Similar to the ever-present confusing discount calculations in stores, this makes prices fluctuate significantly. On the face of it, it is advantageous for people, but it introduces lack of transparency and therefore instability into the pricing policy. In addition, according to grocers, the chains can also influence the quality of the products.
If a customer has ever felt that the taste of a private label food and a more expensive branded product were the same, it may not have been just a feeling. The practice, where one product is packaged in two different packages and sold at significantly different prices, is common, according to some. These are often dairy products, but also others.
“This is nothing new and it is happening more and more often. It is also common with biscuits, meat products or even beer. There, they are often common, well-known brands of industrial breweries, only with a different label,” Tomáš Maier, an economist from the Czech University of Life Sciences, told Novinkám.
Why is butter expensive in the Czech Republic? Here is an overview of the excuses
Economic
The retail chains refused to comment on the matter when asked by Novinek. Billa only stated that she is not deceiving the customer by offering her private label products.
Despite the risk of bad relations with supermarkets, only the aforementioned dairy responded to the milk product manufacturers that were contacted.
“It is standard that the composition of, dare I say, most of the products produced under private brands is identical to the composition of products under the manufacturers’ brands. These are identical products. The difference in price is due to the chain’s business strategy,” said Zdeněk Bukovjan, business director of Mlékáren Valašské Meziříčí.
Unethical but not against the law
The dairy is known for its kefirs and yogurts, which it also produces for some private chain brands. Complete agreement in terms of manufacturer, composition and nutritional information can be found in selected kefirs. Where agreement cannot be found, however, is the price, which is often more than a third higher for a branded product than for a private label.
“Each manufacturer is limited by some minimum quantity for each production batch, which, however, not every customer is willing to accept. That is why they prefer standard manufactured products. Chains try – and we are no different in this in Europe – to offer successful products under their own brands. It is entirely up to the customer whether he chooses a branded product or one under the chain’s private label,” explained Bukovjan.
However, the composition of some products differs by a tenth of a gram in fat content. It is therefore a question whether it would be worthwhile to recalibrate the production lines due to such differences, or whether it is a reason for the product to be tens of percent more expensive.
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Dairy products for private supermarket brands are produced by dozens of other, often very well-known companies. However, the customer does not always find the manufacturer on the packaging.
This is voluntary information from the supermarkets. And so some can mask the similarity of the products by writing only “Made for:” on the product and thus can change the manufacturer at any time.
Apparently, this is not a violation of the law, which the Ministry of Agriculture agrees with.
“It is a common practice that consumers can choose from different brands or packaging, while it may be essentially the same product. But that in itself is not against the law. Setting the price is a matter of business discretion of the company,” confirmed Martin Pitron from the consumer organization dTest.
According to him, however, a problem can arise from the point of view of the protection of economic competition in the event that supermarkets abuse their position on the market and put smaller producers at a disadvantage.
“The result could then be the creation of a monopoly or an oligopoly, which could set prices and other conditions on the market in view of the very limited competition,” said Pitron. An oligopoly is a structure with a limited number of firms that completely dominate the market.
Will there be a reduction in quality?
Food manufacturers point to the disadvantaging of branded products. “Private brands are increasingly presented as branded products that chains offer at a consistently low price. In reality, however, they discriminate against traditional branded products in a way. They put a bigger markup on them and thus favor their private brands,” said the chamber’s spokesman Marek Zemánek.
“The composition of both products is, in most cases, completely identical,” he noted.
In addition, supermarkets often place their private brands in more advantageous positions in their stores. “For a number of manufacturers, it has an existential level. They will either produce and deliver what the chain wants, or the supermarkets will discard them,” added Zemánek.
“We know from many of our members that some chains are reducing orders or making it conditional on the purchase of branded products in favor of private labels. In addition, shops often change their requirements and dictate how the packaging, composition and especially the price of the product should look. So it can be said that chains determine the quality of food with their requirements,” concluded Zemánek.
Questionnaire
Do you buy more often the products of private brands of chains, or the branded ones?
I choose private label chains because they are cheaper
I choose branded products, even if they are more expensive
I don’t look at brands, whether private or others, and I choose different ones
A total of 1324 readers voted.
Cucumbers and butter were the most expensive food items
Economic
Well, well, well! Strap yourselves in, folks, because we’re diving headfirst into the delightful world of grocery shopping where prices can fluctuate more than my sense of self-worth on a bad stand-up night! It turns out shopping is like a game of “Guess the Price” — except you never win, and instead of a lovely little cuddly toy, you end up with the crushing burden of existential dread.
Now, let’s talk about these private label products. Apparently, they’re like the social chameleons of the supermarket aisle. One moment they’re strutting around in sleek packaging, and the next they’re in a disguise so good you’d think they were auditioning for “The Masked Singer.” As our mate Tomáš Maier pointed out, you’ve got the same product dressed up differently and — surprise, surprise — one is selling for a pretty €€€ while the other is as cheap as a knock-off Rolex! I mean, come on! Suddenly, I feel like I’m trapped in a relationship with a food company that’s got commitment issues.
And don’t even get me started on butter! Why is butter so expensive in the Czech Republic, you ask? Well, the chains aren’t talking, which typically means they’re hiding something — likely behind an elaborate curtain of “immediate business strategies.” But you can bet your bottom koruna that the spread on your toast is just as confused by its pricing as the rest of us!
Now, let’s sprinkle some scandal on top, shall we? The slippery slope of “identical products under different labels” is eerily reminiscent of a low-budget action film. You can’t trust anyone! Chocolate-covered biscuits are masquerading as gourmet treats, but they might just be wearing the outfit of the discount brand. It’s like when your mate tries to convince you their new boyfriend is ‘the one’… and he’s just wearing the same shirt as the last 12 disasters.
But here’s the kicker – apparently, pretending not to present the manufacturer isn’t illegal? That’s right, folks. It’s like a game of hide-and-seek in the grocery store! Who even knew that it was all above board? So, if you’re about to ring up that yogurt expecting to see the manufacturer’s name and instead find “Made for: Your Local Supermarket,” just know it’s not a crime – it’s merely ‘business discretion.’ Discretion! More like ‘disgrace!’
And did I mention price manipulation? Zdeněk Bukovjan – sounds smart, right? – confirmed that it’s not just a price tag difference but a corporate strategy to send you running toward the private labels while they play puppet master with traditional brands. It’s like a supermarket Shakespearean drama unfolding every time you pick up a bottle of milk.
Then there’s the ever-so-charming threat of monopolies and oligopolies. If those words sound a bit too suave for your grocery shopping experience, you’re not alone! When shops start dictating what you should be keeping in your cart, I begin to wonder if we should be indexing shopping carts alongside stock portfolios!
So, here’s a conundrum for you: do you stick to the ‘always expensive but high-quality’ branded products, or do you go for the ‘you don’t know what you’re eating but your wallet loves you’ private labels? The answer, dear readers, is a heck of a plot twist! Because when it comes down to butter, cucumbers, or your mid-week treat of questionable chocolate, the choice you’ve got is as clear as mud.
Ultimately, the aisles of your grocery store might need to invest in some therapy: “Hello! My name is Yogurt – I have identity issues!” But on the bright side, at least you save a few koruna while trying to figure out if you’re falling in love with the real brand, or if this is just another flavor of heartbreak from the label that keeps bending the rules!
So, next time you’re in a store and the price tags seem to be pulling a classic ‘let’s mess with your head,’ just remember: every product has an existential crisis, and every shopper is just trying to make sense of the chaos. Happy shopping! Or should I say ‘price-hunting’? Either way, keep your wit sharp and your wallet sharper!
The ongoing complexity of discount calculations in retail environments has led to unpredictable pricing, resulting in substantial fluctuations in product costs. While ostensibly beneficial for consumers seeking the best deals, this approach introduces significant transparency issues that, in turn, contribute to instability within pricing strategies. Furthermore, grocery chains have the ability to impact the quality of the products they offer.
For consumers who have ever perceived a similarity in taste between private label foods and their pricier branded counterparts, it is possible that this impression is grounded in reality. A practice commonly observed involves the same product being presented under different brands, leading to marked discrepancies in price. While this tendency is prominent in dairy products, it extends to various other food categories.
Economist Tomáš Maier from the Czech University of Life Sciences remarked, “This is nothing new and is occurring with increasing frequency, particularly with biscuits, meats, and even beer. Often, these products stem from well-known industrial breweries, albeit with alternative branding.”
Why is butter expensive in the Czech Republic? Here is an overview of the excuses
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When approached by Novinek for insights regarding this pricing phenomenon, retail chains, including Billa, declined to provide detailed comments, reiterating that they do not mislead customers with their private label offerings.
Zdeněk Bukovjan, the business director of Mlékáren Valašské Meziříčí, confidently stated, “It is standard that the composition, dare I say, of most products produced under private brands is identical to that of established manufacturers’ brands. These are identical products, and the price disparity is a consequence of the chain’s strategic approach.”
Unethical but not against the law
While the dairy industry is noted for its kefirs and yogurts, it also produces for various private chain brands. Notably, in select kefirs, there is a complete agreement in terms of manufacturer, composition, and nutritional details; however, the pricing often sees branded products exceeding their private-label equivalents by over a third.
According to Bukovjan, “The minimum quantity for each production batch limits every manufacturer, though not every customer is amenable to these terms. Thus, they lean towards standard products. Chains strive to offer successful items under their brands, leaving the choice to the customer between branded offerings and private labels.”
Yet, the composition of certain products may differ by mere tenths of grams in fat content, raising questions about whether recalibrating production lines for such minor variations is justified or simply a tactic to inflate prices.
Trays for minced meat replace the bag. Chains save plastic
Economic
Private supermarket brands source their dairy products from numerous well-established companies, although consumers do not always easily identify these manufacturers on the packaging.
This practice of concealing manufacturer information is voluntary on the part of supermarkets. Consequently, some products only bear the description “Made for:” which allows retailers to alter the source at will.
This circumvention of transparency is not deemed illegal, as affirmed by the Ministry of Agriculture.
Martin Pitron from the consumer advocacy group dTest confirmed, “Consumers can generally select from various brands or packaging, often representing the same product, which is not inherently illegal. Pricing decisions are fundamentally a matter of corporate discretion.”
However, potential issues related to economic competition protection arise if supermarkets exploit their market power in ways that disadvantage smaller producers.
Pitron warned, “Should this transpire, we could potentially see the emergence of a monopoly or oligopoly, resulting in limited competition allowing dominant firms to dictate terms and prices within the market.”
Will there be a reduction in quality?
Food manufacturers express concern over the growing disadvantage faced by branded items. “Private brands increasingly masquerade as established products offered at persistently lower prices while systematically discriminating against conventional branded products through higher markups.”
“In most cases, the composition of both product categories is effectively identical,” he pointed out.
Supermarkets often position private brands more favorably within their store layouts, leading to inescapable consequences for various manufacturers. “This creates an existential dilemma for many; they either comply with chain demands or risk being removed from shelves,” Zemánek noted.
Zemánek further explained, “Several of our members report that chains are cutting orders or demanding branded products alongside private labels. Additionally, stores frequently change their requirements, dictating product packaging, composition, and pricing, thus giving chains substantial influence over food quality.”
Questionnaire
Do you buy more often the products of private brands of chains, or the branded ones?
I choose private label chains because they are cheaper
I choose branded products, even if they are more expensive
A total of 1324 readers voted.
Cucumbers and butter were the most expensive food items
Economic
“Such practices could lead to the emergence of monopolies or oligopolies that distort pricing and market conditions due to limited competition.”
**Interview with Tomáš Maier – Economist at the Czech University of Life Sciences:**
**Interviewer:** Tomáš, thank you for joining us today. You’ve shed light on an interesting trend in the grocery industry regarding private label products and their pricing. Can you explain why there is such a significant price difference between private labels and branded products?
**Tomáš Maier:** Certainly! The essential factor here is that many products sold as private labels are often identical in composition to their branded counterparts. However, the pricing is determined by the retail chains’ business strategies. They mark down private labels to attract customers, but they often charge a higher markup on branded products. This pricing strategy leads to confusion and a lack of transparency for consumers who may not realize they are buying essentially the same product.
**Interviewer:** That’s insightful. You touched on the idea that many groceries undergo this practice. Can you elaborate on some examples beyond dairy products?
**Tomáš Maier:** Yes, this phenomenon extends to various categories, including biscuits, meat products, and even beverages like beer. In many cases, well-known brands produce products that are rebranded by supermarkets. It’s an increasingly common practice, and it often leaves consumers questioning the true nature of what they are purchasing.
**Interviewer:** And what about the quality concerns that have been raised? Are consumers at risk of receiving inferior products?
**Tomáš Maier:** The quality often remains consistent, as many private label products are manufactured to the same specifications as branded items. However, there are instances where the chains impose different production standards, which could affect the end product’s quality. Consumers should be aware that even a slight difference in product composition can justify price disparities, which may not always correlate with perceived quality.
**Interviewer:** The transparency issue is certainly a concern. What can consumers do to navigate this confusing landscape?
**Tomáš Maier:** I encourage consumers to scrutinize product labels and compare nutritional information, regardless of the brand. Awareness is key. If shoppers notice substantial discrepancies in pricing without differences in quality, they may choose to prioritize private labels—provided they are comfortable with potential variations in product content.
**Interviewer:** Thank you, Tomáš, for enlightening us about these grocery store dynamics. It seems consumers have a lot to consider on their next shopping trip!
**Tomáš Maier:** Absolutely! The more informed they are, the better choices they can make. Thank you for having me.
**Interviewer:** A pleasure to have you!
G lower-quality products when opting for private label brands?
**Tomáš Maier:** That’s a critical question. In many instances, the quality remains consistent between private labels and branded products since they may originate from the same manufacturers. However, there can be variations based on the supermarkets’ standards or demands for specific formulations, packaging, or pricing strategies. While consumers might perceive private labels as lower quality, they are often receiving products that are essentially the same, just under a different label. Nevertheless, the lack of transparency regarding the manufacturer can leave consumers feeling uneasy about the quality of the products they are purchasing.
**Interviewer:** It seems like a complex web of marketing and production strategies. Are there any regulatory measures in place to protect consumers in this scenario?
**Tomáš Maier:** Currently, the regulation on product labeling and transparency is quite limited. Retailers may not always disclose the manufacturers of private label products, which can lead to consumer deception. While it’s technically allowed under existing laws, it raises ethical concerns about consumer rights. The government should consider enhancing regulations to ensure that consumers are better informed about what they are buying.
**Interviewer:** What do you think the future holds for private labels in the grocery market, especially in light of these practices?
**Tomáš Maier:** The trend towards private labels is likely to continue as retailers look to increase their margins and offer competitive prices. However, if consumers become more aware of the similarities between private label and branded products, there could be a shift in purchasing behavior. Supermarkets may also face pressure to improve transparency and accountability in their labeling practices. Ultimately, it’s about finding the right balance between providing value to consumers and maintaining fair competition in the market.
**Interviewer:** Thank you, Tomáš, for your valuable insights. This discussion highlights the need for greater transparency and consumer education in navigating the grocery aisles.
**Tomáš Maier:** Thank you for having me. It’s a pleasure to shed light on such an important topic affecting daily consumer choices.
