Will Co-Branded Private Label Catch On?

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December 16, 2009

Phil Lempert

"Supermarket Guru" Phil Lempert predicts that major food brands will develop co-branded private-label foods with retailers next year, but two branding pros interviewed by the Marketing Daily said it should never happen.

The premise of Lempert’s prediction for 2010 is that co-branded private label (meaning private-label foods would feature brands' key ingredients) will "fuel industry innovation while putting major food companies back in grocery carts."

Branding experts Laura Ries of Ries & Ries and Bill Cross of Broad Street Licensing couldn’t disagree more.

"It wouldn't surprise me if they tried this, because brands are experimenting with all kinds of crazy ideas in the current economic conditions," Ries told the Marketing Daily. "Big brands are owned by public companies that need to show gains on a quarter-by-quarter basis, consumer belt-tightening is a real concern, and it's even possible that co-branding with private labels might generate results for a while, because it might get consumers' attention. But that doesn't make it a good idea. In fact, it's a very dangerous idea."

Ries added that it could in fact damage brands in the long run. "You can't try to cover the whole market with one brand -- you can't be both the best and the cheapest," she said. "In challenging times like these, marketers have to demonstrate some backbone and stand by their brands and what those brands represent."

Although she said a multi-tiered strategy can work where companies market higher-end and lower-end products within the same category under different names, she rejected the idea offering lower-end versions of the same brand. "As a consumer, when I see something like Tide Basic or Bounty Basic, do I wonder if the brand has been overcharging me all these years?" she asked.

Cross, VP of food licensing for Broad Street Licensing, said he can't imagine major food marketers engaging in a co-branded strategy.

"National brands want to sell their products to retailers -- and retailers, because of the higher margins they realize on private label, are doing everything they can to expand sales of these lines. As a brand marketer, am I going to help my competitor by strengthening those products with my brand's quality image? If I owned one of the major food manufacturers, I would never consider this."

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