retail news in context, analysis with attitude

The Dallas Morning News reports that Aldi is “lowering the price for a gallon of its Friendly Farms private-label milk to 99 cents,” a move that seems designed to put pressure on the large chains that have stores in the region, and that is far below the nation average cost of a gallon of milk - $3.31.

According to the story, Aldi has promised that the promotion will stay in place at least until October 6, and has increased its milk order from suppliers by 85 percent to handle the expected increased traffic.

The story notes that Aldi often uses items like milk and steep price cuts to establish its credentials in markets where it has major expansion plans. In North Texas, the German-owned retailer has 29 stores, with at least a dozen more planned...and it also has designs on the Houston and San Antonio markets.

The price cut also reflects another market reality. The writes: “For Dallas-based Dean Foods, the nation's largest dairy processor, Aldi's strategy doesn't have a direct impact since Dean doesn't supply Aldi, a Dean spokeswoman said.

“However, Dean has complained recently about the impact of lower-priced private-label milk, in general, on sales of its more profitable branded products. Aldi's move shows the increasing importance of bargain-priced milk as retailers try to woo recession-weary consumers.”
KC's View:
’m more interested by this last part of the story - the notion that private label milk may be having a significant and lasting impact on the sale of national brand varieties.