Private Label Food and Beverages Will Make You Tons of Cash. Here’s How!

Global Private Label Food and Beverages Market

Innovation has always been a prominent factor in the food and beverages industry, partly because the competition is intense and the target audience is always looking out for more comfortable options. Consequently, private label foods and beverages- cheaper than the branded options and plentifully available- are fast becoming quite popular. However, is private labeling as lucrative as it sounds? And importantly, is it legal here in the US?

Opportunity in the supermarket aisle- How private labels are overthrowing the brands?

For starters, private label foods and beverages are a cheaper option as compared to the nationally or internationally acclaimed brands. And yes, these are much sought after by the budget conscious and those that aren’t brand savvy. Some retailers have taken this concept a step further – sourcing products from abroad and selling them under their own branding umbrella. Neat, right?

And yes, private labels are perfectly legal here in the US. Though, this practice entails a quantum of risk for the importer. While any retailer could sue a supplier if the merchandise sourced from them is found to be defective, the same doesn’t apply to foreign based private label food manufacturers.

Yet, the fact that retailers can make a better profit on private label food products as compared to the branded items, and that said retailers are afforded an opportunity to create actual brand loyalty for their retail chain ensures that private label food and beverage companies will always be in business. The commodity that has seen the maximum mileage as a private label food is milk, and many more products are fast adopting to this distribution system.

What must the entrepreneurial retailer watch out for?

With great opportunities come great risk. While private label food brands can thrive amid a community and build its own unique identity, many a times the big branded alternative could play a vengeful spoilsport. These big names are constantly improving their products (something that comparatively smaller retailers aren’t doing) and are constantly bridging the distance between economy and practicality. Eventually, the private label will lose the customers’ goodwill and fall by the wayside.

Constant improvement and keeping in regular touch with the consumer’s changing tastes will ensure that private label food and beverage companies stay competitive and in-demand.

Watch out for the trends, and adapt your business accordingly

Demand begets more demand. And, the creation of this demand in the coming years will be all about understanding the market, tracking the popular trends and executing a flexible and scalable business strategy. Market analysts at Technavio have pointed out these three factors as the fuel that will fire the intensely competitive private label food and beverages market in the foreseeable future-

Digitization- Thanks to increased competition, retailers are taking a greater initiative to promote their products by using modern technology and digitization, especially social media.

Improved packaging- With increased eco-consciousness, consumers are looking for packaging materials that are more sustainable and environment-friendly. Ergo, retailers are turning pro-green as well.

Health and wellness- Consumers the world over are becoming more conscious about their health, and are increasingly moving towards safer and healthier food products. Private label food products must adapt accordingly.

Is your retail business on the right path with regards to the private label food and beverages brands? If not, it’s time to innovate and deep-dive into some beneficial market insights. And fast!