As you wheel your cart through the grocery store, you make dozens of choices: white bread or wheat, frozen green beans or canned, pepperoni pizza or veggie. And after those decisions comes another one: store brand or name brand. Many of us choose the latter, even when the products in question are nearly identical. But that choice is costing consumers about $44 billion a year, researchers have found.
Why do we opt for the more expensive option? Maybe we think national brands have superior quality, or maybe we trust the brand name. But maybe it's because corporations and marketing efforts are spending a fortune to confuse or mislead us into spending more on their products, even if their product is the same as a less expensive one. Without that message to sway you, your choice of products may be different.
To clear up that confusion, here are some occasions where generic or store brand is the way to go, and other occasions where you want to stick with a brand name.
WHEN TO BUY GENERIC WITH CONFIDENCE
For years, corporations have led some of us to believe that paying for the pricier gas will be better for our cars. Though some cars require premium gasoline, AAA says that's true for only about 16 percent of cars. Most of the time, your car will perform just as well with regular gas. In fact, AAA recently said American drivers waste more than $2 billion each year paying for premium unnecessarily. During their tests, AAA found no benefit to using premium gasoline in a vehicle that only requires regular fuel. “Drivers see the ‘premium’ name at the pump and may assume the fuel is better for their vehicle,” said John Nielsen, AAA’s managing director of Automotive Engineering and Repair. “AAA cautions drivers that premium gasoline is higher octane, not higher quality."
2. Over-the-counter and prescription medications
In a paper titled "Do Pharmacists Buy Bayer?" economists investigated whether experts in the health care field buy store brand medicines or name brand ones. In other words, are doctors buying generic aspirin while the rest of us pay three times as much for a national brand? And it turns out, the answer is: yes. Pharmacists buy store-brand medications 91 percent of the time, they found.
But the trend goes beyond pharmacists and Bayer. "If you look at health experts outside of headache remedies, you see this pattern in a lot of products — especially over-the-counter medications — you see that people who are informed about the products [are] way more likely to buy store-brand across a lot of categories," one of the economists, Jesse Shapiro, now a professor at Brown University, said in a 2015 Freakonomics podcast.
While the paper acknowledged that name brands may provide "psychic utility such as comfort or familiarity with the brand itself," as far as ingredients go, they're the same. According to the Food and Drug Administration (FDA), "Generic drugs are required to have the same active ingredient, strength, dosage form, and route of administration as the brand name product."
As for prescription medications, the FDA says generic prescriptions are copies of brand-name drugs and are the same as those brand name drugs in dosage form, safety, strength and more. "FDA-approved generic drug products have met the same rigid standards as the innovator drug. All generic drugs approved by FDA have the same high quality, strength, purity and stability as brand-name drugs. And, the generic manufacturing, packaging, and testing sites must pass the same quality standards as those of brand name drugs."
3. Pantry staples
That same paper also looked at chefs and whether they use name brand baking items, such as salt, sugar and baking soda. The researchers found that chefs bought store brand items 77 percent of the time, compared to consumers who bought store brand 60 percent of the time, and food preparers who are not chefs were also significantly more likely to buy generic store brands.
Chefs also tend to use store brands for condiments, oils and tea, according to this NPR chart.
According to the American Academy of Dermatology, you should use a broad-spectrum sunscreen that protects against UVA and UVB rays, has SPF 30 or higher and is water-resistant. If both the name brand sunscreen and the store brand meet those qualifications, then it's up to you to decide whether the name brand is worth the extra cost.
For what it's worth, when Consumer Reports tested 60 sunscreen lotions, sprays, sticks and lip balms for effectiveness, both store brand and name brand sunscreens made their list of top recommendations.
5. Canned and frozen fruits and vegetables
A frozen pea is a frozen pea and a canned peach is a canned peach no matter what the bag or label says. It might only be a few cents difference in cost, but those small amounts can add up. Plus, that NPR chart mentioned above also shows that chefs tend to buy store-brand frozen and canned veggies over pricier name brands.
6. Peanut butter and jelly ... sort of
Could you tell the difference between name brand and store brand peanut butter? Have you ever tried? If it turns out you can't, then why not save money and buy the cheaper one? (Photo: Brent Hofacker/Shutterstock)
The Freakonomics podcast mentioned above also had a segment about a peanut-butter-and-jelly sandwich taste test held at WNYC, an NPR affiliate where the podcast is recorded. For the taste test, organizers set out a row of PBJs on plain white plates and another row of PBJs on patterned plates. Participants were told one row was made with Skippy Creamy peanut butter and Smucker’s strawberry preserves, and the other row was made with ShopRite Peanut Butter Creamy and ShopRite strawberry preserves. (The bread was the same for both rows.)
The participants told organizers which sandwich they liked better and why, and they tried to guess which was the name brand sandwich (many guessed the one they liked better was the premium brand). But here's the rub: They were all made with the same store-brand ingredients.
So yes, you may decide store-brand peanut butter and jelly is fine for your family. But the taste test story is meant to serve as an example of how sometimes our pre-learned biases about brands and quality can interfere with making wise money decisions.
7. Things you don't care about
Spending a little money to try a new brand of shampoo with a lower price may lead to long-term savings. If the new brand works well, you'll save more money going forward. (Photo: Lodimup/Shutterstock)
This advice comes courtesy of Ramit Sethi, New York Times bestselling author and founder of iwillteachyoutoberich.com. Sethi says we can't have the best of everything, so he emphasizes prioritization and experimentation when it comes to generics vs. name brand. If you're not tied to your brand of shampoo (or hand soap or laundry detergent), for example, try one that costs less. If it works, great, you've reduced your expenses. If it doesn't, switch back to your regular brand. "You won’t know until you test it by buying a less-expensive comparison shampoo and try it out. Until then, you’ll slavishly continue buying the more expensive goods. Combine all the name-brand things you buy and you could be overspending by thousands each year," Sethi writes.
Though your taste buds may object, he makes a pretty good case for buying generic Cheerios. "Can you really tell the difference between Cheerios ($5) and the generic version ($2.50)? Have you ever tried? It’s a spend-once-save-forever proposition: If you save 50 percent on Cheerios for the rest of your life, that’s a lot more than the $2.50 you spent on trying it out."
AND WHEN TO TAKE THE NAME-BRAND ROUTE
1. Baby formula and diapers
Give store brand diapers a test run to see if they're a good fit for your baby. If they are, you've saved yourself about 4 cents a diaper until your little one is potty-trained! (Photo: Lana K/Shutterstock)
Maybe you'll be lucky and have a baby who has a strong stomach and doesn't have sensitive skin, and store-brand baby formula and diapers will work just fine for him. But as all babies are different, generic baby products won't work for everyone.
When my older daughter was a baby, we tried several brands of formula to find one she would take, and she did not like the generic brands. As the Mayo Clinic points out, formula recipes may be different, but as far as safety goes, they're all the same. "All infant formulas sold in the United States must meet the nutrient standards set by the FDA. Although manufacturers might vary in their formula recipes, the FDA requires that all formulas contain the minimum recommended amount of nutrients that infants need."
And we tried store brand diapers on both our kids, but they gave my older daughter a rash, and I found them not to be as soft as the name brand. Generally parents are less willing to pinch pennies when it comes to their kids' health and comfort, but store brand diapers can save around 4 cents per diaper, which adds up. So as Sethi advises, try those lower-cost options and see what happens.
2. House paint
Sometimes, you get what you pay for. And if you pay for cheap household paint, you may find yourself layering on more coats than your kid wears on a January morning. House paint is one of a few items where the quality can vary widely between name brand and generic. So read reviews or ask a professional as you research which brand to buy.
3. Paper and plastic goods
Speaking from experience, store brand versions of plastic wrap, zip-able plastic bags and paper towels may not be worth the savings. Without naming names, I've tried a certain big-box store's paper and plastic goods and had them fail across the board: zipped bags wouldn't stay zipped, plastic wrap wouldn't cling and paper towels simply disintegrated. So I opt for name brands in this category, mostly, though I did find one local grocery store with a decent line of store brand plastic and paper products.