The news from Mintel that British shoppers now buy more own-label products than branded goods has been widely interpreted as a conscious action of cash-strapped, savvy shoppers turning their back on the ‘luxury’ of brands. This analysis overlooks the fact that much of the time, shoppers are manipulated into making this choice by the multiples.
In many supermarkets, the selection of brands on offer has shrunk dramatically and been sidelined, encouraging shoppers to go for the own-label item. Are customers steered towards own-label for public-spirited reasons? On the contrary. Multiples have a direct incentive to eliminate brands and bring more products under their wing: simply because it’s more profitable for them.
Own-label producers and manufacturers are faceless to the public and cannot build a loyal following. If a significant number of people regularly buy Farmer Jack’s branded yogurt, for instance, they might kick up a fuss if it gets delisted, which gives Farmer Jack some bargaining power. Own-label producers have no such leverage. supermarket buyers make them an offer they can’t refuse: give us the price we want or we’ll take our business elsewhere.
I am inclined to think a company that puts its name on a product will ultimately take more pride in it and strive to do it better than one deprived of public visibility and squeezed on price. Many companies supplying own-label product to our greedy multiples are perpetually forced to cut production costs and margins to make the sums add up, putting a downward pressure on everything from ingredient quality to employees’ working conditions.
Brands like Heinz, Kellogg’s, Findus and Campbell’s can look after themselves. But I do feel for small and medium-sized brands. Multiples use them as free new product developers, watching their progress, listing them, then swapping them for a copycat, own-label lookalike from a more under-the-thumb supplier.
One crude stereotype of Stalinist communism was that consumer choice was eliminated in favour of grey uniformity. It’s that loss of variety we face when we open the fridge to find only one label - a supermarket own label - staring out at us.