Quality of Private Brand Products Questioned

With the suspension of private label (specific to E-mart) milk by Korea’s largest discount chain manufactured by Maeil Dairies and Binggrae, fears over the quality of private label products have spread to other items such as detergent and coffee.

Contrary to E-mart’s claim that the quality of their private label products equals that of name brand products, manufacturers say otherwise.

Consequently, the quality of private label products, or also commonly known as private brand products, is under question.

○ Diverse ways to cut prices

LG Household & Health Care, the leader of its respective industry in Korea, has supplied its detergent brand One Spoon to E-mart as a private label product since 2007, though production was suspended in the early 1990s. The company is in charge of production only, and has nothing to do with product development.

“The sterilization effect of our own brand Tech is a notch better than average detergents,” an LG source said. “Without E-mart’s own efforts to develop new technology, its private label One Spoon will fall behind our product.”

Aekyung, which makes E-mart Sensible Shampoo for sale as a private label in E-mart stores, also said its own brand and private label products are manufactured in the same factory, but contain different elements.

“Our highest quality elements are not included in private label products to keep prices low,” an Aekyung source said.

Things are similar in the food industry.

Kirin makes the snack Stars Made with Rice for E-mart with Chinese rice to keep the cost down. The company uses a half-and-half mix of Korean and Chinese rice for its own brand Ssalobyeol.

“They are both manufactured at the same factory, but have a different taste because we use better seasoning for our product,” said a Kirin representative.

An industry source said, “Manufacturers are pressured into making private label products for large discount chains at their request. As a result, they put little effort into upgrading product quality.”

On the disclosure of confidential information of manufacturers, he added, “It’s an act of desperation to maintain their brand reputation, demonstrating how much the retail industry holds sway over manufacturers.”

○ Low % of main ingredients

According to a study of product brand products distributed by large discount chains conducted by the Korea Consumer Agency in the second half last year, the percentage of main ingredients in certain private brand products was lower than that of those sold under manufacturers’ own brands.

A case in point is Nonghyup Hanaro Club’s private brand ham. The meat contained 30 percent less pork than its manufacturer Moguchon’s own brand ham, though it was 11 percent cheaper.

Another example is E-mart’s private brand instant coffee mix Starmix Mocha Gold produced by Jardin. The mix contained less coffee than its rival products.

At the end of last year, the consumer watchdog found that Home Plus provided false nutritional information on the label of its private brand low-fat milk (930 milliliters). Though manufacturers are only allowed to indicate added calcium on a label with more than 52.5 milligrams of additional calcium per 100 milliliters, Home Plus did so when it added just five milligrams of calcium per 100 milliliters.

Consumer groups say large discount chains anxious to keep prices low for their private brand products are less careful about quality management.