A weaker opponent can put up a good fight in a tug-of-war, but once the rope slips, recovery becomes a long shot.
Such is the position of some brand-name food companies trying to hold their ground against generic competitors. Private-label sales accounted for 13.4% of a basket of U.S. groceries in 1994, but likely reached a new high of 17.5% in 2009, fuelled by tougher times, says Robert Moskow of Credit Suisse.
The key question is whether Americans will stick with generics if the economy improves. In some consumer-product categories such as razor blades, differences in quality are noticeable. A better shave is probably worth paying for again as soon as it becomes affordable.
But for many commodity-like products, second-best has proven good enough. Private-label products account for 26.2% of ketchup and condiment consumption in U.S. households, up 4.2 percentage points from 1994, according to Consumer Edge Research. The firm found that 63.3% of shoppers were “very satisfied” with generic condiments, nearly the highest rate of all categories surveyed.
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