Across the retail spectrum there are stores that boast bottom-dollar prices and there are stores with that offer higher levels of selection, convenience, quality, or service that generally have higher prices. Should we assume that the store brand products at premium stores are automatically higher quality than those of dollar stores?
We decided to do a case study using one of America’s favorite foods – ketchup. If you’re part of a typical American household, you might go through a few bottles of ketchup every month, so it’s worth looking into whether you’re getting the best deal. Prices of this staple can vary quite a bit. A typical store brand bottle will cost you about $1, but the name brands such as Heinz will run you about $2, about double the price.
Ketchup is usually comprised of three main ingredients, no matter which brand you buy – tomato paste, corn syrup, and high fructose corn syrup. There are of course some new, premium options on the market that use honey, organic tomatoes, or other healthier ingredients. But overall, the typical bottle of ketchup you would grab off the shelf will be essentially the same from brand to brand.
So let’s say you’ve decided to give the store brand a chance. Would you automatically assume the store brand ketchups at premium grocers, like Publix or Giant Eagle, would outperform those of bargain stores like Dollar General, Family Dollar, and Walmart?
The price difference may lead you to think so. At Publix, the 24-ounce store brand bottle of ketchup costs $1.49. Giant Eagle’s costs $1.19.
Meanwhile, the same size bottle of ketchup costs $1.00 at Family Dollar, $1.00 at Kroger, $0.92 at Walmart, and only $0.85 at Dollar General.
The price difference between Publix’s ketchup and Dollar General’s is $0.74. You could almost buy 2 bottles at Dollar General for the price of one bottle at Publix. So shouldn’t we assume that Publix’s ketchup is, in some way, better?
Would it surprise you to find out that the ingredients and nutrition facts for the Publix and Dollar General ketchups are exactly the same? Tomato concentrate, high fructose corn syrup, distilled vinegar, corn syrup, salt, less than 2% of: spice, onion powder, natural flavors. 20 calories, 4g of sugar, and 160mg of sodium per 1-tbsp serving.
Because the ingredients and proportions are identical, there is in fact a high likelihood that Publix and Dollar General acquire their store brand ketchups from the exact same private label producer. In that case, the only difference between the bottles would be the sticker.
So why does Publix charge such a higher price for the exact same bottle of ketchup? Put simply, because they can. Consumers are often too quick to assume that higher price means higher quality and tend to associate their perceptions about the store with the quality of the product, when in reality, the products on the shelves are produced by third parties.
So if you’re looking to stretch your dollars, you can do even better than switching to store brands over name brands. There is a high likelihood that the same food producers are supplying store brand products to supermarkets across the retail spectrum, and those stores will price those identical products at whatever price they think their customers will pay. Comparing store brand products between stores, knowing now that the ingredients may be identical, can save you even more money on your grocery bills and keep more money in your pocket for more important things.