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Major Manufacturers producing Private Label Brands

Private-label brands now account for one of every five items sold in U.S. supermarkets, drug chains, and mass merchandisers. A controversial move by some marketers of major brands is to supply private-label makers. For example, Ralston-Purina, Borden, ConAgra, and Heinz have all admitted to supplying products - sometimes lower in quality - to be used for private labels.

Other marketers criticize this strategy, maintaining that these actions, if revealed, may create confusion or even reinforce a perception by consumers that all brands in a category are essentially the same. Choose a side, arguing that manufacturers should feel free to see private labels as a source of new revenue or that national manufacturers should never get involved with private labels.

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The majority of major brand manufacturers supply private label brand to retailers because it benefits the manufacturer. It allows them to maintain production and enjoy higher economies of scale. From pet food to cereal to soda pop and beer, utilizing the major manufacturer in the category allows the private label ...

Solution Summary

This solution gives a detailed description of the manufacturing of private label brands by national manufacturers. It discusses if manufacturers should feel free to make private label as a source of new revenue or if it is wrong for them to get involved. It includes examples.