Pricewatch: How we’ve learned to love own-brand products

The price of two litres of own-brand milk in Tesco will set you back €1.69, while a similar quantity of milk with a brand name on it will cost €1.99. Butter sold under the Tesco label is €2.99 while butter carrying a label which is far more familiar to most of us is €3.95. An 800g white sliced loaf with a well-known name is €1.87. By contrast, a white sliced pan with the Tesco name emblazoned on the packaging is 75c.

If we move on to the pasta aisle, 500g of Tesco linguini is 69c while 500g of a considerably fancier looking linguini with more Italian on the packaging is €2.95. And finally, 80 Tesco Gold Label teabags will set you back €1.15 while a similar quantity of gold label tea from another company is priced at €3.60.

While the prices we looked at were from Tesco, they could just as easily have come from Aldi, Lidl, Dunnes, Supervalu or – somewhat surprisingly, perhaps – Marks & Spencer, such is the degree of price matching of key products that exists across all our supermarkets.

Now, you can argue about the contents of the milk carton until the cows come home and refuse to give up your Barry’s for all the tea in China, but what you can’t do is dispute the price differentials that exist between own-brand and branded products.

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We might just pause here to pose a question you might ordinarily find in a sixth class maths book, but bear with us.

If a family of four consumes 10 litres of milk, 454g of butter, two sliced pans, one box of tea bags and two packets of pasta each week and switches from branded to own-brand products for one whole year, how much will they save?

Give up?

The answer is €606.84. By any measure, that is an astonishing sum and bear in mind that is only five products. Were we to spread that over the entire weekly shop, the savings would increase dramatically.

But how is that possible? How is it possible for own-brand to sell for so much less than branded products and why aren’t we buying more of them?

Tipping point

To the second part of the question first. We are buying more of them. In fact, the typical Irish supermarket basket of goods could reach a major tipping point before the end of the summer if current trends in retail continue.

In an advance that would have seemed almost beyond belief 20 years ago, more than 50 per cent of what we buy on a typical visit to the shops is likely to be own-brand, or private label, to give it the somewhat fancier term that many retailers like.

The amount of own-brand products bought by Irish consumers has increased steadily over the past two decades and according to figures published by Kantar last week, private label sales stood at just over 46 per cent in April by value – an increase of 3 per cent since last November.

In 2005, just 9 per cent of what found its way into our shopping trolleys was own-brand. While the recession that followed the great economic unpleasantness of 2007 and 2008 was a boon for own-brand, the other reason for the change was the boom in quality own-brand products on the market.

In the distant past of the early 1980s, Quinnsworth rolled out a "yellow pack" range of own-brand groceries. The products were as gruesome as they were grim

The whole notion of own-brand got off to a rocky start in this part of the world, as some of our older readers may recall.

The garish yellow packaging didn’t do the brand any favours, and the quality of what was found in the boxes was more often than not poor – we are being kind here. The low quality of the stock is why “yellow pack” quickly become a pejorative, something to be attached to jobs, products and even lifestyles that were less than stellar.

Throughout the 1980s, 1990s and the first decade of this century, own-brand products from all the retailers struggled to make a dent with Irish shoppers, who stayed loyal to their big-name brands. Then the German discounters started to really make their mark.

They started slowly, selling unfamiliar brands at knock-down prices. How we chuckled at the weird German hams and breads sitting alongside the only slightly weirder blow torches.

Oohs and yums

But over time, the chuckles were transformed into oohs and yums as Aldi and Lidl formed good relationships with local producers and suppliers and the quantity and the quality of their stock improved. They developed a reputation among those producers and suppliers as being good to deal with – they would do a deal and then stick to it, paying on time and at prices agreed.

That encouraged more producers to come on board.

Today, the own-brand offerings both Aldi and Lidl have is frequently as good as – and sometimes better than – branded products selling for substantially more. The same can be said of many of the products found on the shelves of Dunnes Stores, Supervalu, Tesco and M&S.

Often that is because the products are made by the very same brands.

Sometimes the quality is not so good. But much depends on where in the pecking order the own-brand products fall. Many come in three tiers. The bargain basement, the mid-range and the Finest ( or Specially Selected or Deluxe or Simply Better or whatever you are having yourself.) While the retailers will insist that they have their three levels because they want to offer us more choices as we go about our shopping, there is an alternative reason which is, perhaps more believable.

That’s anchor pricing.

Ask anyone with even a passing acquaintance with psychology what someone will do if they are given the choice of an expensive option, a really cheap option and a middle-of-the-road option and they will quickly tell you that people will almost always pick the middle of the road.

That is because we tend to have an aversion to extremes and tend to pick the middle of the road when at all possible. So, if you price products accordingly as a retailer you can exploit that human weakness – or predictability. You set the price bar high with the premium range, and price the bottom of the barrel at the low end of the scale so you can boast about how cheap you are.

Then you edge up the price of the middle range goods, which people will inevitably compare to the higher-priced version and believe the are getting good value for money. And well they might be.

But that is not to take away from the popularity of own-brand in Ireland today. Tricks of the trade would not work if the products were not good enough and the good news is that they are. Finally.

Meet the private-label makers

Who are the private-label makers and what is in it for them? Why would they get into bed with a big retailer and sell their products under a private label for substantially less than they might sell it for under their own brand name?

Rob Horgan from Velo Coffee Roasters supplies Aldi with high-end coffee which it sells under its Specially Selected range. His product first appears on the discounter’s shelves in 2019. So far he has no regrets.

“It has transformed our business,” he says simply.

And how did it do that? By allowing Velo to ramp up production and make long-term purchasing decisions knowing that they had a guaranteed buyer for a significant volume for a set period.

“When we started, no-one knew us,” Horgan says. “I wouldn’t be having this conversation with you if it wasn’t for Aldi, and because of them we are available from Buncrana to Skibbereen.”

The relationship also means he can “forward-buy coffee to make sure we get the right coffee at the right price. Without the security of a listing like that, we would not be able to take the risk.”

But is there not a danger he will ultimately undercut himself?

“The coffee we sell directly to consumers on our own site is different coffee, although we do sell some of the same coffees at a higher price. People do ask why and I wouldn’t be rude and say how many pallets would you like? But that is the reality: we can’t deliver at that price. We can sell to Aldi at one price and to consumers at another, and we can’t be one bag. We would love to be able to do it but it is just not possible.”

Bernard Broderick makes cakes for a living, both under his own name and for Aldi and Lidl although the discounters do not get the same products. “For us, it was all about scale. We wanted to get into retail and we needed scale. Having a relationship with a big retailer gives you the purchasing power and the volume, and we can tag the branded stuff on the back of that.”

More than that, the relationship with Aldi in particular has opened doors for Broderick that might never have opened otherwise. “A lot of people outside of Ireland don’t know what our product is. Rocky road is standard here but outside of this country it is not. We are about to do a deal with Aldi in America, a place where you won’t find a rocky road. It is big volume and exciting for us, but they are doing all the work. Can you imagine the cost for us to do that?”

He stresses that there is very little difference between the own-brand products he makes and those that sell under the Broderick’s name. “We use the best of ingredients and there is nothing to be ashamed of when making own-brand. It is not like the old days when producers tried to whatever they could to cut corners.

“Today our products, own-brand or branded, have to benchmark against the competition and it has to be as good as the best in the market, or else people won’t buy it. It really is that simple.”

Twitter favourites

Last week we carried out a Twitter poll and asked users if they were buying more own-brand products now than they were five years ago.

All told, a third of the more than 500 people who responded said they were buying far more than five years ago, while 36 per cent said they were buying “pretty much the same”, with 23 per cent saying they were buying a bit more but nothing overly dramatic. There was also 7 per cent who said they never bought any own-brand.

Are they missing out?

Well, they might be. We also asked people for their favourite own-brand products and got hundreds of responses covering all the supermarkets. Here are just some of them.

"Lidl's Way to Go Fairtrade chocolate bars!" – Kevin Jenkinson

"Divine chocolate biscuits, Aldi."– Aileen Eglington

"Aldi do a hand soap that is exactly like Jo Malone." – Clare O'Connell

"Any of @LePatissier1's desserts for Dunnes Simply Better. Superb quality!" – Gillian Nelis

"Tesco chicken kievs are unreal" – Thomas Cross

"Lidl almond magnums are delicious." – Shane Beatty

"Supervalu sausages and their in store baked round brown bread." – The Village Bookshop

"Dunnes Digestive Biscuits. The nicest of all Digestives, ever." – Jen Hogan

"Tesco custard creams! My son loves them! Nothing else will do!" – Niamh Lane

"Deluxe sausages from Lidl. Super high meat content (80%) and a decent range for a good price. By far a better price/taste/ingredient combination than any other supermarket." – Killian Byrne

"Dunnes sour cream – nicest I've found ! Lidl Tiramisu… should carry a warning, it's so nice – barely makes it out of the car and into the fridge!" – Donna O'Connor

"M&S Thai corn cakes. They taste nearly as good as fresh ones on the street in Bangkok." – Paul O'Connor

"Tesco Finest chai tea. Lives up to the name (although the 'tea' bit is redundant because 'chai' already means 'tea' in India." – Vish Gain

"Dunnes Simply Better bronze pasta range is the best dried pasta I've tried, so good." – Sarah Jane Hurley

"Aldi nappies for sure. Great price and I never remember them leaking unlike some branded ones." – Aisling McCann

"Lidl American smoked thin bacon, do it in the oven game changer chrispy bacon for burger, sandwich, breakfast." – Thomas O'Brien

"Dunnes Stores own brand porridge €1.79 for a tub. It's as good as any branded porridge." – Nicola McDonald

"West Cork Irish Buffalo Mozzarella 290g Specially Selected From Aldi produced in Macroom from Irish Buffalo's by Johnny Lynch... way better than the Italian version." – Jerry

"Lidl Deluxe Canadian Bluberry yogurt is unreal." – Debbie Curran

"M&S cookies. No cookie has ever matched." – Niamh Ryan

"Dunnes Lemon Curd yoghurt – it's unreal." – Siobhán Mehigan

"Kavanagh porridge oats in Aldi as good as Flahavan & half the price." – Seamus O'Hanlon