Kojo Quartey: Brand name or generic, what is the difference?

As inflation has ravaged our economy over the past two years, some people have turned to buying generic or store-brand items. Store brand items are not necessarily inferior as many are of the same quality as the brand name items, however, they tend to be cheaper.

In economic terms, an “inferior good” is a good that as one’s income goes up, they buy less of, versus a “superior good” that as one’s income goes up they tend to buy more of (and vice versa). To be clear, although sometimes confused in economic theory, the terms "superior" and "inferior" refer to changes in income levels, and not changes in prices.

Some examples of inferior goods include used cars, discount clothing, public transportation, frozen dinners, instant noodles, canned foods, and generic products. Superior products include steak, shrimp, luxury cars, and eating at fancy restaurants. Inferior goods may differ based on a consumer’s tastes and preferences, for example, coffee — Starbucks (superior) vs. McDonald’s (inferior), however, some may simply prefer the cheaper McDonald’s coffee.

Now that we have gotten the economic theory out of the way, let’s focus on the purchase of store brand or generic products that some of us buy because they cost less and are not necessarily "inferior" to the brand name products.

There are some consumers who never buy generic and insist on buying brand names such as Hunts, Heinz, Jiffy, Peter Pan, etc. Those brands are so well known that I do not even have to tell you what products they are. These individuals have brand loyalty and assume, for the most part, that the generic or store brands are of inferior quality. But is that always the case? You guessed it! The answer is an emphatic no! Many generic or store brands are of the same quality and cost much less. Generic foods may save us anywhere from 25% to 30% and the savings can add up.

Personally, unless there is a deep discount or volume sale on the brand name items (buy one, get one/two free, for example), I tend to buy the generic or store brand. Here are some facts that you may not be aware of:

• Generics are often produced by the same national brand companies. Yes, Hunts makes your Kroger and Walmart brand tomato paste. They are made in the same plant and from the same ingredients but packaged differently with more basic labels and no brand advertising, so they tend to be cheaper. Compare the ingredients as I do, and you will see that there is little or no difference. You are paying more for a label/brand.

• When the taste test is applied, there is no noticeable difference in taste or quality.

The most common products that fall in this category are sugar, flour, spices, milk, frozen vegetables, peanut butter, coffee, and tomato products. There are, however, other products where the generic or store-brand items are indeed inferior. These include paper towels, garbage bags, mouthwash, and sodas (Coca-Cola and Pepsi and others have their own proprietary formulas)

In the pharmaceutical industry, a generic drug may be produced once the patent ends, normally after 20 years and a period of “exclusivity,” which depends on the particular drug. After the exclusivity ends then a single manufacturer can produce the drug for a period of “exclusivity,” then any number of other manufacturers can produce that drug, as long as they prove that it has the same potency. Some manufacturers even create their own generic brands. Generics can be as low as 80 to 85% less in price. According to the U.S. Food and Drug Administration, in 2020, generic drugs saved the healthcare system $2.2 trillion over the previous decade.

When all is said and done, most generic products are produced in the same factories but branded differently. The ingredients are the same and they tend to taste the same. This is not the case for all products, however. It is up to you, the consumer to determine what to purchase, based on the prices, your income, and tastes and proclivities.

— Kojo Quartey is president of Monroe County Community College and an Economist. He may be reached at kquartey@monroeccc.edu.

This article originally appeared on The Holland Sentinel: Kojo Quartey: Brand name or generic, what is the difference?