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Eric Bleeker: All right, Austin. Me and Andrew, we'll go with the tech things, but in the consumer space... you don't often think of consumer trends, but what's one trend that you're watching this year?
Austin Smith: The big trend that I'm going to be watching to continue in 2013, that showed a lot of strength in 2012, was the rise of private brands. We saw private brands enjoy really strong sales. They hit $108 billion for the year-end period in August, and that's up from $88.5 billion in the year prior, so pretty intense growth.
But there's still a lot of room left to run. If you look at major, heavily branded companies, they still comprised about $520 billion in sales for the same period, so a lot of room for these private-label brands to continue growing and dominating in this space.
I think the ConAgra-Ralcorp deal is going to be very threatening to these companies that have rested on the laurels of their brands for so long -- companies like Kraft. I think you're going to see a lot of weakness from them, going forward. Their meat and cheese products are, in my opinion, likely to be pretty commoditized.
You have these companies that have rested on these really seemingly indefensible moats of brands for so long, are really starting to see a paradigm shift in consumer behavior. The recession pushed a lot of consumers toward private-label brands.
You're seeing a lot of value there; grocery stores in particular -- Safeway, Whole Foods, SUPERVALU -- all adding a bigger part of private-label brands to their aisles, and customers are responding very well. Volume growth in that division continues to outpace the overall grocery space, and I think it's going to continue in 2013.
The article 1 Must-Watch Trend in 2013 originally appeared on Fool.com.
Andrew Tonner has no positions in the stocks mentioned above. Austin Smith has no positions in the stocks mentioned above. Eric Bleeker has no positions in the stocks mentioned above. The Motley Fool owns shares of Whole Foods Market. Motley Fool newsletter services recommend Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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