Own brands vs. branded products – which one’s the Finest?

Sainsbury’s is embarking on “the single biggest own-label development” programme it has ever done as a business. Around 7,500 of Sainsbury’s standard own label products are being revamped over the next year to feature the new “By Sainsbury’s” label.

The own-label sector has come of age. Long gone are the days when you simply bought a Sainsbury’s this or a Tesco’s that, most likely to save a few pence off the brand leader. Now, there are sectors within the own label sector itself. Tesco offers products across its Value and Finest ranges, Sainsbury’s pairs its Basics range with its Taste The Difference products, and even Waitrose got in on the act recently with the launch of its Essentials range.

The power of the own-label became evident last Christmas when Waitrose enlisted the help of celebrity chef Heston Blumenthal to put his name to its Christmas ranges. These were a sell-out success. Thwarted shoppers turned to eBay, apparently bidding up to £250 for Blumenthal’s Waitrose Hidden Orange Christmas Pudding, despite a retail price of only £13.99.

With retailers working hard than ever to give their own-label lines the cachet of branded products, own labels have become brand labels in their own right and in some categories have achieved brand leadership. But given that they not only offer extensive product ranges, they also own the major supermarkets, what are the longer-term impacts for established brands?

At a time when the price gap between branded and own-label products is lower than ever, you would expect branded products to be regaining ground. Yet, aside from ‘heritage products’ like Lea & Perrin’s Worcester Sauce, Heinz Tomato Ketchup and Coke and Pepsi, to what extent will branded products – established or new – be able to compete with own brand products in their own store environment over the next ten years?

Are we looking at a future where, with a few legacy brands aside, you will only be buying own-label products from different own-label premium or value ranges?

The reality is that established brands have been concerned with own-label products for years and, although many of the same manufacturers make own-label and branded products – sometimes to a more successful recipe – the power of the retailer and its own-label arsenal means that manufacturers are often searching for innovation that is harder for own-label products to copy: packaging innovation, for instance, or brand development via innovation or marketing.

But there is one retailer that is simply bucking the trend. For years, Marks and Spencer only sold own-label products. Now it has started stocking certain brands like Marmite, proving that there can be a limit to own-label domination if the positioning and the marketing of the branded product is so distinctive that there is no commercial advantage for an own-label equivalent.