By Published on .

Brands may have been battered in recent years, but it appears they're learning from the abuse.

From Procter & Gamble Co. to Philip Morris Cos. to General Mills, marketers have made deep cuts in pricing in an attempt to retaliate against private-label inroads.

Nabisco Biscuit Co. and Campbell Soup Co. are among those who've stepped up consumer advertising and marketing budgets. Others have put a renewed focus on unique new products and packaging to woo increasingly value-conscious shoppers.

As a result, many of these companies' brands are showing more strength. But now other factors are helping the process. With the slow economic upturn and supermarkets keeping prices low to battle discount outlets, consumers are seeing national brands in a new light.

Lehman Bros., New York, is forecasting a shift in consumer spending from big-ticket durables like cars to brand name foods, clothing and other non-durables.

Allen Sinai, chief economist with the company, said the prediction is part of a natural shift back to brands as the economy improves.

But analysts warn that consumers won't abandon private labels. Bolstering brands will be easier for a category's No. 1 and No. 2 products, while others will have a harder time competing with private labels. And brand marketers' gains come at a significant cost.

"If you're prepared to cut profits and margins deeply, sure you can regain lost movement," said Les Pugh, consumer analyst with Salomon Bros. "I wouldn't go so far as to say the tide has turned, but there is a shift going on. Part of what's changed is that a year ago, senior executives were in denial about private labels. Today, they're no longer ignoring its existence."

That's probably a smart approach, given the most recent figures on store brand growth. Sales surged to an all-time high in supermarket unit market share-19.7%-for the 52 weeks ended Jan. 2, according to Information Resources Inc. The latest figures are up from 19.4% in 1992, and continue a slow but steady yearly rise since 1989, when private labels had a 16.4% unit market share.

Dollar market share has also increased, to 14.9% for the period, up from 14.6% in 1992. In 1989, dollar share was 11.6%.

Most Popular
In this article: