The impact of storebrands on the food product line

Jankuné Kürthy, Gyöngyi – Juhász, Anikó – Stauder, Márta – Tunyoginé Nechay, Veronika

Keywords: store brand (private label), producer brand, per unit costs and income, ratio of store brand and producer brand prices

The success of store brands is the symbol of modern food supply chains and of the formalisation of consumer preferences - as well as a tool of gaining power and advantage over competition in the global food retail market. The share of private label products in the international and domestic food market is so high that it has brought about fundamental changes affecting nearly every participant in the supply chain. It has affected the vertical and horizontal competition in product line segments, the price and cost of products as well as profitability. The spreading of store brands - which provide greater choice, sold at lower prices and can be produced at lower per unit cost - can in theory have the benefit that despite the lower per unit income the total profit of food processing and retail sales can be increased by increasing demand (market share). The market share of domestically produced has decreased along with the increase of store brands over the recent years, however. This process has therefore had an adverse impact on the processing and raw material production phases of the national economy and contributed to the loss of market caused by the poorer competitiveness of domestic food industry. The building of the own brand images of retail chains, the increase in their vertical power as well as the greater stability of the retail business compared to industrial sales all indicate that the positive effects of the spreading of private labels primarily benefited the retail phase in Hungary. Our analysis compares the prices of store brands and producer brands to look at the impact of store brand products on the Hungarian food market and especially on the Hungarian suppliers of food products.

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