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Save Money Buying Private Label Products: Store Brands

This is not a typical post from me but I spoke to my dad yesterday and he was talking about some of the differences he has seen lately between name brand and local private label products.

He went over some specific items like mushroom soup and dishwashing soap, and the price difference did trigger some curiosity in my mind.

I always used to pick up local brands whenever possible, but since I haven’t seen a grocery isle in what seems like decades, I had no idea the disparity has creeped up so much.

It is no secret that local private label products like the “Costco”, “Walmart” or “Kroger” brand will usually cost you less than a popular brand like “Colgate”, “Heinz” or “Coca Cola”.  But how much are you really saving at the end of the day?

It’s hard to tell sometimes when you are dealing with relatively small numbers, and it is not until you start extrapolating and trending that you clearly see the bigger picture. For example, a brand name canned good might cost .95 cents, whereas the store brand might cost .80.

Sure it only seems like .15 cents of saving, but what if have a big family and you buy 10 cans? What if you shop weekly?  And just to put it in percentage terms, .15 cents is almost 16% of .95 cents. 16% is a lot of savings.  What if you saved 16% on a $10,000 purchase?

Think about it, if you spend $9,600 a year on groceries (which is $800 per month), you are looking at a savings of $1,536.  What can you do with an extra $1,536 a year?  Can that be a local vacation for the family?  Perhaps pay down debt?  Save for retirement or the kids’ college fund?

Private Label Products are Not Much Different

There is no doubt you can save a lot of money buying private label products if you change your shopping habits. But what are you sacrificing? Before writing this post, I quickly browsed the web to read some industry thoughts on brand name vs. store brand.

As expected, I learned that store brands are really not much different from name brands. In fact many are not different at all. They are made by the same companies, the same product assembly lines and the same ingredients. The factory simply stamps a different label on them.

It can be difficult sometimes changing the old habit because we are exposed to brands all the time on TV, movies, billboards, magazines, everywhere really. A lot of marketing dollars and PR goes into establishing a brand, so you are essentially paying for the company’s cost of doing business and not necessarily a better product.

That said, private label products are in fact better, but only very few of them; so few that “it actually doesn’t make a difference to even know about them”. I don’t know that first hand. That’s just a line I stole from an ehow article.

“If you don’t buy store brands over name brands, you are essentially throwing money away”. I also stole that one. Think about it, why pay $5 for something when you can get it for $3.99?  Just doesn’t make sense.

People have definitely caught onto it though and I am sure that has given the big brands a run for their buck, forcing them to reduce their prices to compete better.  There are some companies that can afford to remain stubborn and get away with it. Apple Computers is one of them for example.  But one can also argue that the Apple product is truly that much better than the generic kind.

I have nothing against big brands at all.  In fact, I wish well for any company that produces useful products, employ a lot of people and contribute to the overall economy. That said, it’s all about the consumer in the end.

Every consumer has to look out for them, or no one else will.  And in this case, I have not come across any reason why I, as a consumer, should be buying name brands over store brands.  Where am I out-of-line in my thinking? What am I missing?

I know this post is rather basic personal finance stuff.  But for someone who hasn’t stepped into an aisle to examine prices lately, I thought I’d remind myself of reality and jot down my thoughts out loud here.

What is your take on brand name vs. private label products or store brand? What has your personal experience been like?  Do you bring in coupon clipping to the mix? If so, is the savings worth your time clipping, filing and remembering to take the coupons to the stores?

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4 Responses to “Save Money Buying Private Label Products: Store Brands”

  1. I agree with you. My family and I (since I live with my dad) save a lot of money buying the store brand. The only down side is when the store is using a different factory than the name brand. You can really taste the difference. But its rare so I have no problem getting the store brand most of the time. I use coupons once and awhile. The savings does add up.

  2. Alice Dunn says:

    I always compare the prices of all products. I only go for the cheapest ones. However when a brand product is for sale I buy it. Sometimes I can taste or distinguish the difference in quality, if the quality is a lot higher I might just go for the brand product when it’s more expensive as well.

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