A roommate of mine who was an Econ major told me once that the knockoff bag cereals are often made by the same company that makes the name brand. That they’re the exact same product.
He said this is because there isn’t really much crossover between the market segments. People don’t comparison shop the bag cereal, they buy it because it’s cheaper and they wouldn’t buy the box cereal otherwise. And people who buy box cereal don’t really buy bag cereal. There’s no competition between the segments.
So if Kellogg’s or Post or General Mills makes the same cereal and throws it in a bag under a different brand name with a random title, they make more money than they would if they left that segment of the market to another player.
This is the same reason Costco and Sam’s Club brands have products that compare well with the brand names…they’re the exact same product, sold under a cheaper brand. Brew Dr can sell their kombucha under their brand at one price, but ALSO make kombucha and sell it under the Kirkland brand, and they’ll make money on both products.
Just because they’re made in the same factor doesn’t mean they are made to the same specifications. Often the store brand foods are made with cheaper ingredients, even if it’s on the same assembly line
So a former home office employee of Walmart it is what’s left after the name brand run it is what isn’t up to snuff for the name brand that is why off brand vegetables have more stems and stuff etc in them.
A roommate of mine who was an Econ major told me once that the knockoff bag cereals are often made by the same company that makes the name brand. That they’re the exact same product.
He said this is because there isn’t really much crossover between the market segments. People don’t comparison shop the bag cereal, they buy it because it’s cheaper and they wouldn’t buy the box cereal otherwise. And people who buy box cereal don’t really buy bag cereal. There’s no competition between the segments.
So if Kellogg’s or Post or General Mills makes the same cereal and throws it in a bag under a different brand name with a random title, they make more money than they would if they left that segment of the market to another player.
This is the same reason Costco and Sam’s Club brands have products that compare well with the brand names…they’re the exact same product, sold under a cheaper brand. Brew Dr can sell their kombucha under their brand at one price, but ALSO make kombucha and sell it under the Kirkland brand, and they’ll make money on both products.
Exactly.
Another way to look at this is: It’s not the store brand version that’s marked down, it’s the “name brand” version that’s marked up.
Just because they’re made in the same factor doesn’t mean they are made to the same specifications. Often the store brand foods are made with cheaper ingredients, even if it’s on the same assembly line
So a former home office employee of Walmart it is what’s left after the name brand run it is what isn’t up to snuff for the name brand that is why off brand vegetables have more stems and stuff etc in them.