To hell with real Heinz ketchup

Some swear by the real, real Heinz ketchup. No question of choosing a bottle from another brand to save a dollar or two. Other households buy only Lay’s potato chips. Sometimes it’s the Le Sieur peas that would never be replaced by a can of other colors. Each his own.

But the moment inflation hits us head-on in every row of groceries, whims and demands evaporate.

Whether in Europe, at home or, to a lesser extent, in the United States, supermarkets are all seeing the same phenomenon. Their customers fight inflation by favoring what is on sale, of course, and by turning massively to so-called private or house brands. It is these brands that belong to the retailers. Think President’s Choice at Maxi and Provigo, Irresistibles at Metro and Super C or Compliments at IGA.

Their prices are usually lower than national brands, which explains the sudden jump in popularity.

In a few months, consumers have changed their habits enough for the president of Loblaw (Maxi and Provigo) to mention the phenomenon during a discussion with financial analysts in May. Galen Weston then clarified that sales of the unnamed brand (the famous bright yellow packaging) “are reaching unprecedented heights”. However, he did not quantify the increase in sales.

On the IGA side, the house brands “are on fire right now,” a senior executive recently revealed to shareholders. And the growth of their sales “is much faster than that of the national brands”.

The scenario is similar at Metro, where we also see that private labels ” are doing very well,” according to President Eric La Flèche.

In France, consumers have adopted the same behavior, observes the data firm Kantar. The shift towards private brands mainly affects mustard, pasta or oils, three foods whose prices have particularly exploded due to the weather and the war in Ukraine.

“National brands took advantage of COVID-19 because consumers were looking for more security, but also a little reassurance. But in March, this trend was reversed: all the ground that brands had gained, they lost in a month. It’s huge,” a vice-president of Belgian supermarkets Delhaize told the trade publication. RetailDetailin May.

In the United States, the phenomenon is more mixed, but still present: 21% of consumers have turned to private brands to fight inflation, according to a study conducted by the firms Caddle and IRI Canada, in April. This compares to 47% of Canadians.

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For the shareholders of the three Canadian food giants, the statistics on the sales of private label products are not insignificant. Because they generate higher profits than national brands like Kraft, Heinz, Ritz, Lays’s, Oreo, Campbell’s, Philadelphia, Coca-Cola or Hunt’s. When you control the entire chain and eliminate intermediaries, it necessarily costs less. One can also choose less expensive ingredients or packaging.

In short, even if the consumer saves, the supermarket pockets more money.

So it’s no coincidence that Loblaw relies so heavily on its President’s Choice brand. Its new products are promoted through a magazine. The most recent, distributed in May, includes 100 novelties. Its launch is accompanied by a television and radio advertising campaign featuring Galen Weston.

Private labels now generate between 30 and 40% of the total sales of the Ontario giant, which launched 850 new products in 2021 (pharmacy products included). It is enormous.

Metro and IGA are more discreet. But Metro is displaying its two Selection and Irresistibles brands extensively in its flyers these days.

These brands are a good solution to reduce your grocery bill. At Maxi and Provigo, the President’s Choice brand is 20% cheaper than the national brand, while the no-name brand provides a 40% discount, says Loblaw spokesperson in Quebec, Johanne Héroux. At Metro, we are talking about an average saving of 15%, while IGA did not want to provide a figure, since “it varies”.

Let’s take the example of ketchup, the condiment par excellence of the summer hot dog.

When the shopping cart is overflowing each week, every dollar saved ends up making a noticeable difference. Same thing for inflation: each small increase that adds to the previous one ends up appearing on the budget.

Especially since the pace of the climb has accelerated since the fall. The last time food inflation stayed below 3% was in August.

We have not seen such a surge in prices since the fall of 1981.

Inevitably, such a shock provokes unprecedented reactions in the rays. It remains to be seen if the new habits will take root and how the multinationals will react.

Anything new in your fridge?