business news in context, analysis with attitude

(Including brief, italicized and occasionally gratuitous commentary...)

• The Wall Street Journalreports this morning on how “every year, U.S. shoppers buy more generic goods, many of them trading down from more expensive, name-brand labels to save money. But consumers are developing loyalty to store brands for reasons besides price, and that could be a problem for food and consumer-products companies as the economy rebounds.”

“Private-label products,” the story notes, “still cost an average of 29% less than their nationally branded counterparts. But they are rising faster in price, at a rate of 5.3% last year compared with the industry average of 1.9%, and can sometimes be the most expensive product in a category, according to market-research firm Symphony IRI.”

• The Austin American-Statesman reports that “H. E. Butt Grocery Co. is spending about $100 million to expand, relocate and remodel several of its Austin-area stores this year part of a larger, statewide expansion and price-cutting campaign. It's the largest-ever Austin investment for the grocery chain, which also expects to hire about 1,000 workers in Central Texas during 2012, according to President Craig Boyan.”

• The Boston Globe reports that the just-out-of-bankruptcy Friendly’s Ice Cream is teaming up with Burger King to test a co-branded shop that will feature each chain’s specialties under one roof in New Jersey.

If it works, the two companies hope to roll the concept out across the country, which would expand the troubled Friendly’s brand into markets it does not currently serve.

On the other hand, neither brand seems particularly strong right now, and it usually is folly to think that adding two weak brands together will result in a strong brand.

Reuters reports that Starbucks “will open its first coffee shops in India in August or September, a year later than originally planned, and aims to have 50 outlets by year-end through a tie-up with the Tata group, the country's biggest business house.” The story notes that the coffee company is entering “a market with a fast-growing middle class and plenty of competition in the small but fast-growing coffee segment.”
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