Private Labels: Keeping an Eye on Consumers

“The rule is if you squint at it and you can’t tell the difference,” between the packaging of a private label and a consumer product, the private-label good’s packaging needs to be changed, said Karen Feisthamel (Kacvinsky Daisak Bluni, USA) in CM03  Trade Dress: Brands vs. Private Label—When Is It Too Close for Comfort?

Ms. Feisthamel suggested that those making private labels meant to be an alternative to consumer products should use this test.

Joshua J. Burke (General Mills, USA) agreed that the “squint test” was a good idea to keep in mind, given that consumers spend roughly four seconds making product purchasing decisions, according to consumer research by the company.

He added that consumers read approximately seven words during their entire grocery shop.

John Pickerill (Fredrikson & Byron, USA) walked the audience through a U.S. case: McNeil Nutritionals v. Heartland Sweeteners, that covered the trade dress of the artificial sweetener SPLENDA.

“There’s a unique thing about trade dress disputes: when you analyze trademarks you don’t do a side-by-side comparison, you’re supposed to analyze in a vacuum. But in these cases, when putting brands right next to a private label, a direct side-by-side comparison is fair,” he said.

Mr. Pickerill advised that when creating a private label, stores need to “drive a wedge” between its similarity with branded products, while ensuring consumers know the comparison and realize the difference.

In terms of litigation, Mr. Burke suggested that brand owners pick the “right target,” adding that it was “probably better to go after someone who is not your customer” and instead choose the manufacturer.

He recommended that brand owners make it harder for competitors to imitate their packaging, by making it distinctive and strong.

Ms. Feisthamel explained that although private label goods are not exclusive to any one country, such goods have more “successfully penetrated” developed markets.

According to a 2014 survey by consumer study company Nielsen, 71 percent of respondents said that private label quality had improved over time.

The type of goods sold under private labels also differs among countries—in the UK, babycare goods lead the way, while in France and Italy alcoholic beverages are ranked highly, added Ms. Feisthamel.

Ms. Feisthamel explained that one factor people often don’t take into account is that the retailer and national brand owner are business partners.

“It [the business relationship] is a really interesting dynamic that drives a lot of these decisions,” she said.