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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 860  
Subject: Re: Private Label thoughts? Date: 11/14/2007 2:46 PM
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HJ Heinz used to be the main producer of private label soups. They sold that business to DelMonte (one of the two but which one) several years ago.

Much of the private label foods come from co-ops. But are they stock companies. Apparently DelMonte originated as one of these. Ocean Spray. Sunkist. Green Giant was one.

Nearly every food processing plant out there has potential to make better use of their equipment by making private label product. Some do have company policies not to participate.

Then we have companies who contract to make all sorts of products in their equipment. During the Menu Foods catfood issue we learned that Menu Foods makes dry pet food for a whole series of companies. Many brand names do not have manufacturing. They contract to have product made periodically, store it in warehouses and ship it when ordered.

Brand name consumer products are famous for the high margins they command that allows for advertizing, marketing, and research. But private label has to be cutthroat. So you expect it to be low margin--unless there is a critical shortage. Profits are probably cyclical. Will profits be up now?

But frankly under NAFTA, the processed food industry is probably in the process of moving to Mexico. Low labor costs and low shipping costs make that inevitable, I would think. So who is building in Mexico. They are the future. Old plants will keep running as long as they can, but their days are numbered.
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