The head of the largest U.S. dairy producer on Monday said some of the company's name-brand business might not bounce back, a signal that the recession may have produced a long-lasting change in consumers' spending habits.
Dean Foods Co. Chairman and Chief Executive Gregg Engles said gains by private-label producers are accelerating despite an improving economy, noting that in some regions, a half-gallon of his company's milk costs more than a gallon of an unbranded product. Major retailers routinely use discounted staples such as milk, bread, eggs and meat to drive foot traffic, and private-label food products gained market share as consumers traded down during the recession.
Cheaper private-label products have been gaining food-industry market share for years, but Mr. Engles is acknowledging that the weak economy may have forced a long-term change in consumption that holds ramifications for margins and investment. Milk prices have firmed in recent months after a volatile period, but Mr. Engles said efforts to push through increases at the retail level have failed to stick.
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