Morton salt, Domino sugar or Arm & Hammer baking soda –regardless of what label appears on these products, the chemical formula is the same: NaCl for salt; C12H22O11 for sugar; NaHCO3 for baking soda.
Chefs know the brand name doesn’t affect the taste, and a new study by the University of Chicago’s Booth School of Business shows that knowledgeable shoppers, such as professional chefs, stock up on generic ingredients and save money.
The new research, conducted by Chicago Booth’s Jean-Pierre Dubé, Sigmund E. Edelstone Professor of Marketing; Matthew Gentzkow, Richard O. Ryan Professor of Economics and Neubauer Family Faculty Fellow; and Economics Professor Jesse M. Shapiro, demonstrates that professional chefs are more likely to reach for the cheaper, no-name versions of such pantry staples at the grocery store. The study hypothesized that sophisticated shoppers may find it easier to cut through the informational clutter created by branding.
They found that when chefs buy pantry staples, they devote more than 80 percent of their purchases to private labels, compared to 61 percent for the average consumer. Overall, chefs are 13 percentage points more likely than the typical shopper to buy the generic version. If everyone in the United States shopped like a chef, the researchers estimate, spending on name-brand pantry staples would fall 24%, saving consumers $20 million per year on pantry staples and $340 million on other food and drink categories in the study.
“If you look at places where generics and brands are very similar, if people were informed, they wouldn’t buy brands,” Gentzkow says.
Chef Peggy Ryan agrees. Ryan, who is daytime executive chef at The Dining Room, the fine-dining restaurant at Kendall College in Chicago, learned as chef/owner of Italian restaurant Va Pensiero that when it comes to basic ingredients, generics work just as well. Now, when she and her family are baking for the holidays, she buys private-label sugar and white flour to save money without sacrificing quality. For these products, “I definitely will buy a store brand instead of a major brand,” she says.
The researchers analyzed grocery purchase data obtained through a partnership between Booth’s James M. Kilts Center for Marketing and the Nielsen Company. Then they matched those results to a separate survey asking respondents to list their occupations.
The Booth researchers’ study, which also examined how pharmacists shop for headache medicine, is titled, “Do Pharmacists Buy Bayer? Sophisticated Shoppers and the Brand Premium.” Bart J. Bronnenberg of Tilburg University in the Netherlands co-authored the paper. Their findings are detailed in the fall issue of Capital Ideas.
The research was supported by the Neubauer Family Foundation, the Initiative on Global Markets at the University of Chicago Booth School of Business, the Marketing Science Institute, and the Netherlands Foundation for Scientific Research.