Makers of Dawn dish soap, Heinz ketchup, Clorox boost defenses against store brand rivals

By Jessica DiNapoli and Richa Naidup

NEW YORKLONDON Reuters – The makers of brandname products such as Tide detergent and Kraft Macaroni & Cheese are bolstering their defenses against storebrand rivals like Walmart Inc‘s Great Value products as shoppers’ budgets start to show signs of strain due to persistent inflation.

Executives at Clorox Co said they have seen privatelabel rivals make “marginal improvement” in market share, in a Monday evening earnings call. The bleach maker‘s CEO, Linda Rendle, said Clorox would increase promotions – now already higher than last year – if shoppers’ wallets show more signs of stress, a tactic for competing with cheaper storebrand products.

The roughly 361 billion U.S. packagedfood and household products sector is on alert as shoppers start to buckle under multiple rounds of price hikes, with more in the pipeline. Retailers including Walmart are partners with brandname product makers like Clorox and KraftHeinz Co as much as they are rivals selling less costly storebrand goods. A bottle of 64load Tide “Free & Gentle” laundry detergent cost 12.97 on Walmart.com on April 25, while Walmarts Great Value “Free & Clear” brand costs 8.67 for the same number of washes, for instance.

A survey from financial services firm Jefferies found that roughly 72 of 3,500 consumers are buying cheaper grocery and household items. Inflation “will ratchet private label growth,” said Jim Wisner, founder of marketing and research firm Wisner Marketing in Gurnee, Illinois. “It most definitely is a moment.”

Separately, Dawn dish soap maker Procter & Gamble Co is shifting its marketing to make more “overt” claims about the value in its costlier products, finance chief Andre Schulten said in a call with media in April, another strategy aimed at warding off popular privatelabel rivals.

P&G and some other companies such as KimberlyClark Corp that make brandname pantry and household staples are easing in price hikes at a slower rate than storebrand competitors, according to Nielsen data analysed by Bernstein.

On a rolling average basis, in the 12 weeks ended March 26, price hikes on privatelabel household care goods such as laundry detergent outpaced the increases from big brands, compared with the same time period last year, according to a Reuters analysis of exclusive Nielsen figures. Average prices for storebrand household goods rose by 15 in the same period, while major brands climbed 11.7.

U.S. privatelabel household goods and beverages lost market share during the pandemic because consumers had more money from stimulus checks and were spending less outside the home, Bernstein analysts wrote.

Executives at consumer companies are also expecting to start seeing a slowdown in demand.

To promote Cascade detergent, P&G is airing TV commercials about the efficiency of using a dishwasher for as few as eight dishes. The company has also added a new easy squeeze cap for Dawn dish soap that allows consumers to use “every last drop,” Schulten said in a call with analysts.

“You will see us go into those claims and make them more overt for the consumer,” Schulten said in the media call. An 18ounce bottle of Dawn detergent in the new squeeze cap bottle costs 3.99 on Target.com, while a 28ounce bottle of the big box retailers up & up brand dish soap sells for 2.39 online.

Consumer goods manufacturers focused on basics in the pandemic and are now launching new products to stand out against privatelabel items. KraftHeinz Co offers a new twoinone sauce and chip dip. Cloroxs new disinfecting mist is off to a “strong start,” a spokeswoman said.

Reckitt Benckiser Group Plc finance chief Jeff Carr said the company was investing in its equipment to upgrade Finish Quantum dishwasher tablets, which is “very difficult for private label to copy and keep up with.”