Here are two food industry stories to inspire you to think about the business of food the next time you’re filling up your cart at the grocery store.
Expanding private labels
A recent piece in the New York Times reported that as inflation continues to impact the wallets of consumers at grocery stores, some major retailers are focusing more on providing cheaper private-label alternatives to name-brand favorites. This has allowed them to take a larger share of the market at a time when consumers are more open to switching up their carts. In fact, two-thirds of consumers said they were trading down at the grocery store in July, which has prompted some name brands to consider small sales on specific items to hold on to their market share.
However, this competition from private labels is heavily led by consolidation in the grocery landscape. Between the Kroger and Albertson merger and Aldi acquiring 400 Winn-Dixie and Harvey’s, the market continues to have fewer and fewer players. Finally, it is noted that a lot of this private label success comes down to the fact that these knock-offs are genuinely just as good tasting as the original, which is a huge contrast to generic brands 40 years ago.
What does this mean for the future of private labels? Will they continue to be a cheap alternative to national brands, or will they become national brands in their own right and see their prices rise over time?
Legislation creates new recipes
As a Washington Post article reports, California has established a first-in-the-nation legislation that bans the manufacture, sale, and distribution of four additives found in thousands of food products in the United States. The ban has been dubbed the ‘Skittles Ban’ by opponents as they claim it will lead to the candy being removed from shelves.
Although it may be the first time these additives will be banned within the U.S. (the legislation goes into effect in 2027) many food additives legal in the U.S. are already banned around the world. So while large brands sell the same products globally, they often have to use different recipes in different places. As quoted in the article, “There’s no realistic chance that this bill will result in any products, including Skittles, being pulled from shelves. Companies will simply change their recipes to match what they’re already selling in other places.” Therefore, this California ban could have longer-reaching implications for the rest of the U.S. as it is unlikely a company will choose to manufacture a product solely for California. Rather than pull its product from the state altogether, it would seem more likely that a company will change what it distributes to the entire country.
It is important to note that this isn’t the first time Skittles has changed its recipe. In 2009, they quietly stopped using gelatin so that their product would be suitable for vegans and some religious groups. As consumers become more health-conscious, consider what this change could mean not only for products that have to adjust their recipes but also for those who may want to cater to a more health-conscious consumer base.
