The impact of private label foods on supply chain governance

Abstract

Purpose – The purpose of this paper is to investigate the impact of the introduction of private label (PL) foods upon the governance of the food supply chains. Design/methodology/approach – The authors conducted a multi-case study research examining the launch and development of PL cheeses in four large national-wide retail chains. The paper focused on the category of Products of Designated Origin (PDO) cheeses, including the popular feta cheese. Data collection involved semi-structured interviews and secondary sources of information. Data analysis involved single-case and within-case analyses. Findings – There is a strong motive to launch and develop PL cheeses due to increasing consumer demand. Retailers choose suppliers based on criteria such as: compliance to quality assurance standards, modernisation of processing facilities, implementation of legislation, credibility, experience, and reputation. Retailers use contracts and prefer small suppliers than medium-sized companies. Supply chain governance turns from market to hierarchy status, which performs better in terms of supply chain cost, food quality, and consumer satisfaction. The structure of food industry is also affected by pressure put on medium-sized food companies. Research limitations/implications – The paper is based on a multiple case study design that does not provide static generalisations, yet it offers a stepping stone to building new theory about supply chain governance, how it evolves and its effects on supply chain performance. Practical implications – The introduction of PL cheeses favours small and dynamic cheese processing units willing to adopt retailer standards and prices over larger units, which poses a real threat to the survival of regional-wide food companies. Originality/value – Few studies have examined how supply chain governance evolves and what triggers a change in governance structures.