In the latest of a growing wave of brand consolidations, Walmart has sent Glad and Hefty bags packing from its food-storage shelves, reports www.adage.com. Similar decisions are likely to play out across other categories over the course of the year, as Walmart steps up efforts to streamline brand assortments, often to the benefit of its fast-expanding Great Value brand and national brands that survive the vetting.
In food bags, Walmart has consolidated nationally with one brand, SC Johnson's Ziploc, and its own private label, Great Value, wiping Glad and Pactiv Corp.'s Hefty off its shelves, according to Adage.
In trash bags, Glad and Hefty have retained their places on the shelves, two people familiar with the matter say, but Hefty now has a smaller assortment limited to its CinchSak line. This position was most likely preserved, says Consumer Edge Research analyst Bill Pecoriello, by Pactiv Corp.'s agreement to take over all private-label manufacturing for Walmart's Great Value trash and food bags.
Pactiv, which has taken over all private-label manufacturing for Great Value from smaller, non-branded producers, stands to pick up volume, but as margins on private-label manufacturing tend to be considerably smaller, it's less clear what the net impact on profits will be.
For the 52 weeks ended Dec. 27, the bag categories collectively accounted for $1.9 billion in sales as measured by Information Resources Inc. data, which exclude Walmart, and likely account for more than $1 billion in additional sales at Walmart and $4 billion total across all channels, including club and dollar stores.
Even before this, the categories already had some of the largest private-label penetration rates in package goods, with more than a third of dollar sales and more than half of volume in the combined categories coming from store brands in measured channels.
Picking up the private-label manufacturing -- often viewed as a concession by brand marketers -- was portrayed as a prize by Hefty executives, who addressed the trash-bag portion of the business only on a Jan. 27 conference call. Analysts, though, raised questions about the margin impact and potential for industry pricing disruption as private-label manufacturers seek new outlets for their sudden excess capacity.
Clorox exited the private-label bag manufacturing business last year after deeming it non-strategic.
A spokeswoman for Pactiv confirmed it has also taken over manufacturing for Great Value food bags and added, "We are currently off the shelf on the food-bag business, but we expect to be back on the shelf in that category sometime in the future."
Indeed, Walmart's assortment decisions aren't always permanent and are reviewed sometimes more than annually. In some lower-priority categories such as food and trash bags, Walmart is moving closer to practices of club and dollar stores, which often carry only one national brand - sometimes on a rotating basis - plus private label. That gives ousted brands a chance to win their space back while ratcheting up pressure for price and sales performance on all brands year-round.
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