AdAge reported today that Walmart has sent Glad and Hefty
packing as the big retailer streamlines categories and positions its own
private label brand for success.
The news is a major blow to the traditional brands, as Walmart makes up a third or more of their sales.
The good news for Pactiv (who owns the Hefty brand) is that they've been granted the privilege of manufacturing Walmart's Great Value bags.
But is this really good news for Pactiv?
Clorox (Glad) exited the private label business last year after deeming it to be non-strategic.
Pactiv has taken a different approach, preferring to play on both sides of the fence.
Are manufacturers like Pactiv positioning themselves for profit, or total annihilation of their core brands?
The gain realized today will slowly erode brand equity as consumers realize that the private label products aren't only as good as the big brand, they are the same.
Walmart is clearly in the position of strength here, pitting manufacturers against each other and forcing them to spend millions in advertising to drive consumers into stores. (Pactiv and Clorox increase ad spend $23 million and $58 million respectively)
And what does Walmart do?
They simply stock the shelves with their own branded alternative, taking full advantage of the traffic driven in by branded manufacturers battling it out over shelf space.
For Walmart, it's brilliant.
For manufacturers like Pactiv, it's short term gain which will lead to long term pain.
For consumers, product selection is diminished, which only leads to less innovation.
It's an interesting landscape out there, and we're just getting started.
