Such environmental shifts are now changing the dynamics of packaged goods. For more than 50 years, manufacturers have been the dominant industry force, garnering most of the economic surplus. But today the NYSE-listed packaged-goods companies that have lost more than $50 billion in market value since Marlboro Friday are in danger of being overwhelmed by the new retailer speciation.
Retailers are taking control of their shelves and their customers. Consider the growth of store labels, such as President’s Choice and Sam’s American Choice. These labels offer a product as good as or superior to the national brand leader at prices 30% to 50% below the leader’s price. Store labels like these have created a sudden burst of change. Those who don’t respond vigorously will be wiped out.
In the cookie category, which grew a modest 2% in 1993, Nabisco has introduced a full line of Fat Free Fruit Bars and its new Snackwell line. These new “species” of offerings have so appealed to U.S. consumers that Nabisco’s sales have increased three times as fast as the overall market. Nabisco has prospered as its branded competitors have withered precisely because of its product-line innovation.