While the Covid-19 pandemic showed us the vulnerabilities in a global supply chain, private label and co-manufacturing companies in the food and beverage industry were able to make their mark. Thanks to a combination of supply chain challenges and economic uncertainty, consumers are more willing to change their buying behavior, picking the “generic” or private label versions of a product over the name brand. And with the right strategy in place, co-manufacturers can increase business by marketing the various benefits of working with a reliable and experienced team such as theirs. Here are the ways private label and co-manufacturing brands can highlight their successes in the food and beverage industry, to establish brand loyalty and increase profits.
Private Label Opportunities
A private label brand is manufactured by a third-party manufacturer and sold under the retailer’s name. Think of Costco’s Kirkland Signature brand. Or True Goodness by Meijer. Brand loyalty, often associated with familiar brand names, took on a new meaning as preferred CPG products disappeared off store shelves early in the pandemic, as consumers were stockpiling, or manufacturers couldn’t source necessary ingredients. Consumers were left with a difficult question: can I live without this product, or can I find an alternative? In many cases, they made the switch to private label products.
Private label success stories have increased in the last few years, with sales of private label products growing 1% in 2021 to hit a record $199 billion in all U.S. retail channels. And the private label food and beverage market is expected to grow by $31.17 billion during 2021-2025, rising at a CAGR of almost 4%.
Highlight Private Label Advantages
With a strong brand awareness strategy, private label companies can highlight their advantages over competitors. Private label products are often known primarily for their more affordable price tags. Today, they’re able to compete with the big brand names on value-added characteristics, including:
- Quality
- Sourcing
- Quality assurance
- Marketing and more
Share Relevant Information
As a private label company, you can invest in marketing that helps convey the benefits and showcases your thought leadership regarding consumer market trends. Clearly communicate all value propositions—such as sustainability and innovation—with enthusiasm and thoughtful design packaging.
Retailers are looking for dependable private label companies to help them take their products to market with great success. They see the chance to compete with brand names more than ever, and now is the time to shine.
Proud to Be a Contract Manufacturer
Contract manufacturing companies, also known as co-packers, can act as an extension of a retail, CPG or food service team. They have had similar—yet unique—challenges as private label brands during the pandemic due to ingredient shortages and supply chain disruptions. As certain ingredients became difficult to source consistently, the co-manufacturers, with resiliency and a strong supply chain foundation, could provide customers with what they needed in a timely manner. Those that retained their long-term partnerships came out on top, building even stronger relationships with new and old customers, proving they can deliver even in challenging times.
As packaging and label regulations become stricter and the cost of equipment and labor increases, contract packaging can be a smart solution for small and large food and beverage brands. In 2020, the market was valued at $49.89 billion, and it is expected to reach $89.74 billion by 2026, for a CAGR of approximately 10.18%.
Help Customers Save
Retailers can save considerable time and money when partnering with a reliable co-manufacturer. From labor costs to equipment and suitable facilities, the savings can be significant—especially for smaller or emerging brands. With many years in the industry, co-manufacturers have the expertise to support small and large brands through commercialization. They can identify areas where you can acquire more cost savings during the process, especially since many private label and co-man brands focus on certain types of products.
Deliver Science-Backed Certifications
Potential customers will be looking to meet consumer demand and provide products that align with their lifestyles and desires. Meeting federal regulations by achieving valuable certifications can help boost your credibility, so be sure to highlight any of the following on your packaging and messaging:
- Organic
- Gluten-free
- Kosher
- Vegan
- Keto
- Plant-based
Additional Benefits To Put On Display
Customers seek cost-effective ways to bring their desired products to market. They may also have certain specifications for their project and require the ability to adapt to changing consumer demand and supply chain disruptions. The guardrails they may be looking to work within include:
- Label claims
- Allergens
- Packaging
- Equipment and more
With a transparent, proactive and efficient team, co-manufacturers can ensure their customers’ needs and goals are met. In addition, customers want to build long-term partnerships with an experienced and trustworthy co-manufacturer. When working with a co-manufacturer, their team will be able to focus on core capabilities while outsourcing the rest. The following capabilities or offerings are just some of the parameters retailers are looking for in co-manufacturing capacities:
- Sustainable packaging
- Trusted history of success
- Operational efficiencies
- Purchasing power
In an ever-changing market, there is no certainty that key ingredients will always be available. Private label brands must highlight their achievements, especially when consumers are more willing to switch buying behaviors. Similarly, co-manufacturers can highlight their strong supply chain foundations and thought leadership to help retailers scale up cost-effectively during challenging times. It’s more important than ever for private label and co-manufacturing brands to step up their marketing games and toot their own horns when it comes to success stories, overcoming challenges and highlighting desirable capabilities and services to continue meeting customer needs and obtain new business opportunities along the way.
Want to improve your private label or co-manufacturing messaging strategy? Contact Mitch Robinson at Mitch@colinkurtis.com or call 815.965.6657 EXT. 1 to set up an appointment. Check out our latest work here.
Blog post from:
Valette Piper-Bledsoe
Vice President, Client Services
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