Carving out your brand in a market that is saturated with big names and established legacies can be difficult. Not to mention costly if you’re packaging your products yourself.
Private-label packaging has become the answer to faster business growth in a market that is embracing a new way of thinking. Brands and consumers alike have embraced the fact that the potential of private-label products doesn’t end with costs.
The turning tide for private-label goods
Where private label products were once seen as budget-wise alternatives to superior brands, they are today accepted for what they are: quality products that come directly from the source.
Millennial and Generation Z consumers have come to embrace private-label goods for their quality and sustainability, not just their budget-wise pricing, with 32% of their carts now made up of private label brands.
Younger generations are welcoming private label products because they shorten the supply chain (saving the environment) and cut out major corporations (saving the everyman), creating a more sustainable and personal market.
This trend is what has helped Aldi become a grocery retail giant based almost exclusively on its aggressive private label strategy, with private label products making up 77.5% of its total sales. It’s the same trend that helped Kirkland, Costco’s private label brand, to outperform Kraft Heinz by 50%, even with Kraft Heinz’s 100-year legacy and multi-million marketing budget.
In 2021, the private label market segment was already responsible for sales of $77.8 billion in mass merchant stores and sales of $73.1 billion in supermarkets. And in 2023, 25% of US unit sales are currently made up of private label products, with 45% of consumers adding private label products to their carts, based on factors that start with pricing and extend to taste, quality, and availability.
The advantages of private-label products packed at the source
The most obvious benefit of private label production is the cost-savings and increased profit margin. The outsourcing of product packaging lets companies increase their profit margins by cutting manufacturing costs by up to 50%.
But increased profit margins are just the tip of the iceberg when it comes to the advantages that private label manufacturing offers.
A unique value proposition
With private labeling, you get to differentiate your products from other brands, focusing on a novel journey that is free from the constraints of a parent company’s identity or guidelines.
Customized quality assurance
The direct relationship you build with your supplier and the private label manufacturer, allows you to establish quality controls that aren’t hampered by a massive production line where your product is just one of the thousands being produced. Especially when buying wholesale products, managing the shortest and most secure possible supply chain is vital – something that private labeling simplifies.
Profitable pricing opportunities
The savings in manufacturing costs can translate directly to more competitive pricing. Private label manufacturers rely on specialized packaging factories that result in lower manufacturing costs and more affordable purchasing prices for you.
Hands-on brand building
As a private label seller, you can promote your products through campaigns that capture your company’s values and identity without needing to adhere to the stiff guidelines of established brand identities.
Gain loyalty through quality
Unlike white label products that are stock standard wherever they are sold, private labeling allows you to find a supplier that truly offers the highest quality products. Offering a truly high-quality product that comes directly from reliable sources will help you improve customer loyalty.
Improved change management
Established brands have to navigate the red tape of their brand, working within set parameters when changing products or even marketing strategies. When you’re working with private label products, you can alter your course for improved results whenever you need to without restraints. This nimble change approach allows you to address bad product reviews and unimpressive sales immediately.
Source86 is here to simplify your private label journey
Whether you’re starting a private label business or expanding an existing catalog, Source86 is the supply partner you need to ensure a smooth journey.
We’ll help you tap into the food industry niches that are on the rise and help you find the manufacturers that package private-label products at the source. Our strong relationships with our vendors helps us provide you with the freshest samples to ensure you get the product you’re looking for while improving our quality assurance as well.
Embrace the potential that private label products hold for your brand – get in touch now.
In the meantime – take a look at the wide range of ingredients that we offer. Can’t find what you are looking for? Look no further, we can source it for you!
