Private label products or services are typically those manufactured or provided by one company for offer under another

company's brand. Private label goods and services are available in a wide range of industries from food to cosmetics to web hosting etc. They are often positioned as lower cost alternatives to regional, national or international brands, although recently some private label brands have been positioned as "premium" brands to compete with existing "name" brands. Richelieu Foods, for example, is a private label company producing frozen pizza, salad dressing, sauces, marinades, condiments and deli salads for other companies, including Hy-Vee, Aldi, Save-A[1] [2] Lot, Sam's Club, Hannaford Brothers Co., BJ's Wholesale Club (Earth's Pride brand) and Shaw's [2] Supermarkets (Culinary Circle brand). Another prominent example is the Cott Corporation, which manufactures private-label beverages for many supermarket chains. McBride plc is an example of a European based provider of private label household and personal care products.
1 Private Label Manufacturers Association 2 Private Label as a Marketing and Business Tool 3 Private Label use by small companies 4 Advantages of Private label brands 5 Quality and Safety of Private Label Products 6 2007 pet food recalls 7 See also 8 References

Private Label Manufacturers Association

The Private Label Manufacturer's Association (PLMA) [4] categories:
[3]

categorizes PL manufacturers into 4 main

1. Large national brand manufacturers that utilize their expertise and excess plant capacity to supply store brands. 2. Small, quality manufacturers who specialize in particular product lines and concentrate on producing store brands almost exclusively. Often these companies are owned by corporations that also produce national brands. 3. Major retailers and wholesalers that own their own manufacturing facilities and provide store brand products for themselves. 4. Regional brand manufacturers that produce private label products for specific markets.

Private Label as a Marketing and Business Tool[edit source | editbeta]

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rewriting it in an encyclopedic style. (July 2010) Retailers have extended the concept of private label to identify a brand with a store, a concept known as the store brand. This can be a far more profitable business than selling nationally advertised brands. A Food Marketing Institute study in the U.S. found that retailers earn a 35 percent gross margin on store[5] branded products compared to 25.9 percent on comparable nationally advertised brands. Use of Private Label goes well beyond the Store Brands, though certainly this is the most frequent situation in which a customer will have contact with one. Several corporations source an extremely wide range of products from specialized manufacturers, which may or may not own their brand. The reasons for this business practice are several. A company, having identified a business opportunity in a new product or groups of products, may assess that setting up their own production line or facility may require a substantial investment in equipment, human resources, patents and so forth. In many cases, a viable alternative is to source from a specialized company that has already made such investments and that has spare production capacity. If the two companies find that the market situation allows to avoid or minimize direct competition without stealing each other's market share (cannibalization), then both companies may find an agreement whereby the specialized manufacturer supplies the goods to the other. The methods to reduce 'cannibalization' are general marketing practices such as: dedicated distribution channels, different image and customer perception of the brands, pricing, separate regional presence etc. This applies, with basically the same basic concepts, to the service industry (for example, customer services help-lines). Private Label may be behind the decision of some companies to enter the market with products that are quite different, but somehow associable, to those that have made them famous (apparel companies launching perfumes; car companies launching watches and so on). Private Label may be an extremely profitable business for companies or corporations commanding an important share of the market with certain products that enjoy a high customer recognition. As sophisticated technologies become widespread, and even subsidized, in emerging countries (generally with export-driven economies), sourcing of a wide range of products can be made at very low cost. These same products may have prices that allow for net margins to account up to several times the cost of the goods sold. Customers may be unaware of this business practice and be paying higher prices for products that differ little from others with less famous brands. On the other hand, some companies do provide additional guarantees to these products offering better quality, customer support, additional services.

Private Label use by small companies[edit source | editbeta]

Another use of private labeled products that has seen good growth is by small companies. Small companies usually do not have any input in the recipes or packaging of the products they buy. These small companies buy from a specialty food company that uses their recipes and simply label for the individual retail store. The reasons small companies look at branding products with their name is for the advertising benefits they receive. For example, if John's Farm Market sells jams or salsas with the John's Farm Market label, each time the consumer uses the product they are reminded of their visit to John's Farm Market. If the private labeled products are really good they will have to return to John's Farm Market

if they want more of that particular product. Another benefit John's Farm Market receives is if someone gives that private labeled product away as a gift. This introduces another potential customer to the products carried at John's Farm Market. For this reason private labeling by small companies is a soughtafter marketing plan.

Advantages of Private label brands

Private label brands are those offered by retailers. There are various advantages for the retailers to go for private label brands. The advantages include 1. Control over pricing of the product/service, 2. Put forth own ideas on marketing plans, 3. Create personalized image which in turn leads to higher customer loyalty, 4. Higher control on production, marketing, distribution and profits, 5. Give their own inputs, additional materials, logos, tag lines, etc. 6. Customer's changing preference - drive towards private label products. These points provide an edge over the other brands. Private label brands are available in a broad range of varieties from food to cosmetics. These brands help create a personalized and unique brand for retailers. Retailers with pretty good private label brands will be able to create better sales opportunities for themselves. They can build value and recognition from the customers. Private brand products allow retailers to differentiate their products from competitors' products, and provide consumers with an alternative to other brands.

Quality and Safety of Private Label Products

Private label products are mostly not only sold in one country, but in many. For this it is essential, that all products are of high quality and comply with all the relevant single or global market standards. Also, issues such as sustainability and environmental impact need to be taken into account. This can be done by performing certification and audits, inspections, hygiene monitoring, and testing of food, [6] beverages and packaging.

2007 pet food recalls

Main article: 2007 pet food recalls In 2007, there was a recall in the United States of more than 60 million cans of pet food sold under more than 100 brand names made by Menu Foods. The mass recall lifted the curtain on a common practice in consumer products that competing brands are often made by the same manufacturer. However, ingredients, designs and quality may differ substantially among the labels made under the [7] same umbrella.

Private label products are products manufactured by different producers but sold under retailers brands. A manufacturing company, for example, produces private label food products or beverages for a supermarket chain. That private label brand can be the retailers own name, such as Conad, Carrefour or Lidl. In these cases the

supplier is not actively marketing the product directly to the consumer and the ultimate control over the product is exercised by the retailer.

The European Commission will launch early next year a study to assess the impact of private label developments in the European retail sector on consumers
- Josette Grech

Private label goods and services are available in a wide range of industries from food to cosmetics to web hosting. Private label has witnessed continued growth, with own brands displacing name brands both in stores and in consumer preference. Private label goods are typically offered as lower cost alternatives to branded goods, although recently some private label brands have been positioned as premium brands to compete with existing name brands. Wider availability and growing sophistication has led to growing acceptance and trust. Private label products not only provide consumers with a variety of competitive goods, but also offer a unique opportunity for producers to benefit from this growing trend. Manufacturing private label products for major retailers provides a consistent and stable demand for products of different variety and quality. This may be attractive to small manufacturers that start producing products exclusively for the established retailers. Small producers can take advantage of retailers increasing demands, particularly when retailers are present in different markets, to allow them to expand production capacity and provide them with stable income. By contrast, large manufacturers tend to be volume-driven and will not change production lines to fill small volume orders for particular retailers, although some have used private label contracts to fill excess plant capacity. In addition, teaming up with retailers, manufacturers can virtually eliminate marketing and advertising costs, which are instead absorbed by the retailer. Retailers use cost free in-store advertising and promotions to increase private label or store brand purchases. Shelving costs, which are normally an expense for manufacturers, are borne by retailers when products are branded by the retailer. However, private labels influence both the competition within food supply chains and the range of food products that are available to consumers. Private label contracts can sometimes take up the majority of production capacity of smaller manufacturers, leaving them dependent on one buyer. Suppliers of private labels become more reliant on one or two retailers for the marketing and sale of their products. As a result, retailers have full control of their brands. Manufacturers are left with little or no recognition among consumers and little opportunity to compete with their products on the market. In this scenario, unfair trading practices, where individual suppliers are forced to accept unfavourable conditions for fear of losing a retailer client, may thrive. Similarly suppliers of branded products face more intensive competition, not from other suppliers but from retailers who start producing their own products. With cheaper private label goods on the increase, national brands face pressure to reduce costs when consumer loyalty gives in. Retailers may thus replace name brands by private labels which are more on demand. When retailers do so, they reduce consumer choice. Ultimately, consumers may be negatively affected if prices rise and

consumer choice is limited. The ability of suppliers to provide their own brand and to innovate is likely to diminish, resulting in less innovation in the food sector. In response to calls from a wide range of stakeholders, including the European Parliament, consumer organisations and food producers claiming that the European food market is not functioning well, the European Commission will launch early next year a study to assess the impact of private label developments in the European retail sector on consumers. The study will primarily focus on the variety of products available to consumers in view of the introduction of retailers own brand products. It will assess whether these factors negatively affect choice and innovation in the European food sector to the detriment of the final consumers. The final report of the study is expected by the end of 2013. The study will provide valuable comprehensive information on choice and innovation in the food sector, particularly on the pros and cons of private label goods in the EU marketplace, both from a consumers and a competitors viewpoint. The outcome of the study will be the groundwork for future legislation in this sector.