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PaperclipPerfector  4mo ago (text post)   2813 thread views

Small-Scale Question Sunday for December 17, 2023

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Why do people buy name brand over generic groceries? They're often identical. Are people just stupid? But it's such a blatant case about which product is better. They'll be identical products, next to each other on the shelf, except one costs about 25% less. The only difference is that the other product has commercials advertising it. I have friends insist that name brand tastes better, but the contents are literally identical.

Counterexample from the FTC:

(¶ 16) Respondents [JM Smucker (Crisco) and Conagra (Wesson)] do not sell their products directly to end consumers. Instead, both Respondents sell their branded canola and vegetable oils to retailers, including grocery stores (such as Giant), mass merchants (such as Target), club stores (such as BJ’s Wholesale Club), and convenience stores. Retailers purchase canola and vegetable oils at wholesale from suppliers such as Smucker and Conagra and sell them at retail to their in-store customers, the end consumers.

(¶ 19) In addition to buying canola and vegetable oils from the national brands, retailers also frequently sell canola and vegetable oils under their own label. Most retailers that have “private label” canola and vegetable oils typically price it at a lower retail price than the national brands, usually 10–20% below the brand price. Retailers generally contract with a third-party oil producer, such as Cargill or Stratas, to manufacture their private label oils. The process by which retailers supply themselves with private label canola and vegetable oils is separate, and different, from the way retailers buy and sell branded canola and vegetable oils.

(¶ 21) Smucker and Conagra do not participate in or bid to supply private label to retailers. While one of the rationales for the Acquisition is to fill excess capacity at Smucker’s Cincinnati plant by buying the Wesson brand and its corresponding volume, Smucker has elected not to increase its capacity utilization through a less anticompetitive alternative. For example, Smucker could supply private label oils to retailers or produce private label oils for a private label supplier that lacks sufficient capacity itself, which Smucker recently did for Cargill.

So, you typically will not find Crisco or Wesson vegetable oil repackaged under the grocery store's generic brand (though it does sometimes happen, as shown in the second item bolded above). Rather, generic vegetable oil is made by other manufacturers (at least as of year 2018).

The point isn't that it's literally exactly the same company/plant producing it, it's that the differences really don't make any difference; certainly not enough to warrant paying a premium. If you did put generic vegetable oil in a fancy bottle, I doubt anybody who wasn't some kind of expert/chef would actually notice any difference. Indeed, they presumably use generic bulk stuff in actual kitchens, even in nice restaurants, so it should be good enough for you or I at home.

The point isn't that it's literally exactly the same company/plant producing it, it's that the differences really don't make any difference

I did intend both points tbh. Sometimes it is literally the exact same plant producing it, and that's even more egregious. But even in the lesser cases, I don't expect there's a meaningful difference between Smucker/Conagra and no name brands like you say.

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