First generation brands

Third Generation Storebrands

Inferior goods or not? A cross-sectional study

Abstract: The phenomenon of storebrand-products has received a lot of attention from the food- and groceries industry in recent years seeing how their marketshares continue to grow at a steady rate. Previous research on storebrands have not been able to find any strong socioeconomic predictors as to whothe typical storebrand consumer is. The recent economic downturn however appears to have resulted in a gain of market shares for third-generation storebrand products. In this paper we set out to determine whether or not third-generation storebrand products show signs of being inferior goods by using cross-sectional data of consumer behavior gathered in Stockholm during November 2009. Our findingsdo not support the hypothesis that they are. However, our data is to limited to say draw any definite conclusions. [utveckla detta kortfattat, men spara till sist]

Table of content

1. Introduction 3

2. On Storebrands 3

2.1 Store Brands: Definition 3
2.2 Storebrands: The Economic Logic 4
2.3 Storebrands: A Snapshot of Sweden Today 6
2.4 Third Generation Storebrands 63. Previous research 7

3.1 A Comment on Storebrand Research in General 7
3.2 Storebrand Reserach: Who Is The Storebrand Consumer? 7

4. Research question 9

5. Theoretical Framework 10

6. Research design 14

6.1 A Quick Philosophical Degression 14
6.2 A Fundamental Question 14
6.3 Using cross-sectional data to estimate income elasticity 15
6.4 Datacollection method 15
6.5 Estimating ∆Q 16
6.6 Estimating ∆I 17
6.7 Controlling For Omitted Variables 18
6.8 Choice Of Products 18

7. Data 19

8. Discussion 22

8.1 Are Third Generation Storebrands Inferior? 23
8.2 Comments on Other Findings 24

9. Conclusion 24

10. References 25

11.Appendix 26

1. Introduction

Storebrand products, products producedand sold by a retailer exclusively at their own locations, first appeared in Europe and America in the 1960s. Because the introduction of storebrands has ramifications for actors both up- and downstream in the value chain - a chain that amounted to approximately 26 trillion dollars in Sweden alone in 2008[1] - the phenomenon of storebrand products has received a lot of attention from the food-and groceries industry. Among the topics that have received the most attention is how a growing marketshare for storebrands will affect the industry as a whole and how the preferences of typical storebrand consumers differ from those of their nationalbrand counterparts..

In this paper we set out to determine whether or not third-generation of storebrand products show signs of being inferiorproducts by using multiple regression on cross-sectional data gathered in Stockholm during three weeks in November. Throughout the paper we recommend that the reader consults the appendix containing the questionaree used for gathering the empirical data whenever uncertainties arise as to what exactly it is that is being discussed.

In the first part of the paper we provide a quick background tothe concept of storebrands, its definition and “economic logic”. In the second part of the paper we give a quick overview of the findings of previous research of interest to our purpose. In the fourt and fifth part we state our purpose formally as well as provide the theoretical framework for our study. The sixth- and seventh part of the paper is dedicated to empirical findings and discussion. Inthe final part of the paper we summarize the findings of our study and the major lessons learnt.

2. On Storebrands

2.1 Store Brands: Definition

Perhaps the best way to introduce the concept of storebrands is to think of them as products emminating from from retailers that have expanded their vertical boundaries to include the production step. Typically, producers produce and...