Unlike brand names that feature a manufacturer or producer’s name, private label products are owned and sponsored by a supplier or a retailer. Private label products are generally produced by getting in contact with a manufacturer.
For instance, many supermarkets offer generic goods like food items at a low cost. But, they also feature premium private brands.
The World of Private Label Food & Beverage
Impact on the Economy
In the US, private labels account for about 16% of the entire retail market across consumer packaged goods. It’s estimated to have a value of approximately $140 billion. In the EU, the size of private label brands varies significantly from country to country. The total sales of grocery units are the highest in the UK and Spain.
Often private label consumer products perform better than branded goods. The reasons for that are manifold. Unlike generic or branded products, private label retailers can set their desired pricing to set their products apart.
Besides, consumers believe that private-label or store-brand products are usually of better quality. Private label products are also believed to be more sustainable in the long run.
Looking to the Future (Growth)
The private label food products in the US market are expected to grow by 21.17 billion dollars during 2021-2025. This growth momentum is likely to accelerate at a CAGR of 3.8%
How to Develop a Private Label Food Brand
Understanding Production Costs
It’s paramount to assess and understand the initial startup costs before diving head-first into creating a private label. Private labels are usually more expensive to create and sell than resorting to drop-shipping or simply reselling. But, the capital usually results in higher ROI, especially in the long run.
Choosing the Right Product
It’s always better to initially start with a generic product on which to put a private label. During the selection process, it’s better to stick with something high-ranking and also high-margin. Also, sticking with something lightweight and small is better as it would reduce shipping and warehousing costs.
If the first product doesn’t work, there’s always an option to switch to another product in a niche market. The idea is to use the initial product research as a lens to look into the overall industry and the niche.
It’s also good to think about complementary products during this stage. For instance, if a retailer plans on selling a beverage, they could continually expand their horizons into creating travel mugs or cups.
Define the Target Market
Understanding the target market and demographic is key to success in any business. What does the typical customer look like? What’s their income bracket? Where do they hang out?
This kind of knowledge helps develop the right kind of products, the right kind of ingredients, and aesthetics. It will also determine the marketing channels and efforts.
Think About Your USPs
What factors differentiate the product? What Unique Selling Points will make the product stand out from other competitors within the industry? At this point, it’s good to look at the competitor and their primary areas of focus.
Study the areas where they are lacking. Anything that the competitor lacks is an excellent place for an aspiring retailer or supplier to position their brand and use it as a springboard for branding/marketing.
Those key differentiators become the cornerstone of a brand in the long run.
Find a Supplier
Working with the right supplier can make or break the entire enterprise. It’s essential to look at manufacturers who have years of experience handling private labels.
Many overseas suppliers will create a generic product for several clients but later customize them to suit the private label packaging needs. Sometimes the factory would charge an extra for the packaging and customization fee.
Once again, working with the right supplier is the key to building a robust private label, the importance of which cannot be stressed enough.
Brand Building
After establishing the key differentiators, things that uniquely position the brand, and having located a supplier, the next order of business is to start building the brand. To that end, a retailer would need to take care of the following –
- Coming up with the logo and the copyright name
- Setting up a website (preferably an online store)
- Taking care of the social media presence
- Forming an LLC
Think about the private label as any other business needing protection and profit-making. Other than that, branding and marketing efforts are also crucial.
Finding a Private Label Development Partner
It’s always the beginning that scares the most people. But, having the right private label development partner by the side can make things a lot easier. A partner can offer help across the board, including gaining access to the right market, shipping, storage, labeling, branding, and advertising.
While looking for a private label partner, make sure that they are –
- Quick to respond to inquiries
- Carry cross-cultural knowledge and linguistic skills for the target market
- Are you willing to form long-term partnerships
- Offer direct-to-retail relationship; thereby eliminating intermediaries
Who is ATI
ATI, or American Trading Company, was formed in 1995. This US-based export trading company focuses on exporting US-based food and beverages to more than 80 markets.
Why ATI is an experienced Private Label Partner for Food & Beverages
With more than two decades of experience, ATI has developed 30+ private label brands, including direct retailers and importer distributors. The company has 2,000 SKUs that handle all private label needs for 50 core manufacturers.
The company maintains all the capability and more to help with a retailer’s all private label development and branding needs.
Bottom Line
For information on Private Label partnerships at American Trading International (ATI), visit us at https://www.american-trading.com/private-label. Interested in working together? Call us at +1 (310) 445-2000.