What Is Private Labeling?
Any product created by a third-party manufacturer and sold by a separate brand name is a private label. It’s essentially outsourcing the creation of a product but controlling all merchandising, marketing, advertising, and packaging by a retailer. Most sellers, whether online or in traditional brick-and-mortar stores, use a separate supplier to produce their merchandise.
The Rise of Private Labeling for Food and Beverage Companies
The fact is that the use of third-party manufacturers for the creation of products sold under a private label is growing exponentially. A report recently showed that by 2028, private label products will increase profits around the globe by upwards of $15 billion. Especially, this is a massive economic shift in the food and beverage market.
Four Benefits of Private Labeling Foods and Beverages
Using private labeling in the food and beverages industry has its benefits. It is quite an undertaking to manage so much of a private label business or a business in general, for that matter. The overwhelming risk of potential failure can be daunting for any entrepreneur, which is why private labeling greatly reduces that risk.
Private labeling is renowned for its ability to achieve great financial rewards with access to sell products directly to traditional stores, e-commerce, and consumers across the globe. The reach is nearly limitless, and so are the benefits. Here are a few of the pros of private labeling products.
Bigger Profits
This process means greater profit margins through the retailers’ costs for marketing and promotions and the potential for higher income increases. Without those additional costs for advertisements, there is a larger percentage of profit to keep.
Minimal Operational Costs
Without the hassle of warehouse and production costs, you are free to earn more income from your private label business. A third-party manufacturer can handle all your needs, such as specialized requirements that include bonded warehousing, refrigerated cargo, and even hazardous shipments—these considerably lower operational costs that can impede overall profit margin gains. The lower the cost of production, the more you can accrue massive financial benefits.
Stable Market
Name brand products carry more than a simple tag. A private and established brand name means a more intimate and loyal customer relationship. Those loyal buyers want that specific brand and product, and once they find you, they will continue to purchase through that seller.
Adaptability also guarantees stability in the market with flexibility in how one can respond to various rises in demands for products in the marketplace. Production rates, timely distribution, and the assurance of quality products are all beneficial to creating and maintaining a secure market.
Private and Exclusive Product Use
Imagine access to an exclusive piece of the market. Private label products are only carried at exclusive stores, whether online or in traditional brick-and-mortar. Through private labeling, products are found in limited spaces meaning more streamlined access to their consumer base. You get to decide which marketing channels you want to use, the pricing of products, and how and to who you want to advertise to
How to Choose Private Label Manufacturer for Food and Beverage
Finding a private label manufacturer requires a few key factors. There are several options available depending on the type of products you have in mind to sell or where you’d like to ship them, and what pricing you are thinking about. Before selecting your private label manufacturer in the food and beverage business, here are a few things to know.
A Specially Designed Manufacturer with Knowledge of the Market
The more experience a company has, the likelier you’ll succeed in your own private labeling business. The more experience they have, the more knowledge and awareness you’ll be able to utilize. That means a manufacturer with knowledge of the market.
Can Produce High-Quality Products
Assess each option you have to determine the company’s ability to produce the highest quality products. Companies are individually rated based on their manufacturing potential to create excellent value merchandise.
One way to ensure you are getting quality production is by ordering samples. Most companies are willing to send samples of what they are capable of producing. Not only this but, how much of it they can produce.
You can check first-hand the products and measure the integrity of their quality. This is key to investing in a long-term partnership and establishing a reliable and integral part of your private label business in the food or beverage market.
Knowledge of Logistical Requirements and Overseas Market
Look for a company with expertise in shipping costs and procedures.
- Can they deliver products in bulk or large packages?
- Where and how do they deliver requested purchases?
Make sure to verify that they offer both air and freight transport of goods. Are they able to successfully and safely ship internationally to reach markets all over the world? You want a team behind you that is accessible to potential customers across the globe and possess multi-cultural knowledge with the ability to communicate across many languages is a must.
ATI’s Expertise in Private Label
American Trading International is a U.S.-based company with experience in the food and beverage industry, exporting to over 80 markets worldwide. With over 26 years in the business, ATI can handle all your export needs. We offer export documentation and logistics as well as overseas payment liability. Among our supply partners are Sun-Maid, Ferrara, Nestle USA, and Kroger.
Is Starting a Food or Beverage Private Label Right for Your Business?
Depending on how valuable and unique your product is we can determine if starting a food or beverage private label is right for you. If you have a high-quality and exclusive product, then private labeling can be a great way to begin a private brand that’s all your own. Private labeling lowers production costs and eliminates competition by excluding others from selling your specific product or merchandise.
