Introducing Our First Faster Times Reader Investigation – Help Us Discover the Real Story Behind Generic Foods

Last week we asked you to vote on the topic you wanted to investigate together with our reporter. It was a new experiment in journalism, which caught the attention of the Columbia Journalism Review. Now the voting is over and we have a winner: generic and private label foods.

Note: Please sign up on The Faster Times e-mail list (see sign-up box to the right) to make sure that you receive updates on the investigation as it progresses.

UPDATE: The leads are coming in. Click here for the next installment of the investigation.

Most of us eat private label food, buying that cheap Wal-Mart-brand organic milk or Trader Joe’s coffee. Unfortunately, what makes such items inexpensive is exactly what makes them problematic from a consumer protection and social responsibility standpoint: No one but the retail outlet’s buyers really knows where they come from. Here is how it works: A company like Trader Joe’s will contract with a company whose name-brand product it sells, and ask them to make a private-label version for less. They can afford to do that because private-label products don’t come with the large marketing costs of name-brand products. The stores keep their sources quiet for a couple of reasons: First, they don’t want other stores snapping up their private-label suppliers, and second, if customers know that the name-brand product and the generic product are exactly the same, they have little incentive to buy the name-brand version.

It is a booming business. In the United Kingdom, 40 percent of grocery store foods are expected to be private label by 2011, and in the United States, private label foods already account for about 25 percent of the retail food market.

In the best-case scenario, it’s also a win-win-win for store, supplier and customer. The store gets to cut its costs and build its brand, the supplier gets to lock in a large and steady order, and the customer gets a good price. Even some of the more virtuous stores, like Whole Foods, have gotten in on the private-label game, a fact that has allowed the company to (finally) stock its shelves with some more affordable alternatives.

Unfortunately, when companies can operate without public scrutiny they’re more likely to do things they wouldn’t normally do. This is particularly true in the case of private-label organic food items. In 2007, for example, Aurora Dairy, which supplies Wal-Mart with its organic milk, was found by federal investigators to have “willfully” violated 14 tenets of the organic standards, including confining their cattle to feedlots, instead of grazing, and bringing thousands of conventional cows into their organic operation.

The lack of transparency in the private-label food chain affects conventional products as well. Earlier this year Trader Joe’s made headlines when a peanut recall had it scrambling to pinpoint which of its products contained the ingredient in question.The company responded quickly and alerted customers in stores and on its website which products may have been affected, but the story shed a light on what could be a growing problem.

We want you to help us hold the private-label food chainmore accountable. Do you have a lead on an interesting private-label food story? Do you know someone who might be willing to talk, on or off the record? Are you willing to ask the store manager at your local grocer’s or big box store where they get their store-branded goods?

We’re hoping that if some of you can join us in tracking down more information about these goods, perhaps we can influence the retail food industry to be a bit more forthcoming. We don’t want to ruin the economics of private label, necessarily, but we think consumers have a right to know where their food comes from.

We’ll be posting weekly updates here, eventually building an online database full of information about where private-label food comes from … whether retailers like it or not. We’ll also post resources from other studies and investigations into the private-label sphere to help those who want to get involved, or are just interested, to get a better sense of what we’re looking at.

Help us paint a more complete picture of the private-label ecosystem by posting a comment here, or emailing your thoughts and findings to: investigations@thefastertimes.com

To help get you started, following are links to a few handy resources:

Trader Joe’s contact page: This company’s main slogan is that it gives its customers what they want; if you’re a customer, ask to know more about where TJ’s private-label foods come from.

Cornucopia Institute: This is an organic foods watchdog group that has called out many of the private-label dairies for poor practices. Tons of their reports and findings are available online.

Wal-Mart – There’s a wealth of information out there about Wal-Mart’s love of store-brand items, including a 2006 BrandWeek study conducted during the year when private-label really started to take off in the U.S.; a great Fortune article written last year when the store relaunched its “Great Value” brand; and an Advertising Age article in which Wal-Mart’s CMO defends the store’s shift to more private-label brands.

Private Label Magazine – The private-label industry is big enough to have its own magazine, which profiles a variety of retailers and their store brands.

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