- Elaine Wong

Bad times are good times for private labels. At least that's the conventional wisdom. As consumers become more price-conscious, they also become less brand-conscious.

For retailers with a strong private label presence, that's good news. In November, for instance, Wal-Mart announced that sales of corporate brands like Sam's Choice and Equate were growing 2.5 times the rate of national brands for the past few months.

Supermarket chain Wegmans, meanwhile, has been promoting its line of branded food products via heavy in-store marketing. In an earnings call with analysts last month, Walgreens president Greg Wasson said the retailer has seen "good increases in over-the-counter items and our private label brand as people trade down and look for value." In 2008, private label sales jumped 15 percent, the retailer reported. Overall, sales of private-label items increased 10 percent last year, according to Nielsen, owner of Brandweek.

Store brand products may be poised for even bigger growth in 2009. When prices of commodities go up, as they did in early 2008, brand marketers like General Mills and Kraft benefit because they buy in much bigger bulk and are more insulated from price increases than private labels. Those brands were also able, by and large, to pass on price increases to consumers. But now that many commodity prices have fallen, private labels can cut their prices even further. Branded CPGs, which spend a lot more on advertising and marketing, are much more constrained when it comes to price.

What's a branded CPG marketer to do? So far, they've been fighting back with a variety of value pitches. Procter & Gamble recently rolled out campaigns for Pantene and Gillette, among others that stress bang for one's buck. The former touts the haircare brand, which has suffered from lagging sales, as an affordable salon alternative. A pitch from BBDO, New York, for Gillette Fusion, similarly, positions the pricey razor blades as delivering "high-performance" shaves for "as little as a dollar a week." P&G rep Kelly Vanasse said the change was meant to address an old notion about the brand."Guys have consistently told us that they think our blades are costly, so reframing the true expense for them makes good sense," she said.

Some brands, faced with tighter-fisted consumers, have reacted by completely repositioning themselves. Unilever introduced Ragu pasta sauce microwaveable pouches as a mess-free, meal-friendly topper this past spring, but now advertising is all about value. One print ad from Ogilvy & Mather, New York, reads, "With Ragu and a pound of pasta, you can feed a family of four for less than four dollars . . . Who knew you could still get so much for so little?" Above the jar of pasta sauce is a photo of a pregnant woman and opposite her, a child, holding her hands to her stomach. Tagline: "The perfect meal when your family is growing and the economy is shrinking."

The pitches seem to be working for now, at least for peddlers of food products, who benefit from the fact that more consumers are eating meals at home as they cut back on their restaurant outings. Such food-focused brands continued to be liberal with their ad spending in '08 and some at least tell investors that they plan to be in '09. For instance, Campbell upped its ad spend from $296 million to $307 million this year. General Mills, likewise, hiked consumer spending by 21 percent in 2008, and the spike is expected to continue by "double digits in 2009," Pillsbury president Juliana Chugg told analysts in December.

Kellogg, whose advertising spend makes up about 9 percent of sales (the industry average for packaged food makers is 5 percent), has also pledged to increase spending in 2009. According to TNS, the packaged foods category increased its measured media spending by 6 percent from January to September 2008.

Hit harder are those CPGs with slim food portfolios. Consumers still have to eat, but maybe they don't have to clean as much. Or at least they can clean with store brands. Maybe that's why primarily nonfood CPGs aren't increasing their ad spends as much. Clorox's ad spend for its first quarter (which ended Sept. 30) was flat with the year-ago period and P&G has slashed its U.S. ad spend by 6 percent (to $2.3 billion) from January to September of this year, per TNS. P&G CEO A.G. Lafley told analysts the strategy in 2009 would be to focus on maintaining "a share of voice."

Kimberly-Clark, which has seen private label bite into its paper towel brands and has had a particularly tough time with high commodity costs in the last year, has dutifully increased its market spend only to see earnings take a hit. Nevertheless, K-C CMO Tony Palmer said it's important to ride out the recession by balancing brand equity and consumer needs. "You can have a value proposition that accentuates good value, but you don't want to walk away from the core proposition of the brand," he said. "That's the only thing you have to protect yourself."