Del Monte Bankruptcy A Harbinger As Consumers Flock To Store Brands

Forbes

14-07-2025

Del Monte Bankruptcy A Harbinger As Consumers Flock To Store Brands
The store brand juggernaut triggered by pandemic-era inflation and economic uncertainty has passed a tipping point with consumers and may have claimed its first national brand victim.
A recent First Insight survey finds that 37% of shoppers now trust the quality of cheaper (and more profitable) private label goods ABOVE national brands. Another 47% consider store brand products to be AS GOOD AS the legacy brand versions.
To paraphrase Shakespeare, ketchup by any other name is still ketchup.
Retailers have gotten smart; consumers have gotten wise.
As we reported here last year, cash-strapped Gen Z-ers have been leading this trend—more than half choose where to shop based on store brands. Many younger shoppers have no problem buying knockoffs of fashion brands. Now the latest survey finds the shift has extended to high-income consumers—61% said they trust store brands over national brands.
Ominously, for the traditional consumer packaged goods (CPG) industry is the recent First Insight finding that more than 70% of those surveyed were unable to recognize a private label when comparing side-by-side images of store and national brand products.
Shoppers are buying store brands even if they don't realize it.
As trust in store brands has increased, national brands have been losing it. According to a recent food and beverage survey by Ernst & Young, more than 40% of respondents believe 'product innovations' by national brands are 'merely disguised cost-reduction measures,' such as shrinking package sizes.
Put it all together and it becomes clear that traditional brand awareness is becoming murky, brand loyalty is fading, and brand equity is shrinking.
According to the Private Label Manufacturers Association, private label sales rose by nearly 4% last year to a record $271 billion. Although store brand unit sales grew modestly (2%) since 2021, during the same period national brand unit sales fell by almost 7%.
National brands—those household names that have dominated grocery shelves for so long—face a daunting challenge, especially when the price spread is as large as it is on many items. How much longer can a box of famous-name cereal retail for $4 when the identical product and package size of store brand is $3?
The gap apparently proved to be too much for Del Monte Foods, whose products include venerable brands like College Inn broths and Contadina canned tomatoes. The 138-year-old company filed for bankruptcy last week citing declining demand.
The private label insurgency extends far beyond groceries and other consumables. Amazon was early and aggressive with its extensive line of essentials under the Amazon Basics brands. Walmart has apparel brands like George (men's shoes and clothing), and Athletic Works (activewear for men, women, and children).
The latest wrinkle in this developing conflict is the allegation by Lululemon that Costco is poaching off its reputation and intellectual property with a knockoff line sold under its Kirkland private label. According to a recent report in The Wall Street Journal, 'some Lululemon shoppers say that they now want bargains, not brand names.'
If there is a limit to the store brand movement, we are unlikely to reach it anytime soon.
In fact, the retail industry's leaders are rewriting the rules of engagement. Large global chains have become much more aggressive about controlling the supply side. For example, Walmart purchased Vizio, a maker of flat-screen televisions (a commodity product in every discount department store); and Home Depot recently purchased SRS Distribution, a building products distributor.
This all leads to a need for companies of all types (Retailers, Brands, Manufacturer's, Auto, Tech, etc) to understand what consumers are willing to do to switch, their optimal costs and how they feel about private brands versus branded. Super exciting times for some.