The craft brewery idea that’s been nagging at you since college is finally becoming a reality. You have the space, the perfect recipes, and plenty of hope for growth. Now you just need to determine how you want to package and sell your brews.
One option is a private label. In a private label partnership, the production, packaging, and labeling of your product is handled by one manufacturer.
While there are many benefits to private label beverage packing, it might not be the perfect fit for everyone. This guide will walk you through everything you need to know about private labels so that you can make the best choice for your business.
Private Label 101
When you elect to sell your products under a private label, you take more control over the merchandising process. This may seem counterintuitive since you’re moving the production of your product to another company. However, working with a single partner, like Wildpack, instead of a full supply chain helps you become more involved.
How does the process work? Let’s take a look at the key features of private labels:
- Who controls the business – You retain the exclusive right to sell your product unless you choose to become a wholesaler. Then, you can partner with retail stores to broaden your sales territory.
- Who makes the product – You don’t make the product. Instead, the manufacturing partner makes and packages the product. They ship it to you and you sell it. For example, say you own a brewery and you want to sell cans of your customers’ favorite brew. You sign a contract with a company that will make the beer, package it, label it, and ship it to you to sell.
- Who designs the look of the packaging – You also decide what the packaging should look like. Many businesses opt for private labeling because they can match the look of their packaging with their company aesthetic.
You’re probably thinking that a private label sounds a lot like creating your own brand, and you’re right—sort of.
What’s the Difference Between Branded and Private Labels?
Although the two may sound similar, branded and private label products are different. Branded products typically have the following features which differentiate them from a private label:
- Branded labels are nationally (or internationally) distributed products
- They’re distributed through the supply chain and sold by retailers
- They typically have huge advertising budgets to market products to consumers
Branded products are those that are ubiquitous, such as your morning cereal or your favorite laundry soap. People all over the world would probably recognize the brand name or logo. You’d also likely find these products on the shelves of stores in many countries.
If your company had a private label pre-mixed cocktail beverage, it might gain traction and be popular in your city. However, someone outside of your area wouldn’t recognize the label.
Benefits of a Private Label for Your Business
Now that you know what does private label mean, let’s talk about some of the benefits of choosing it for your business. In many cases, companies with private label products experience the following upsides:
- Better brand recognition – When you choose a private label for your business, you provide the specifications. This means you can have continuity in every aspect of your marketing materials including menus, advertising pieces, and your beverage packaging. Cohesive branding helps your customers recognize your product when they see it, thus fostering brand loyalty.
- Improved margins on your products – When you work with one company for your beverage packaging and labeling needs, you cut out the middle man. This saves you money because there are fewer components involved in your supply chain. You then make more money on each unit of the beverage you sell.
- Control over what goes in your products – You tell the manufacturer what you want to go into your product and they follow through for you. This gives you more control over production and costs as you can always make adjustments when needed. It also allows you to be more creative if, for example, you sell packaged pre-mixed cocktails. The possibilities you can create are bound only by your recipe creativity.
- Faster turnaround times for production – Because you’re streamlining your production through one channel, your products can often be ready to fill your shelves sooner. Lead times are shorter, so you won’t have to worry about missing key seasonal sales peaks.
- Growth potential – If your product is in high demand, other retailers might be interested in selling it, too. You can become a wholesaler who selects specific retailers to stock your product. This means increased profits and business growth for your company.
In many cases, a private label product can help boost your margins, streamline your production, and even lead to further growth of your company. Wildpack has top of the line manufacturing facilities to help you achieve your goals and exceed your expectations.
What Are the Downsides to Private Label Products?
While private label products are an excellent choice for many companies, there are a few downsides to be aware of before taking the plunge. Some of the potential issues that may arise include:
- Higher minimum orders – Some manufacturers have higher limits on private label products. If you’re a small business, you may struggle to meet those minimum orders.
- Leftover, unsold product is your responsibility – After placing the minimum order, you may be stuck with unsold inventory if your supply exceeds the demand for your product.
- Working harder to gain brand traction – If you’re new to the market, it may take time to gain the trust of potential customers. A private label might scare away customers who prefer to stick with a brand they’re familiar with.
These issues might interfere with your goals for your private label business. However, you can mitigate some of these potential problems by choosing the right private label partner.
How can you launch a Successful Private Label Beverage?Building any business entails a long road filled with potential obstacles. Developping a private label beverageis no different. However, by taking the proper steps, you can successfully and profitably sell your private label brews.
- Research, research, research – First and most importantly, you need to research your market. Knowing what your customers want and being able to provide something to fulfill that desire is a must. You can have the best beverage ever crafted, but if there isn’t consumer demand, your business will struggle.
- Patent your idea to prevent competition – If you have a truly innovative and unique product, consider a patent. This will help prevent a competitor from swooping in with a similar product.
- Create a marketing strategy – Those huge national brands have sky-high marketing budgets that they can use to get their products advertised everywhere. You probably don’t have that kind of budget. However, with some savvy marketing, you can make sure people know about your label. You just need to spend your marketing dollars carefully and target the consumers who are most likely to buy your products.
- Choose a trustworthy manufacturing partner – Lastly, you must have a manufacturing partner you can trust. It’s critical to find a reliable, affordable, and friendly partner who produces high-quality products when you need them. Imagine the consequences of a poor manufacturing partner. It’s possible that you won’t receive the product needed to meet demands, that you’ll be required to order more than you need, or that you’ll get subpar products that will fail to satisfy customers or foster brand loyalty.
We don’t mean to scare you with that last point. However, it is important to stress that your choice of a manufacturing partner is the most impactful component of a successful private label (outside of your ideas, of course).
What Should You Look for In a Beverage Packaging Partner?
We think you’ll agree that one of the pillars of all successful relationships is trust. The same is true of the relationship between your business and the partner you choose to produce your private label.
Trust is built when you select a packaging partner who:
- Has a strong, responsive customer service team
- Can deliver your product quickly
- Doesn’t have excessive minimum order requirements
- Specializes in the product you sell
- Offers a variety of sizes and design options
- Helps you source the best ingredients for the best price
- Boasts multiple facilities to save you money on shipping
These features are key components to helping your relationship with your manufacturer thrive. As a result of that productive partnership, your business will be set up for success.
Build Your Private Label with Wildpack Beverage
What is private label production? It’s an ideal solution for breweries looking to offer packaged versions of their signature beverages while retaining control over the production and distribution of their product. While they do come with some potential downsides, a solid partner can help mitigate those risks.
Enter Wildpack Beverage.
Our private label beverages will help you expand your brand without leaving you with a warehouse full of unsold products. We have reasonable minimum orders, custom sleeving, and the ability to get you your products quickly. Contact us today to learn more.
Sources:
Business.com. What is Private Labeling and How Does it Work? https://www.business.com/articles/private-labeling-details/
The Journal of Business. Assessing the Competitive Interaction Between Private Labels and National Brands. https://www.jstor.org/stable/10.1086/209634?seq=1#metadata_info_tab_contents
