Following the trend of the global beverage market, more and more businesses are participating in this profitable industry. Beverage retailers also have a larger selection of their product lines. In particular, choosing a private label beverage to increase customer loyalty and increase profits is a factor many retailers are interested in. So what are the advantages and disadvantages of private label beverages? Let’s read Nawon’s article below.
What is a private label beverage?
A private label beverage is a drink product that is manufactured by one company but sold under the branding or label of another company. In this arrangement, the company that produces the beverage, often called the manufacturer or supplier, creates the beverage according to the specifications, recipes, or branding requirements provided by the company that owns the private label, which is often a retailer or a brand owner. The private label company essentially rebrands the product as its own.
A reliable private label manufacturer will ensure product quality and keep production costs under control. A savvy private label seller will build strong brand equity with consumers, effectively advertise, and set up a profitable pricing model.
Private label beverage manufacturers offer customized packaging and labeling solutions to various clients, including retail establishments, dining venues, wellness centers, and more. While private label beverage suppliers may occasionally make adjustments to their formulas to accommodate specific customer preferences, the majority of their offerings are under private branding. The only distinguishing factors between products from the same manufacturer are the unique packaging and labels designed for individual buyers.
In stark contrast, contract beverage manufacturing extends a unique opportunity to buyer who wish to create their proprietary recipes. These exclusive formulations are then meticulously packaged by the contract manufacturer for the client’s sole use. It’s worth noting that some beverage manufacturers are capable of providing both private label and contract manufacturing services to cater to a wider range of customer needs. Such as Nawon Beverage.
Prospects of private label beverage
Private label beverage can be customized to meet specific preferences, target audiences, and the brand of the company that owns the brand. This can include choosing flavors, ingredients, packaging design and even the name of the drink.
Private-label beverage are often a cost-effective way for companies to offer their own branded products without investing heavily in manufacturing facilities or research and development or manufacturing process.
Private label companies have control over beverage branding and marketing, allowing them to differentiate their products from competitors.
Private label beverages can include a variety of beverages, including water, soda, juice, coffee, tea, energy drinks, and more.
Many private label beverages are sold in retail stores under the store’s own brand, providing a unique product offering to customers and helping to build customer loyalty .
Overall, private label beverages offer businesses the opportunity to offer unique and customized beverage options to customers, while potentially increasing profit margins compared to selling famous brands.
Considerations of private label beverage
Lower Brand Recognition
Private label beverages often lack the brand recognition and loyalty that established national or well-known brands enjoy. Customers may be hesitant to try a private label product if they are not familiar with the brand, which can lead to slower sales initially.
Companies that opt for private label beverages need to invest in marketing and promotion to establish and build their brand identity. This can require significant resources and time to create awareness and trust among consumers.
Private label products often compete directly with well-established, national brands, which can be challenging. National brands typically have larger marketing budgets and greater visibility.
Maintaining consistent quality can be a challenge, especially if a company switches manufacturers or suppliers. Variations in product quality can harm the brand’s reputation and customer trust.
While private label companies have some control over product specifications, they may have less control over factors like pricing, production schedules, and supply chain issues when working with manufacturers. You must be carefull with private label agreements when cooperate.
While private label beverages can offer higher profit margins compared to selling national brands, they may not be as profitable as premium or unique proprietary products. Businesses need to carefully balance pricing and profit margins to remain competitive.
Dependency on Suppliers
Private label companies are often dependent on their manufacturing partners or suppliers. If a supplier faces production issues, quality problems, or supply chain disruptions, it can negatively impact the private label product’s availability and quality.
Relying on private label products may limit a company’s ability to innovate and develop unique, proprietary products that can set them apart from competitors.
Some consumers may associate private label products with lower quality, even if that is not the case. Overcoming this perception can be a challenge.
Despite these disadvantages, private label beverages can still be a profitable and strategic choice for businesses when managed effectively. Success in the private label space often requires careful planning, marketing efforts, and a focus on providing quality products that meet consumer needs and preferences.
Top 5 popular private label drinks
There are many types of drinks that retailers or businesses choose as their own private label drink. The popularity of these drinks may vary by region and the seller’s target customer, but some popular private label drinks favored by consumers include:
Private label bottled water
Private label bottled water is a popular choice for retailers looking to offer a basic, affordable, and essential product. It’s often available in various sizes and packaging options, catering to different consumer needs.
You may also read: Top 10 world’s most consumed beverage
Private label soft drink
Many grocery store chains and discount retailers offer their own private label soft drinks or carbonated drinks. These store-brand sodas often mimic the taste and style of well-known national brands but are typically more budget-friendly.
Private label juice
Private label fruit juices, such as orange juice, apple juice, and grape juice, are commonly found in stores. These beverages offer consumers a cost-effective alternative to brand-name fruit juices.
Private label iced tea
Private label iced tea is another popular choice, with variations like sweet tea, unsweetened tea, and flavored iced tea. These beverages cater to different taste preferences and can be a refreshing option for consumers.
Private label energy drinks
Private label energy drinks have gained popularity among consumers looking for a boost of energy. Retailers often offer their own store-brand energy drinks that compete with established national brands.
Private label beverage vs white label beverage
White label beverages are already manufactured products that can be purchased and rebranded by multiple companies, often with limited customization.
Private label beverages are custom-developed and produced exclusively for one company or retailer, giving them more control over the product’s features and branding.
In conclusion, private label beverage offer a world of opportunities for businesses looking to differentiate themselves in competitive markets. Through this strategy, companies can harness the power of established products, enhance their brand identity, and gain more control over their product offerings.
In the ever-evolving landscape of e-commerce and retail, private labeling is a strategic approach that can lead to long-term success when executed wisely. By carefully considering the pros and cons, conducting thorough market research, and staying committed to delivering quality products, beverage businesses can tap into the lucrative world of private labeling and take their brand to new heights.