Is it worth it to splurge on name brands?

Think twice before you pick up a store brand -- many generics are equal in quality and much less expensive. See more pictures of boxed food.
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Many of us think of generic or store-brands as being of lower quality, lesser nutritional value or simply poorer construction than their high-priced counterparts. But in fact, most "generic" products are identical in ingredients and preparation to their more expensive versions. Most of the time, the difference comes down to strategies in marketing and not the products themselves.

Corporations spend a lot of money telling us their brand is the best, and that we should spend our cash on their products because it will make us more successful, more attractive or happier in some way or another. It's called branding, and it's a way of tying our money to our feelings about a given product.

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When a company decides to make a generic version of its own -- or someone else's -- product, the point is to multiply the ways they have of getting your money. Since the higher-priced brand didn't get your attention, or you don't have the money to blow on their more expensive version, they'll appeal to your sense of thrift, offering virtually the same product at a lower price, just without the power of the brand behind it.

In the same way, most store brands are really just repackaged versions of the more expensive stuff, often even manufactured on the exact same factory floors by the same companies. By making the packaging less inviting, putting lower-priced items on lower shelves, making it hard to see what company made the product and advertising it as little as possible, they're able to pass the savings on to you. They can sell generics at these low prices because they never spent the money advertising the brand in the first place.

Either way, it's about separating you from your cash. So the question becomes whether or not you want to give them lots of money, or less money, for the same products.

When you look at it that way, you might wonder why we spend money on brand names at all. Is it worth it to splurge occasionally on the higher-priced item? Are there any rules of thumb for deciding? Are there any generic categories or products to avoid? Let's take a look.

 

Where Generics Come From

In the mid 1970s, a man named Al Williams left Albertsons Stores, where he had been working as a private label product line manager, supervising the creation and manufacture of Albertsons branded products. He started a consulting firm, Keynote Marketing, dedicated to creating generic product lines.

Williams started a trend, and soon several national chains were introducing white-labeled versions of their own products. One company, called Jewel, created the first generic supermarket line of products: no names or pictures, just the contents and required nutritional information. The grocery store Pathmark labeled theirs "NO FRILLS," and A&P changed the logo on theirs to read "P&Q" ("Price & Quality").

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Of course, today's generic packaging is different. In fact, a lot of it doesn't look generic at all. Most stores carry a private label line of products that you may or may not even recognize as a store brand. You might remember one product recall in 2007: Over 60 million cans of pet food were recalled, all from the same company, Menu Foods, but marketed under more than 100 brand names. Is it any wonder most people are so confused by shopping generic, when they spend so much time selling us on brands and labels that ultimately mean so little?

A Consumer Reports study found that by sticking with store brands, they could save an average of 30 percent with every grocery trip. That adds up fast. And yet the marketing for certain brands is so successful that consumer surveys regularly show our beliefs that name brands are better: better tasting, more nutritious and higher in quality. And the younger we are, the more likely we are to avoid store brands. In fact, half of us rarely, if ever, buy store-brand wine, pet food, soda or soup.

It's telling that this likelihood rises when the product category contains highly profitable and strongly marketed brand names like Coca-Cola or Campbell's. They put all that money into advertising so that we'll refuse to pay for anything less, no matter how identical the store brand is.

So, having put aside our brand loyalty for a moment -- just long enough to think about the way store brands actually make it to the shelves -- let's look at other ways we're resistant to buying generic. It's in corporate interests to make sure that we're nervous about quality and health, but when it comes to food, there's another big component: taste.

The Taste Test

In a taste test, some generic chips tied with name brands, and they cost only half as much.
In a taste test, some generic chips tied with name brands, and they cost only half as much.
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Consumer Reports did a blind test, with trained tasters, to find out once and for all whether brand identification was really related to quality or taste. The results are surprising. Of 21 tests, national name brands won seven, store brands won three and the rest were tied. Not necessarily because they were identical, but because they were equally enjoyable in different ways: Heinz ketchup was judged spicier, but Target's Market Pantry private label was more "tomatoey." Skippy peanut butter had a deeper "roasted" taste, while tasters enjoyed equally the "hint of molasses" in the Albertsons house brand.

Walmart's potato chips tied with Lays, at half the price. A Food Lion noodle soup actually beat out Campbell's chicken noodle. The panel preferred hot dogs from A&P's America's Choice label over Oscar Mayer. And there seemed to be no real rhyme or reason to the losses: Name brands won for mayonnaise, mozzarella cheese, frozen French fries and more.

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And then, of course, there's the truth about repackaging: Sara Lee does a brisk business making baked goods that sell under store-brand names, Reynolds makes house-brand wraps and containers, and Royal Oak even makes store-brand charcoal. Same manufacturer, same product, just 25 percent cheaper on average.

However, that's not to say that all generics, or store brands, are equal. Most large chain supermarkets carry what's called a "second tier" brand in which the margins of quality are a little bit more damaging. Kroger Value, Albertsons Shoppers Value, A&P's Savings Plus and Smart Price, and Food Lion's Smart Option are second-tier lines that may be slightly lower quality.

In general, the rule of thumb is to look for the top-tier store brands, generally located on lower shelves, and compare price per serving and nutritional value to the brand you think you want. It's not worth sacrificing quality for a few pennies when you're already saving so much by looking into generics at all.

But what about non-food items? What should we keep in mind when we're visiting the rest of the store? Read on to find out.

Other Rules for Shopping Generic

Some mass merchandisers, like Target and Walmart, have made a quantum leap in the way they present their store-brand items. Target is known for the quality of their generics, and by simplifying their design staff and processes, they've managed to create a unique brand that bypasses a lot of the stigma we once attached to generics while still keeping prices low: They currently offer more than 150 common items at $5 or less.

It's important to remember that all generic over-the-counter medications are legally required to contain the same dosages of the same active ingredients as the pricier items they're replicating. Likewise, asking for generics when you're filling prescriptions could make a big difference in the amount you pay for your medications.

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In the past decade, national drugstore chains have focused on duplicating the formulations in all kinds of personal care items, from allergy meds to cosmetics. They look at the market and see which brands are leading the pack, and they choose those products to copy. In fact, it's perfectly legal to make exact copies of these sorts of products. Beauty lines from Ulta, Sally's and Sephora can give you identical results at half the price or less.

In general, the protection we get from the law means that most cosmetics and medications are identical to nongeneric versions. Baby formula has followed the same regulations since 1980, meaning that there's nothing available for sale that won't give your infant the proper required nutrition.

In the case of both medications and infant formula, however, it's important to find a product that works and stick with it. Changing formula brands can be tough on your child's digestion, which might make you second-guess yourself. Similarly, hopping back and forth between generic and name-brand medications could get complicated because of differences in formulation that have nothing to do with the active ingredient.

In most cases, it comes down to personal taste and remembering that most generics are just the same as the products they're replacing. If you don't enjoy the generic version, you can always go back to your brand-name favorite, but it's likely you won't see much of a difference -- except in your pocketbook.

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Sources

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