Wal-Mart Cuts Food Storage Bag Brands

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February 9, 2010

Wal-Mart reportedly banished Glad and Hefty bags from the food-storage category, leaving only one national brand, SC Johnson’s Ziploc, and its own Great Value store brand on the shelves.

Industry observers anticipate Wal-Mart will similarly consolidate other categories and reduce product assortment over the next several months “often to the benefit of its fast-expanding Great Value brand and national brands that survive the vetting,” according to an Ad Age Report.

Meanwhile Pactiv Corp., Hefty’s parent, has agreed to manufacture all of Great Value’s food storage and trash bag products that were previously produced by smaller unbranded manufacturers.

Despite the consolidation in food storage bags, both Glad and Hefty trash bags retained shelf position, although Hefty’s assortment was reduced to just its CinchSak line.

Wal-Mart’s food-storage brand consolidation followed a series of in-store tests that began last year, “which appear to have prompted the Glad, Hefty and Ziploc brands to hike ad spending dramatically, despite a deep recession and flat to falling category sales, in efforts to stave off de-listings,” the Ad Age report said. “The contests had high stakes for the brands, given that Wal-Mart makes up a third or more of their sales.”

Store brand food storage bag sales were up 7.9 percent across food, drug and mass channels (including Wal-Mart) during the 52 weeks ending Dec. 26, 2009, compared to the prior year, according to Nielsen data reported in Supermarket News. Meanwhile, national brand sales fell 5.4 percent.

Wal-Mart’s aggressive steps are not surprising to some industry observers since the food storage and trash bag categories have some of the largest store brand penetration rate, “with more than a third of dollar sales and more than half of volume in the combined categories coming from store brands in measured channels,” according to the Ad Age report.

"If you look at the trash-bag category, you really have to ask yourself, 'Is there really a need to have more than one brand and private label?' I think Wal-Mart is going to make similar moves in some of the cleaning areas and then across the portfolio," Consumer Edge Research analyst Bill Pecoriello told Ad Age.

SBD Views: This Battle of the Bags shouldn’t surprise anyone. Walmart’s classification of all product categories into Win, Play or Show categories as part of Project Impact is affecting suppliers across the store as the role of store brands in each category is being redefined. I do, however,  find two things interesting in the outcome of this particular battle. First, the national brands that lost out were substantial brands that spent tens of millions of dollars in consumer advertising to be “the last bag standing.” The failure of this strategy to maintain shelf space puts national brands on notice that even massive consumer ad budgets won’t save them from being de-listed (what will CPG brand managers do if they can no longer spend their way onto the shelf?) Secondly, Hefty’s parent company Pactiv received a substantial consolation prize with the contract to manufacture Great Value plastic bags. This move provides support for my comment in previous SBD Views that Walmart’s growing appetite for store brand manufacturing capacity will be partially satiated by national brand suppliers that don’t make the cut. Watch for more national suppliers to exit Walmart as national brands, and re-enter  under Great Value, the world’s largest CPG brand. –– John Failla for Store Brands Decisions.

Read These Related Articles:

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• Wal-Mart Revamps Great Value to Give It Post-Recession Legs
• Store Brands Gain Share in Significant Categories
• Wal-Mart Tests Private Label Spice Program
• Walmart Canada Unveils Revamped and Reformulated Great Value Brand

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