Spain food industry cuts 1,300 jobs amid private label rise

Private labels drive 1,300 job cuts in Spain's food industry

How much does it cost for a supermarket brand soda to be a third of the price? Workers are paying the bill. Private label share has climbed to nearly 50% of the market, squeezing manufacturers into cutting costs. The latest move came from Coca-Cola Europacific Partners, which announced an ERE (collective dismissal) affecting up to 85 customer service staff, mostly in Esplugues de Llobregat, moving operations to Bulgaria where labor costs are lower.

A wave of adjustments starting in December 2022

The trickle began with Pepsico, which agreed with unions on the exit of 545 workers across factories and headquarters, the sector's largest adjustment since then. A year later, Carrefour pulled all its brands in France, Spain, Italy and Belgium after citing an "unacceptable price hike." The tension between manufacturers and retailers is not rhetoric: it explains every subsequent ERE.

In January, the commercial court number two in Girona ordered the definitive closure of Artigas Alimentària, a historic meat company that entered insolvency proceedings. After rejecting the offer from Navarre-based Agotzaina, the firm will lay off its 170 employees. Days earlier, Danone announced the closure of its Parets del Vallès plant, with 157 exits, and Bimbo communicated the closure of its El Verger (Alicante) factory, affecting 90 employees, just as it was dropped from Dia shelves due to lack of agreement.

Why do private labels grow while manufacturer prices fall?

Short answer: because the price gap has become the main sales argument for chains. Heineken confirmed in December an ERE for 127 people due to "organizational causes" within an efficiency plan, and the brewer reported net profit of €2.304 billion, down 14% year-on-year despite revenue rising 4.9% to €36.375 billion. Margins are defended by cutting staff, not price.

Among food companies, Costa Food also appears, with 126 layoffs at Roler meat factory in Terrassa, and Tastia, owner of Muerde la Pasta and supplier of sauces for Mercadona, with another 124. The pattern repeats: private labels gain share, manufacturers lose strength, and staff pay for the adjustment.

Real savings in the shopping basket

The calculation circulating among consumers is stark. A can of Heineken costs around €0.80 versus €0.28 for private label; branded fries go for €3 when white label ones stay at €0.99 or €1.20; branded sliced bread costs €2 and the equivalent white label €0.90; custards, €2 versus €1. The full breakdown, product by product, leaves a monthly saving that surprises those doing it for the first time.

The temporal comparison hurts: according to a forum calculation, two donuts cost 100 pesetas in 2001, about €0.60, and two liters of cola didn't reach one euro. Today those same two liters have tripled while salaries have barely moved. Private label is not a trend: it is the arithmetic response to a shopping basket rising faster than wages.

Private label: same quality or worse product?

Here consensus breaks. One school argues that own-brand quality no longer differs much from name brands and that only a handful of categories — canned tuna, pasta, coffee, extra virgin olive oil — justify paying the premium. Another maintains the opposite: that cheapness is paid for in flavorings, additives and withdrawn products, and that branded sliced bread or beer no longer taste like they did twenty years ago.

The technical detail almost nobody looks at is who manufactures. According to debate participants, much of the white-label colas come from Refresco Iberia, in Oliva (Valencia), and Font Salem, in the Valencia town of the same name, which adjusts the formula per client: the same plant produces a decent cola for one supermarket and a watery one for another. Taste depends not on the manufacturer, but on what the chain pays.

Tax on sugary drinks and fiscal background

Some place the problem's origin far from shelves: the tax hike on soft drinks made products expensive, pushing consumers to private labels or away from buying, leaving multinationals with less volume to spread fixed costs. The Canary Islands precedent is cited as a warning: AIEM taxed non-manufactured goods in the islands for years with rates from 10% to 75%, cumulative if the product contained multiple materials, resulting in cascading extra costs for consumers.

The alternative explanation is more uncomfortable and less technical: people are poorer. With rising tax pressure, CPI perceived as manipulated, and stagnant wages, private label stops being a choice and becomes the only option. Palates adapt, wallets rule, and legacy brands remain on the shelf.

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Thirty years without trying a Coca-Cola, a Pepsi, a Danone, a Bimbo, or a Heineken is a perfectly defensible decision. What is striking is that now it turns out to be the cheapest too.