“Who is the competition these days, you might  ask yourself. I may slice, dice and bag my  carrots, or batch and dispatch my eggs, or slice  the bacon all ready for market.

Then, after all that work and getting the product into  the supply chain, how often are you left wondering  that you have actually been competing against yourself  when you look at the supermarket shelves; where is  your product amongst the array of private label and  multinational brands. You think if this continues and the  more I sell into private label, how am I ever going to  distinguish my quality and improve my prices. Am I the  one actually in the bacon slicer?

And that is the whole point about the importance of  the maintenance of brands in our food and beverage  markets. The ongoing removal of brands from our  shelves with their substitution by an increasing suite  of private label brands removes the capacity for  competition and narrows consumer awareness to  an ever decreasing circle of choice, narrowing the  entrance gate but making the gatekeeper loom  larger than ever.

Should I be bothered about this?

The answer is yes. With a brand which consumers  recognise and appreciate, that establishes a goodwill  for the producer with customers which is an item of  value, not only in repeat custom and any negotiations  with retailers (although this can be notional for some  even at the best of times) but also on the balance sheet.

A suppliers’ contract into private label establishes  neither. This renders the private label only supplier even  more beholden to the buyer and retailer and eliminates  to a real extent any credible alternatives. When credible  alternatives are removed, ultimately that will result in  price squeeze on the supplier but also has the capacity  to facilitate margin retention vis-à-vis consumers.  The buyer controls both the supply agreement, the  branding the pricing and range of SKUs. It may also  lead to less competition in quality to the detriment of  the consumer body as a whole.

This is where we are all probably in agreement with all  stakeholders in the supply chain – competition is not  all about lowest price, particularly where there is an  absence of choice. It is about driving efficiencies and  quality. Driving efficiencies should lead to lower price  but if at the expense of quality and choice, then that is  a fiction.

Tim Harford, otherwise known in the English Financial  Times as the Undercover Economist noted in the  13 August 2014 edition:

“Monopolists can sometimes use their scale and cash  flow to produce real innovations – the glory years of  Bell Labs come to mind. But the ferocious cut and thrust of smaller competitors  seems a more reliable way to  produce many of the everyday  innovations that matter.

That cut and thrust is no longer so cutting or thrusting as once it was. “The business sector of the US economy is ageing,” says a Brookings research paper. It is a trend found across regions and industries, as incumbent players enjoy entrenched advantages. “The rate of business start-ups and the pace of employment dynamism in the US economy has fallen over recent decades … This downward trend accelerated after 2000,” adds a survey in the Journal of Economic Perspectives.

That means higher prices and less innovation, but perhaps the game is broader still.”

What does this mean for you?

If you have an idea for a brand or strategy for your product, believe in it, try and stick with it. It is a hugely important aspect of that element of competition policy which drives innovation and we can all be policy makers on that front. The game is broader still. Otherwise, where’s the fun in white label, right!