King told the BBC Radio4 programme The Bottom Line: “Own-label keeps brands honest in terms of the pricing they try to achieve and the quality they trade at.”
The tension between the distribution power of retailers and the huge brand power of some manufacturers “makes everyone up their game and try to do better”, he added.
Sainsbury had sold own-label produce for 130 years of its 143-year history, he said. Today the grocery giant’s sales are made up of half own-label produce and half branded.
But consumers were more likely to buy brands when choosing packaged dried grocery and more likely to buy own-label for fresh produce, said King.
Rejecting suggestions that own-label were solely entry level food products, King said: “It’s absolutely not the case that brands are one quality and own-label another.”
Leading brands
Sainsbury’s Basic own-label produce offers good produce, while By Sainsbury produce aims to match the quality of the leading brands, he said. Taste the difference aims to offer better quality than the leading brands.
King said that certain own-label products now competed on the same territory as branded products. "The Sainsbury brand on an own-label product reassures customers about certain things [such as product quality] because of our history and our approach. So for us, the competition is like a branded competition at the shelf edge label."
Asked whether own-label and branded grocery products had now reached equilibrium, King replied: "There is no equilibrium in business; I see it as constantly shifting.
Good for customers
"But it must be good for customers if we are thinking about more discrete groups [of shoppers]. We are becoming much more sophisticated at targeting segments and that must be good for customers."
Geoff Cooper, ceo of builders’ merchant Travis Perkins, told the programme that own-label products accounted for 90% of the firm’s turnover. Manufacturers’ brands accounted for the remainder.
Meanwhile, UK consumers will continue to choose own-label food and drink in preference to branded produce during the recession, reported market analyst Mintel in May.
The market for own-label food and drink reached £37.4bn last year – up by 24% since 2006.
Over the next four years, it was expected to reach £45.8bn, said the researchers after canvessing the views of 1,460 consumers.
Last year, 25% of adults reported buying more own-label products instead of brands.
Own-label - in numbers
£37.4bn…………………Market for own-label food and drink last year.
£45.8bn…………………Size of market by 2016.
33%.....................Shoppers plan to buy own-label produce for first time or increase purchases.
+25%..................Shoppers expected to buy more premium own-label products in 2012.
Source: Mintel