Kraft Earnings Take A Hit, Store Brands On The Rise

Kraft just reported a 72% drop in earnings during 2008 - the majority during the last quarter. Consumers are cutting back in a lot of ways and turning more to store brands to save money. However, Kraft still plans on increasing its marketing budget to 8% of its total budget (up from 7% last year).

Very smart move! The best way to counter store brand growth is to emphasize the value in the Kraft: Consumers have to believe that they get more value and better products if they spend the additional money. Brandweek reports that, "Kraft will rely on product innovations and value marketing to drive growth behind its brands.

Brand X set to make its mark in 2009

USA Today's Ad Tracks report that store brand products are poised to make 2009 "a tough year for big brand-name consumer product makers, whose pricey ad budgets make up part of their labels' higher cost. Here are some unsettling stats:

• 72% of U.S. consumers say private-label brands are a "good alternative" to name brands


• Private-label quality was called "as good as" name brands by 62%


• For the 52 weeks ended Sept. 27, private-label goods already were up 10.2% from the previous year, for total U.S. sales of $81 billion