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Private label products are those manufactured by one company for sale under another company's
brand A brand is a name, term, design, symbol or any other feature that identifies one seller's good or service as distinct from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to cre ...

brand
. Private-label goods are available in a wide range of industries from
food Food is any substance consumed to provide Nutrient, nutritional support for an organism. Food is usually of plant, animal or Fungus, fungal origin, and contains essential nutrients, such as carbohydrates, fats, protein (nutrient), proteins, vi ...
to
cosmetics Cosmetics are constituted mixtures of chemical compound A chemical compound is a chemical substance A chemical substance is a form of matter In classical physics and general chemistry, matter is any substance that has mass and take ...
. Private label brands managed solely by a retailer for sale in a specific chain of stores are called store brands or own brands. 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. Such brands are generally less expensive than national brands, as the retailer can optimize the production to suit consumer demand and reduce advertising costs. Goods sold under a private label are subject to the same regulatory oversight as goods sold under a national brand. Consumer demand for such brands might be related to individual characteristics such as demographics and socioeconomic variables.


Prevalence

Growing market shares and increasing variety of private label consumer packaged goods is now a global phenomenon. However, private label market shares exhibit widespread diversity across international markets and product categories. Empirical research on private label products has been of substantial interest to both marketing academics and managers. Considerable work has been done on well-defined areas of private-label research such as private-label brand strategy, market performance of private-label products, competition with national brands, market structure, and buyer behavior. A Food Marketing Institute study found that store brands account for an average of 14.5 percent of in store sales with some stores projecting they will soon reach as high as 20 percent of all sales. Store branding is a mature industry; consequently, some store brands have been able to position themselves as premium brands. Sometimes store-branded goods mimic the shape, packaging, and labeling of national brands; for example, "Dr. Thunder" and "Mountain Lightning" are the names of the
Sam's Choice Sam's Choice is a store brand, private label brand created by Cott, Cott Beverages for Walmart stores. The brand was introduced as "Sam's American Choice" in 1991 and has since been shortened to simply "Sam's Choice". It is named after Sam Walton, ...
store brand equivalents of
Dr Pepper Dr Pepper is a carbonated soft drink A soft drink (see § Terminology for other names) is a drink A drink (or beverage) is a liquid A liquid is a nearly incompressible fluid In physics, a fluid is a substance that contin ...
and
Mountain Dew Mountain Dew (stylized as Mtn Dew) is a carbonated soft drink brand produced and owned by PepsiCo. The original formula was invented in 1940 by Tennessee beverage bottlers Barney and Ally Hartman. A revised formula was created by Bill Bridgf ...

Mountain Dew
, respectively.


Examples

Richelieu Foods Richelieu Foods is a private label food manufacturing company founded in 1862, headquartered in Braintree, Massachusetts Braintree (), officially the Town of Braintree, is a municipality in Norfolk County, Massachusetts, Norfolk County, Massach ...
is a private-label company producing frozen pizza, salad dressing, marinades, and condiments for other companies, including
Hy-Vee Hy-Vee () is an Employee-owned Employee stock ownership, or employee share ownership, is where a company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natura ...
,
Aldi Aldi (stylized as ALDI) is the common brand of two German family-owned with over 10,000 stores in 20 countries and an estimated combined turnover of more than €50 billion. The chain was founded by brothers and in 1946 when they took over th ...

Aldi
,
Save-A-Lot Save A Lot Food Stores Ltd. is an American discount supermarket A supermarket is a self-service shop offering a wide variety of food Food is any substance consumed to provide nutritional support for an organism In biology, ...

Save-A-Lot
,
Sam's Club Sam's West, Inc. (doing business as A trade name, trading name, or business name is a pseudonym A pseudonym () (originally: ψευδώνυμος in Greek) or alias () is a fictitious name that a person or group assumes for a particular pur ...

Sam's Club
, Hannaford Brothers Co.,
BJ's Wholesale Club BJ's Wholesale Club Holdings, Inc., commonly referred as BJ's, is an American membership-only warehouse club chain based in Westborough, Massachusetts, operating on the East Coast of the United States in addition to Ohio Ohio is a U.S. ...
(Earth's Pride brand) and
Shaw's Supermarkets Shaw's and Star Market are two American grocery store chains under united management based in West Bridgewater, Massachusetts, employing about 30,000 associates in 150 total stores; 129 stores are operated under the Shaw's banner in Maine, Massac ...
(Culinary Circle brand).
McBride plc McBride plc () is a leading United Kingdom, British-based manufacturing business, noted as being Europe's biggest maker of retailer own brand household goods. The business also provides contract manufacturing for brand owners. It is listed on t ...
is a Europe-based provider of private-label household and personal care products. In 2007, there was a
recall Recall may refer to: * Recall (bugle call), a signal to stop * Recall (information retrieval), a statistical measure * ReCALL (journal), ''ReCALL'' (journal), an academic journal about computer-assisted language learning * Recall (memory) * Recal ...
in the United States of more than 60 million cans of
pet food Pet food is animal feed Animal feed is food Food is any substance consumed to provide nutritional support for an organism In biology, an organism (from Ancient Greek, Greek: ὀργανισμός, ''organismos'') is any individual ...
sold under more than 100 brand names made by
Menu Foods Menu Foods Limited, based in Streetsville, Mississauga, Streetsville in Mississauga, Ontario, Canada, was the largest maker of wet cat and dog food in North America, with its products sold under 95 brand names, which the company identifies as superm ...
. The mass recall revealed that competing brands are often made by the same manufacturer. However, ingredients, designs and quality may differ substantially among the labels produced by the same manufacturer.


Economic assessment

Research has found that some retailers believe that, while advertising by premium national brands brings shoppers to the store, the retailer typically makes more profit by selling the shopper a store brand. The
Fashion Institute of Technology The Fashion Institute of Technology (FIT) is a public college in New York City. It is part of the State University of New York (SUNY) and focuses on art, business, design, mass communication, and technology connected to the fashion industry. It wa ...
has published research on store branding and store positioning. Grocery chains such as
Aldi Aldi (stylized as ALDI) is the common brand of two German family-owned with over 10,000 stores in 20 countries and an estimated combined turnover of more than €50 billion. The chain was founded by brothers and in 1946 when they took over th ...

Aldi
and
Save-A-Lot Save A Lot Food Stores Ltd. is an American discount supermarket A supermarket is a self-service shop offering a wide variety of food Food is any substance consumed to provide nutritional support for an organism In biology, ...

Save-A-Lot
primarily sell store brands to promote overall lower prices, compared to
supermarket A supermarket is a self-service Retail#Types of outlets, shop offering a wide variety of food, Drink, beverages and Household goods, household products, organized into sections. This kind of store is larger and has a wider selection than earli ...

supermarket
chains that sell several brands.


Private Label Manufacturers Association

The
Private Label Manufacturer's Association Private or privates may refer to: Music * "In Private", by Dusty Springfield from the 1990 album ''Reputation'' * Private (band), a Denmark-based band * Private (Ryōko Hirosue song), "Private" (Ryōko Hirosue song), from the 1999 album ''Private' ...
(PLMA) in the United States categorizes private-label manufacturers into four categories: # Large national brand manufacturers that utilize their expertise and excess plant capacity to supply store brands. # 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. # Major
retailers Retail is the sale of goods and Service (economics), services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturing, manufacturers, dire ...
and
wholesalers Wholesaling or distributing is the sale of goods or merchandise Merchandising is any practice which contributes to the sale of products Product may refer to: Business * Product (business), an item that serves as a solution to a specific ...
that own their own manufacturing facilities and provide store-brand products for themselves. # Regional brand manufacturers that produce private-label products for specific markets.


See also

* '' Private Label Strategy: How to Meet the Store Brand Challenge'', book by Nirmalya Kumar and Jan Benedict Steenkamp *
Badge engineering Rebadging in the automotive industry is a form of market segmentation used by automobile manufacturers The automotive industry comprises a wide range of company, companies and organizations involved in the design, Business development, d ...
*
Copacker A contract packager, or copacker, is a company that packages products for their clients. The packaging and labeling Packaging is the art Art is a diverse range of (products of) human activities involving creative imagination to express ...
*
White-label product A white-label product is a Product (business), product or service produced by one company (the production (economics), producer) that other companies (the marketing, marketers) rebranding, rebrand to make it appear as if they had made it. The nam ...


References


Further reading

* * Kumar, Nirmalya; Steenkamp, Jan-Benedict E.M., Private Label Strategy - How to Meet the Store Brand Challenge. Harvard Business Press 2007
Private Label Manufacturers Association International Council
{{Authority control Brand management