Brand name vs generics: which is more popular?

Tuesday, 17 October, 2023

Brand name vs generics: which is more popular?

According to the September 2023 Consumer Food Insights Report, most US consumers would choose brand-name beverages over generic or store-brand beverages, even when presented with a sizable price discount on generic or store brand names.

The survey-based report, out of Purdue University’s Center for Food Demand Analysis and Sustainability, assesses food spending, consumer satisfaction and values, support of agricultural and food policies, and trust in information sources. Purdue experts conducted and evaluated the survey, which included 1200 consumers across the US.

In contrast to beverage choices, most survey respondents said they were unwilling to pay a premium for brand-name meat or fruits and vegetables. According to the report’s lead author, Joseph Balagtas, professor of agricultural economics and director of CFDAS at Purdue, the findings in the report’s ‘Brand Beliefs’ section were based on new questions that yielded some interesting results.

Consumer choice of brand was found to be price-sensitive when it comes to snack foods. A majority of consumers said that brand-name products taste better, and tended to choose brand-name products even when generics were 15% cheaper. But if generics were 30% cheaper, a majority chose them.

Generally, taste positively correlated with the decision to choose brand-name foods over cheaper substitutes. Consumers perceived brand-name beverages to taste better than generics and were more likely to purchase branded products at a premium. But fewer consumers believed that brands are associated with better taste in the meat and fruit and vegetable aisles, so fewer were willing to pay a premium for those products.

According to Balagtas, most consumers do not believe that brand-name foods are more nutritious, made from better ingredients or safer than store brands.

“Our finding that taste is the main driver of consumers’ valuation of brand names is consistent with results from our food values survey questions, where respondents consistently rank taste as the most important attribute when shopping for food,” Balagtas said.

Additional key results include:

  • Households making less than US$50,000 (AU$79,000) were more price sensitive when presented with two generic or store-brand discounts.
  • The consumer food inflation estimate (6.3%) continues to diverge from the government consumer price index of food inflation (4.3%).

“We see that brand choices differ slightly when disaggregated by income,” said Elijah Bryant, a survey research analyst at the centre and co-author of the report. “Those who make less than $50,000 are more responsive to changes in the price of their food options.”

While those with the lowest income already tend to choose generic brands over brand names, the disparity grows when the discount on generic or store-brand foods is doubled from 15% to 30%.

In the food expenditures category, Bryant noted a decrease in average food-away-from-home (FAFH) spending, which has gone down since June, potentially a result of FAFH inflation cooling at a slower rate than food-at-home inflation.

Total weekly food spending has increased by 1.6% since last September, which is below the government’s food inflation estimate of 4.3%. This suggests that consumers might either be buying slightly less food or more affordable food options relative to last year.

Food security remained at 13%, under the 2022 average of 15%. According to Bryant, people are generally happy with their diets and lives as a whole, although higher-income households tend to be happier than those in lower-income households.

The Center for Food Demand Analysis and Sustainability is part of Purdue’s Next Moves in agriculture and food systems and uses data analysis shared through user-friendly platforms to improve the food system.

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