Return of Trusted Brands: "China-Free" Raises Stakes

There's a battle raging over control of consumers' hearts and dollars - between branded product manufacturers and dominant retailers that leveraging low cost supply chain procurement to feed extremely profitable private label lines. But they're learning the hard way that trusted brands are not the same as affordable labels.


When trouble emerges with tainted pet food or toothpaste, retailers simply pull the product and shift damage control to manufacturers. But what if the brand in trouble is actually the retailer's own low-cost import? Could the retailer's overall brand image suffer irreparably?


Consider this inevitable development in the procurement wars:

Food for Health International, based in Orem, Utah, makes whole food nutritional supplements for people and pets, and President Frank Davis said the company will begin trumpeting the fact none of its ingredients come from China. Plans call for a "China-Free" sticker on products such as Food for Health's "9 a Day-Plus" capsules, "Active Adults" whole food shakes and "Healthy Dog" supplements. The company also will use "China-Free" in advertisements and promotions. (Source: http://www.reuters.com/article/healthNews/idUSN0618941720070706)

Of course the strategic question is, if dominant mega-retailers are more and more constrained in where and how they source products for lowest cost (ie: highest Gross Margin), will power shift back to trusted branded manufacturers? If so, how will fortunes shift?

Stay tuned!