• The Wall Street Journal, Wednesday, August 29, 2007 1 PM

As they grow more sophisticated about developing and branding their own products, retailers are building brands that bear no resemblance to their store names, such as Target's Archer Farms line of gourmet oils, appetizers and frozen foods, and Safeway's Eating Right line of frozen dinners, cereal and salad dressings.

Sara Lee CEO Brenda Barnes says the challenge to branded companies like hers is to be No. 1 or No. 2 in its category "because why would a retailer want to carry 10 products in a category?" Private-label sales of food and nonalcoholic beverages in the U.S. rose 4.3% to $44 billion in the 52 weeks ended July 14, excluding sales at Wal-Mart Stores, according to Nielsen.

To better compete with private-label products, food companies are trying to improve the quality of their products by offering additional health benefits or convenience. Among other new products from Kraft are its Crystal Light beverages with additional vitamins and DiGiorno Ultimate, a microwavable pizza the company says is on par with pizza found at restaurants.

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