Over the last year a curious reaction to or perhaps result of our economic woes and the accompanying Private Brand growth has been a mergers and acquisitions spree by major Private Brand manufacturers. The most recent is the agreement by Cott Beverage to acquire the juice company Cliffstar for $500 million.
Other high profile, high dollar acquisitions have included:
- Perrigo’s acquisition of baby formula giant PBM
- Ralcorp‘s acquisition spree that has include: breakfast food manufacturer Sepp’s Gourmet Foods Ltd, pasta manufacturer American Italian Pasta Co. and North American Baking
- Treehouse Foods acquisition of soup manufacture Sturm Foods
As retailers continue to grow their Private Brands and create compelling consumer relevant propositions it is difficult to believe that Private Brand manufacturer consolidation will be beneficial for either the Brand Manager or the consumer. Even before consolidation it is not uncommon to find identical cereals, soups and other dry goods at all of the major grocers in the my hometown Charlotte.
Even my kids recognize that the fruit gummi’s are the same at Food Lion, Harris Teeter, Lowe’s Foods and Bi-l0 although that may bring higher margins it does nothing to give shoppers a reason to choose one over the other.
If manufacturer consolidation brings efficiencies in operation that provide cost savings which are translated into increased budgets for research, development, quality control and innovation the spate of acquisitions could serve to prolong the Private Brand growth spree.
If not it could further homogenize the Private Brand offering and slow or destroy growth.
Retailers must build relevant differentiated brands both through brand positioning and its tactics and products on shelf.