A slim jar of pistachio butter, a bag of guacamole-flavored tortilla chips made with ground cassava, a bubblegum-pink can of strawberry sparkling water that, on first glance, looks strikingly like a trendy Olipop prebiotic soda — these are just some of the items from Walmart’s bettergoods line that will start to hit the retailer’s grocery aisles and website as soon as this week.
Bettergoods is the largest store-label food brand to be launched by Walmart in about two decades and, according to a report from the Associated Press, is meant to appeal to “younger customers who are not loyal to grocery brands and want chef-inspired foods that are more affordably priced.” In a Tuesday release, Walmart said it expects to have more than 300 products in the line by fall and will focus on three categories: plant-based options, with items like dairy-free mozzarella shreds and oat milk-based desserts; organic and allergen-free products; and “culinary experiences,” a category comprised of products like mango chili salsa and pasta imported from Italy.
Prices will range from under $2 to below $15, with the majority of products costing less than $5.
“Today’s customers expect more from the private brands they purchase. They want affordable, quality products to elevate their overall food experience. The launch of bettergoods delivers on that customer need in a meaningful way,” said Scott Morris, senior vice president, private brands, food and consumables, Walmart. “Bettergoods is more than just a new private brand. It’s a commitment to our customers that they can enjoy unique culinary flavors at the incredible value Walmart delivers.”
But why is Walmart, a retailer known more for “always low prices” than high-end nut butters, getting into the (slightly more) upscale grocery game? Well, this move comes at a time when inflation, and the looming possibility of a mega-merger between Kroger and Albertsons, two of America’s largest grocery chains, has prompted supermarkets across the country to invest more deeply in the production of their private label store brands.
It also comes at a time when Trader Joe’s, a grocery chain that is synonymous with its trendy private label products, is readying for another major expansion, leaving companies like Walmart eager to ensure the cult-favorite food brand doesn’t eat into their profits in new markets.
Supermarkets started introducing private label brands in the late 19th century. In 1859, the Great Atlantic and Pacific Tea Company — soon shortened to A&P — introduced its “Eight O’Clock Coffee” label, before eventually launching more in-store brands like Jane Parker and Ann Page. The supermarket chain, the last location of which officially closed in 2016, was one of the pioneers of developing private labels as a means of offering customers good quality products at lower prices than national brands.
Then, in 1883, Barney Kroger founded the first Kroger supermarket in Cincinnati, Ohio. According to the company’s history, shortly after opening the store, Barney Kroger bought a surplus of very cheap cabbage from farmers who rolled into town with a harvest bounty. He took that cabbage home to his mother, who in turn transformed it into sauerkraut which Kroger anticipated would sell well in the city which had a sizable community of German immigrants. He was right.
“The little manufacturing effort born in Mrs. Kroger’s kitchen was the beginning of something big,” the company wrote. “Today, we’re the largest food manufacturing business in America. Kroger operates our 35 food manufacturing facilities that make everything from bread, cookies and milk to soda pop, ice cream and peanut butter.”
Private label sales now account for over 20% of Kroger’s total dollar sales, which is on-par with Walmart’s private label sales, which accounted for about 23% of the company’s total dollar sales in 2022, according to the international research company Statista. It’s a sizable percentage of the company’s profits, but it’s nowhere near that of company’s like Trader Joe’s where store-brand products accounted for 59% of the company’s sales in 2022. This is because the way the company stocks and distributes products is fundamentally distinct from many supermarkets.
“The store is our brand,” Jon Basalone, president of stores for Trader Joe’s said in the fourth episode of the Inside Trader Joe’s podcast.
“People can’t understand, ‘Why aren’t you selling products online? How come you don’t just sell wholesale to China? They want a bunch of your products. Why don’t you just send truckloads and shiploads of products to other countries and make a bunch of money?’” he said. “It’s like, well, because that’s not what Trader Joe’s is, you know, for us the store is our brand and our products work the best when they’re sold as part of this overall customer experience experience within the store. And so we’re not ready to give that up. For us, the brand is too important, and the store is our brand.”
Inside Trader Joe’s podcast co-host Tara Miller responded that more than 80% of the products sold at Trader Joe's are private label. “Keeping things in our label as opposed to the brand name label or a supplier’s label helps us keep our costs low,” Miller said.
“We don’t have slotting fees,” Miller’s co-host, Matt Sloan said. “We don’t have the producers of the stuff that we sell, pay for the privilege of having space or any space in our stores.”
“And that happens everywhere else, by the way,” Miller clarified.
“Totally normal grocery stuff,” Sloan said. “It doesn’t make a lot of sense to me and yet there it is.”
"Keeping things in our label as opposed to the brand name label or a supplier’s label helps us keep our costs low."
Trader Joe’s emphasis on private label products came early in the company’s history (the story goes that founder Joe Coulombe realized he had something special going in the mid-70s when he produced, packaged and sold specialty granola in his small, original stores) and has served as a case study for how brands can facilitate an emotional connection between customers and their products. Between the Fearless Flyer, the brand’s monthly printed catalog for upcoming goodies, and well-publicized seasonal drops and launches, Trader Joe’s emphasis remains soundly on food items that are created and sold exclusively in the Trader Joe’s cinematic universe.
When the retailer was just a California-based shop for the “overeducated and underpaid,” as Coulombe once put it, it wasn’t a huge threat to national supermarkets, but then the company began to expand — as of this year, they have over 500 stores in 40-plus states — and they don’t plan on stopping. As Progressive Grocery reported in March, Trader Joe’s is planning 16 new stores in cities including Reno, Salt Lake City, Raleigh, Santa Clarita and Sugar Land.
Marketing experts have observed for years how companies — ranging from grocery giants like Kroger with their Private Selection brand, to retailers who are newer to the grocery game, like Target with Good & Gather — have attempted to stoke the kind of breathless brand loyalty Trader Joe’s inspires by expanding their private label product offerings to include some of the items for which the retailer is known, like internationally-flavored pre-packaged meals, seasonal snacks and premium beverages. This strategy appears to finally be paying off.
According to a report from Circana, private-label brand sales increased 6% year over year in the U.S. to $217 billion in 2023, and the private brands gained share from name brands, increasing from 24.7% of total unit sales in 2022 to 25.5% in 2023.
Walmart appears to be attempting to ride the same wave with bettergoods. It’s still very early days, so the relative success of the launch and its products remains to be seen. In the meantime, however, I wonder if Walmart will try to get in on the viral tote bag game, too?
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