Woolworths is killing off Homebrand to fight Aldi

Woolworths has confirmed it will ditch its 33-year-old Homebrand label and replacing products with its more up-market Essentials packaging to improve perceptions against the continued threat from Aldi.

Nearly 1000 Homebrand products will lose their iconic red and white label, the AFR reports. Homebrand products themselves bring in revenue of about $1.4 billion for Woolworths annually.

A Woolworths spokesman confirmed the change in a statement:

“We have been reviewing the products in all of our own brand ranges to ensure we deliver even greater quality and value for our customers.

“Part of this review will see our current value ranges, Homebrand and Essentials, consolidated into one improved value range called Essentials. The Essentials range as the name suggests are products every home needs both food and non-food.

“When customers see each product move to the new Essentials packaging they can be assured the product will offer market-leading value for money for our customers.”

The move comes after Coles made a similar change, replacing its home brand labels such as Smart Buy and Simply Less with a single “Coles” label.

Private label brands are one of the most crucial parts to supermarket strategies. If the supermarkets are able to offer products featuring their brand at low prices, it leaves consumers to believe that all of their prices are low.

Woolworths CEO Brad Banducci had given hints in May last year that a change to the Homebrand label could be coming, noting that it had a perception problem.

“The issue we’ve got with Aldi is providing the same value experience in our store as you would in an Aldi, which requires us to rethink and re-engineer some of our entry-level products,” Mr Banducci said at the time.

There’s more at the AFR.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.