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First crack in private label's gains?

Wall Street Journal on-line reports CPGs are winning back some of the sales lost to private brands during recession.

We have reported here extensively the great strides private label has made in the past few years, as cash-strapped consumers turned to in-store brands for value.

Package design has played a major role in these gains, as private label teams showed they could innovate faster than CPGs, with designs rivaling the big boys.

Now, for the first time, sales figures show consumers may be returning to national brands like H. J. Heinz and Del Monte.

“Store brands rose 3.2% at retailers for the four-week period ended Feb. 20, according to a Thursday report released by Credit Suisse analyst Robert Moskow,” says the WSJ report.

“But the increase is down from a 4% gain in January and an about 6% gain, excluding dairy, last July. At the same time, branded-food unit sales rose 2.4% for the February period compared to a 0.2% decline for the four weeks ended Jan. 23.”

The Journal article, penned by Timothy W. Martin, quotes Steve Burd, Safeway Inc. chief executive officer, who says that “the supermarket chain's private-label sales are still stronger than those of branded companies. However, the private-label growth is maybe not as strong as in previous quarters.”

CPGs are achieving these results with more promotion and coupons, rather than price cuts. Interestingly enough, Martin says the market share lost by retailers to higher priced national brands may not be a bad thing. Private label had to lower prices to widen the “value gap” between branded products. Now retailers will be able to slow their aggressive price-cutting.

The big question is, will the trend continue? The rise in branded sales this time might be due to consumers along the Eastern seaboard stocking up pantries due to major snow storms.

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