Are Store Brands Really Just Generic Versions?

Choosing private label products is one of the smartest ways to cut grocery bills, especially in today's economy where rising food costs are a concern for many families.

In the past, buying a store's generic private label was sometimes considered second-rate. But with the rise of popular retailers like Aldi and Trader Joe's, who focus on offering high-quality private label products at budget-friendly prices, more shoppers are turning to these alternatives.

These days, picking up your snacks at Trader Joe's isn't just a smart financial choice—it's also a trend that many food lovers embrace.

Have you ever found yourself in the grocery aisle staring at a store-brand item that looks strikingly similar to a national brand on the next shelf? Or maybe you've bought a private label product, tasted it, and realized it’s nearly identical to the pricier branded version?

This got us thinking: are private-label products really as basic as they seem, or are they one of the grocery store industry's best-kept secrets? We turned to the experts for answers.

What Exactly Is a Private Label?

So, what’s a private label, anyway? In simple terms, it's the brand created and owned by a retailer. These products are sold under the store's name, rather than the name of the company that actually manufactures them.

For instance, Aldi's private label is Specially Selected, Walmart’s is Great Value, Costco uses Kirkland Signature, Sam's Club offers Member's Mark, and Trader Joe's goes with Trader Joe's. Target has several food-specific labels like Market Pantry, Good & Gather, and Favorite Day.

In essence, every grocery store has its own private-label range. And more often than not, these store-brand products come at a lower price than their branded competitors.

"On average, grocery store prices are about 20% lower for private-label items," says Rajeev Batra, Ph.D., a marketing professor at the University of Michigan.

Here's the surprising part: many private-label products are produced by the same manufacturers that make the national name-brand items.

Yes, you read that right—the reason so many private-label products resemble and taste like their name-brand counterparts is because they are often made by the same companies, or are extremely similar.

Are Private Label Products Just Generic Versions?

The simple answer is, we can't say for sure, but it’s probably not. What we do know is that the majority of national-brand producers are also behind private-label products.

"There are certainly instances where a retailer might have their own manufacturing deals or private label producers," says Batra. "It’s possible, but it's less common. More often, they’re sourcing from a national manufacturer."

So, why would a national brand agree to produce a competing store-brand product? "If this manufacturer doesn’t provide it, someone else will," Batra explains.

The stores actually wield more influence than you might think.

"Imagine you're supplying products to Walmart. They tell you, 'We're going to stock your products, but we also want you to provide private-label goods.' It’s unlikely the manufacturer can say no," says Batra. "To keep the big retailers satisfied, manufacturers typically agree and provide the private-label items."

However, to make sure the products aren’t exactly the same, the national manufacturer might adjust the formula in some way. This could mean a different ingredient or colorant. We can't say for certain if this happens, but it’s possible since it's difficult to prove.

"For most food products, there's no real need for any changes. You can't look at Del Monte green beans under a different brand and immediately tell who made them," says Fred Feinberg, Ph.D., the chair of marketing at the University of Michigan. "I don't see how you could ever prove that two products weren't made by the same manufacturer."

The Final Verdict

While we can endlessly speculate that your favorite private-label Irish butter or potato chips might come from the same factory as the national brand, we’ll never know for certain. If the truth ever came to light, it would be damaging for both the national brand and the private-label store.

From a manufacturing perspective, it's all about maintaining consumer trust and keeping the name-brand products at the forefront.

"If shoppers discovered they could get the same product for a lower price under a store's own brand, why would they bother with the national brand? They’d just buy the cheaper option. That’s why it's kept under wraps," says Batra.

From the retailer's perspective, it's about keeping the trust of manufacturers. If a store reveals it sells the same or similar products, the manufacturer might back out, refusing to produce the private label items. Plus, it could spark legal trouble.

However, Batra points out another reason why retailers prefer to keep the identity of their suppliers a secret.

"A retailer might want the option to change manufacturers at will—today it’s company X, tomorrow it could be company Y," he explains.

What we do know is if you’ve been buying private-label products all along, you’re ahead of the game. If not, it might be time to start giving them a try.