Summary
According to the source article, Wal-mart is in the process of upgrading its private label business. This profit push will bite into branded product marketshare and may cause retail supply chain challenges downstream. How does a P&E firm with branded products position itself?
Analysis
Per the Grocer Headquarters Magazine 2009 State of Industry Almanac, Private Label is growing in select categories such as; non-chocolate candy, ground coffee, ice-cream, yogurts, salad dressing, frozen pizza among others.
How does this impact the retail tier 1 vendor? Simply, increased private label growth means heavier pricing and expense burden for the retail manufacture. Operations, marketers, & sales executives must make, delivery, market, and sell private label products at a lower cost. Bottom-line, private label growth is good for retailers and less desirable for retail manufacturers and many private equity firms with strong branded products.
