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Private Label Food Will Likely Be King for 2009

As the economy has deteriorated, the consumer has tried private label brands as a way to save money on their monthly food bills. They have also discovered that there is very little difference in quality between private label brands and branded goods.

The direct distribution model that private label is often based on makes it impossible for wholesalers to compete in price. The stores, which own the shelf space, have discovered that their own private label brands offer better profit margins and offers a great value equation to their customers when they compare their own brands to brand names. As the consumer makes the switch to the store brands, you will see a switch in the amount of shelf space allocated to private label and name brands.

Once the consumer makes the switch, it will be difficult to lure them back. Don't be surprised to see many traditional brand names bought by retailers for their own private label programs in the near future. Stores will also start to market their own private label brands to create "brands" that the consumer recognizes and perceives as brands.

This is not just a 2009 trend. It's a major transition from wholesaling product to a direct distribution model and it's here to stay.