It pays to buy store brands

Last reviewed: October 2009
Marinara from Safeway
Two sauces to the test
Marinara from Safeway, pictured, was as tasty as national-brand Prego and costs less. The result was similar for most of our store brand vs. big brand face-offs.

If concern about taste has kept you from trying store-brand foods, hesitate no more. In blind tests, our trained tasters compared a big national brand with a store brand in 29 food categories. Store and national brands tasted about equally good 19 times. Four times, the store brand won; six times, the national brand won.

What's more, the store-brand foods we tested cost an average of 27 percent less than big-name counterparts—about what you'd find across all product categories, industry experts told us. The biggest difference: 35 cents per ounce for Costco's vanilla vs. $3.34 for McCormick's. (Prices are the averages we found across the country.) Price gaps have less to do with what goes into the package than with the research, development, and marketing costs that help build a household name.

As a result of that extra spending, national brands are more likely to have the latest in convenient packaging, and foods may have the newest tastes or be fortified with trendy supplements, says Harry Balzer, chief industry analyst for the NPD Group, a leading market research company. That's the nationals' main advantage.

Store brands take hold

During double-digit inflation in the late 1970s, cheap no-frills goods (aka generics) came in plain packaging that said little more than "applesauce" or "whole-kernel corn." They usually weren't very good, concedes Brian Sharoff, president of the Private Label Manufacturers Association, a trade group. Our tests and U.S. sales figures show that's no longer true.

Sales of generics used to fluctuate with the economy (up in bad times, down in good), but sales of today's store brands are steadier, says Jim Hertel, a managing partner with Willard Bishop Consulting, a food retail consultancy. "Store brands are here to stay," he says. Last year almost a quarter of all food and beverages served in U.S. homes were store brands, up 18 percent since 1999, according to a recent NPD Group study.

Increasingly, those brands go well beyond canned and frozen vegetables, dairy products, and paper goods. Publix puts its name on dozens of organic foods; Costco sells wine and champagne under its Kirkland Signature label. Even ShopRite, known more for low prices than fancy fare, offers a long list of imported foods, including roasted red peppers from Greece.

Today's store brands enjoy more prominent placement on shelves, snazzier packaging, more promotion, and, in general, higher manufacturing standards than in years past. That's not surprising, since some companies make both national brands and store brands. Many big-name companies make their usual types of products for the stores; others make additional private-label items. Hormel Foods Corp. (cured meat, chili), for example, also makes bouillon, pudding, and salsa.

Despite the dismal economy, Sharoff doesn't expect a resurgence of no-frills products. Instead, he says, chains will offer more "second tier" store brands that stress savings, such as A&P Savings Plus and Smart Price, Safeway Basic Red, and Kroger Value. Second-tier products sell for about 35 percent less than big brands on average.

Whatever the stores are doing, it's working. In the most recent supermarket survey by the Consumer Reports National Research Center, 70 percent of respondents said they were highly satisfied with the quality of store brands they'd bought.

Bottom line

Switching to store brands can be a painless way to cut your grocery bill.