and best labels, like a super-premium brand, to help cater to a wider variety of consumers," Richards said in the statement.

"All store brands offer the grocery chain a higher profit margin than the brand-name products."


jscullin@tampatrib.com (813) 259-7305 Twitter_@TBO_Factfinders

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