Branding and Profitability

How easy is it to increase price without losing customers?

Research by The Grocer magazine in 2006 confirms the view that ‘branding’ is the key to success. In the food industry, profitability was much higher for food producers such as Kellogg’s and Jordans, which provide branded products.

Those firms that produce own-label products for supermarkets have much lower profitability, although their profitability is slightly higher than those businesses that provide the basic food commodities before they are processed.

The survey also shows that small producers of branded products work at much lower levels of profitability than larger ones. However, for unbranded products and basic food commodities, there is a much smaller difference between the profitability of large an small firms.

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