Shane Commentary

      

National Brands to Suffer Indirectly from Amazon Acquisition

Jul 7, 2017

    

Although there has been an evident trend towards store brands over the past decade, one of the fallouts from the proposed acquisition of Whole Foods Market by Amazon will be an acceleration in the displacement of national brands.

This was evident in the offerings by Kroger, Target and Safeway and more recently Aldi and now Lidl.

  

During the past quarter, Mondelez reported a 2.0 percent decline in comparable sales, Kraft-Heinz, 3.5 percent and Kellogg, 3.0 percent.  It is generally accepted that diversified companies including PepsiCo and Mondelez have sufficient product diversity and brand loyalty to withstand market pressures. 

Campbell Soup Company and ConAgra Brands are vulnerable as their range of products can be substituted by alternative store brands.

Within the egg industry, the leading nationally-distributed brand will come under increasing pressure as nutritionally-enriched store brands offer equivalent or even superior attributes at a lower cost since there are no marketing expenditures.

There are limits as to promotion on mainstream and social media.  Kroger, Safeway and Target will progressively use shelf space to promote their house brands placing independent and national brands at a disadvantage.