Household names like Kellogg’s and Campbell’s have long enjoyed reliable revenue from grocery stores. But today, major food brands struggle to maintain brand awareness while facing competition on all fronts. These are their main threats:
Private Label Brands
Major grocery retailers like Whole Foods and Kroger are investing heavily in their private label brands and delivery options, diverting brand awareness from behemoths. The recent revelation that ConAgra is the brand behind Trader Joe’s private label products revealed a pricing discrepancy: private label products cost $1 less than the market brand, bringing to light how major brands are undercutting their selling price.
Traditional brands have relied on large marketing budgets to maintain share of shelf at major retailers. While Indie brands can’t outspend behemoths in the traditional sense, they’ve found success in leveraging e-tailer sites like AmazonFresh as discovery platforms. Indie brands primarily rely on digital to build brand awareness with celebrity endorsements and social media investments.
Meal kits like Blue Apron have created a new category within grocery by tapping into new customer demand. Meal Kits focus on their private label brands at the expense of name brands and sourceproducts from local suppliers along with essentials from major brands. While “Big Food” has always competed in stores with local and regional brands, these new threats from e-commerce pose a fresh challenge with a direct impact on their bottom line.