The article by Brat and Cordeiro published in the Wall Street Journal titled ‘Store Brands Squeeze Major Food Makers’ provides how the recent crash of the housing markets and the financial markets have influenced recessionary pressures on the household and grocery products while pinching the pockets of the consumer sin the market. As a result the consumers are depicting a trend of shifting from private label brands to the more broadly available and cheaper department/ general store brands for their grocery and food based product needs. The Shift is having a negative impact on the major private food manufacturers like ConAgra, Kraft Foods, Heinz and General Mills who have heavily invested in building their premium priced private label food products in order to generate high levels of profits from high profit margins on their sales.
In the current market conditions the buying power of the buyers is significant as they have more options to buy their grocery and food products at much more cheaper and affordable prices. The recessionary pressures have their budgets for shopping for grocery products. In such conditions the buyers are demanding cheaper food while even those who previously only bought private label food have been forced to consume store brands to fit their expenses in the budgets.
Conclusively it can be mentioned that the changes in the external environment for the market of grocery and food based private label and store label products pertaining to economic and social factors have affected the demand for products. This has resulted in a market skew where the consumers are showing increased preference for the store label products. As a result the private label products are suffering from low volume, and shrinking markets which are reducing their high margin based profitability.