Effect of Private Label Brands of Milk on the Structure of Fluid Milk Markets

Abstract

Data from fluid milk processors in Kentucky were analyzed to determine the impact of private label brands of milk on the structure of fluid milk markets. Emphasis was given to 1) measuring the initial changes in the number of competitors and market shares with the introduction of a private label brand of milk into a market and 2) management's reaction to the effect of private labels on structure. Managers identified 21 competitors that left seven major market areas following the introduction of a private label brand. Shifts in individual firms’ market shares usually were associated with private labeling. Managers tended to agree that: a) private label accounts are particularly suited to large scale operations, b) private label brands of fluid milk have forced small processors out of markets, c) private labeling is one way for retailers to gain bargaining power, d) private label contracts could provide market stability, and e) there is a high degree of risk attached to private label accounts because of the size of accounts. Introduction of a private label brand of milk into a local market can and likely will influence the structure of that market. © 1976, American Dairy Science Association. All rights reserved.