Many legacy OG Brands are doing better than ever.
It’s really time for the “brands don’t matter” conversations to stop.
The financial performances—and emerging strategies—of some of the biggest sellers of branded goods in the country is proving without a doubt that not only do consumers want to buy brands, but the names they want are often the very same ones their parents bought.
Call them OG Brands if you must, but companies like Proctor & Gamble, Kimberly-Clark and Unilever are benefiting from doubling down on their core labels while others like Kraft Heinz are learning the hard way that old brands need to be taught new tricks. For the retailers who count on these brands to drive their CPG businesses, the turnaround is critical.
P&G, in reporting its latest quarterly results earlier this week, attributed the stronger numbers to better sales—at better margins—for some of its most important brands, which include Tide, Pampers and Bounty. The quicker pick-up comes as the company has raised prices on some of these products, reversing an earlier strategy of cutting prices to be more competitive with secondary and private label brands.
Kimberly-Clark, which makes Huggies, and Unilever, whose brands include Dove and Hellman’s, also reported better numbers, citing similar moves.
In fact, one of the few areas of weakness for P&G was its troubled Gillette brand that has come under fire from digital disrupters like Dollar Shave Club and Harry’s. The company has cut prices on the Gillette line but has not seen much in the way of performance improvements, perhaps confirming that price reductions on legacy brands are not necessarily the way to compete in the marketplace today.
An inattention to developing its brands has been cited as one of the problems besetting Kraft Heinz recently, resulting in disappointing financial results and a sudden change in CEOs. One of the first things the new head of the company said after getting the job was that Kraft Heinz had to find a way to revive its “dusty brands.”
Taken together, all of this rethinking—and resulting reversals in fortune—have to be causing consumer product goods suppliers and the retailers who sell them to once more pay better attention to the role national brands play in their merchandising assortments.
Even the slow but steady rise in the deployment and sales of private label house brands shows that consumers will respond to names they know, be they legacy labels or newcomers, as long as the market positioning justifies the pricing premium.
“If we do our job and continue to increase our superiority advantage and that translates into sustained market growth, we’ll be fine,” P&G finance head Jon Moeller said in a recent interview. “If we’re unable to do that, we’ll have challenges.”