CHICAGO -- Store brands gaining on nationally branded grocery items?
That notion is "dead wrong," according to C. Manly Molpus, president and chief executive officer of the Grocery Manufacturers of America, which launched a vigorous defense of national brands during a meeting of food journalists here Feb. 12.
Quoting research from four different sources, Molpus told attendees that national brands will lead the food industry's recovery. He also said the grocery business is growing and rapidly evolving beyond supermarkets into other trade classes.
"Fully 12% of the $360 billion industry has moved from supermarkets to places like Kmart and Wal-Mart," he said, while consumers have, on average, reduced their total annual supermarket shopping trips by two.
"Those two lost trips reflect the growth in alternative channels," Molpus said, suggesting a link between that growth and the emphasis mass merchants and warehouse clubs place on national brands to draw traffic.
The speech was the kickoff of GMA's yearlong campaign to trumpet "the value that national brands bring to the business," said GMA spokesman Jeff Nedelman.
Molpus said the influence of store brands is likely to wane, because research indicates consumers' value equation is taking into account more than price.
Molpus used data and analyses of shopping trends from A.C. Nielsen, Information Resources Inc., Yankelovich Partners and Willard Bishop Consulting to defend his assertions.
"The newest data show that store brands are beginning to lose their appeal to consumers, now that the economy is improving," he said.
"According to Nielsen, less than one in five shoppers buys primarily on the basis of price. And the 1993 Yankelovich Monitor survey shows that 72% of consumers, once they find a national brand they like, are very reluctant to change -- even if they find a less expensive store brand they like! This compares to 71% in 1991," he said.
Molpus did not discuss the phenomenon of premium store brands, which is gaining increased emphasis from supermarkets and does not rely as heavily on price for its marketing edge. His only mention of the trend was to compare the market share of Loblaw's President's Choice Decadent Chocolate Chip cookie, which he put at 0.02%, with Nabisco's SnackWell cookie line with a 3.6% share.
"Store brands can't do what needs to be done. They can try to copy, but they can't innovate," he said. "National brands build the business."
Molpus also used statistics to indicate branded strengths across retail channels. In supermarkets, for example, 81 of the 100 top-selling bar-coded items are national brands; 14 of the 19 store-brand items in the top 100 are in the dairy case, he said.
National brands comprised even higher percentages of the top 100 bar-coded items in drug stores and mass merchants, he said. "Even the new distribution channels for food -- the mass merchandisers and warehouse clubs -- lured their first customers in the door by offering national brands at very competitive prices."
