If you’ve ever walked into a store and picked up an “own brand” product, the chances are it was a private label good. Defined as anything manufactured by one company for sale under another company’s brand, private label goods are often positioned as lower cost alternatives but offer high profit margins for manufacturers.
In the coffee industry, private label products are widespread, appearing everywhere from supermarkets to chain cafés. Not only do they offer specialty roasters an alternative revenue stream, they also provide stability and freedom from marketing concerns.
However, despite the advantages, private labelling isn’t for everyone and specialty roasters need to carefully consider each factor before offering their coffee as a private label good. Read on to learn more about private label coffee.
What Is Private Label Coffee & Why Is It Popular?
Found in a range of industries from food to cosmetics, private label goods are those that have been manufactured by one company for sale under another company’s brand. The retailer can request specific alterations to the products to suit their needs and appeal to their customers.
The benefits of private labelling for both retailers and manufacturers have made them increasingly popular in recent years. According to PLMA 2020, more than one third of all products sold in European retail come from private labels, with the market experiencing considerable growth during Covid-19.
In a recent survey of more than 2,000 US consumers, nearly 20% said they bought more private label products during the Covid-19 pandemic than they did before. The reasons stated were low price and high availability.
One of the most popular private label goods is coffee. Offered by supermarkets, coffee chains, celebrities, and even YouTubers, it’s become an effective and relatively low-cost part of brands’ marketing strategies.
By using private label coffee, companies can reach new corners of the market without the knowledge or resources to roast coffee themselves. For example, a coffee chain might want to offer its own branded coffee to consumers who can’t visit their stores, but are reluctant to invest in their own roasting equipment.
The retailers will usually work closely with the roastery to create a product that will appeal to their customers. They can discuss everything from roast profile and origin, to batch size and flavour notes.
Although private label coffee is often associated with lower cost alternatives, this has started to change in recent years. Supermarkets in particular have begun offering premium own brand coffees, including organic and single origin options. Examples of these include ALDI’s Barissimo line and Waitrose’s No.1 line, where consumers can find a selection of single origin options from Colombia, Indonesia, Peru, and other countries.
What’s The Difference Between Private Label & White Label?
Although the two terms are often used interchangeably, private label and white label refer to two different things.
White label products are manufactured by a contract or third-party manufacturer and sold under a brand name. However, unlike private label products, the retailer only specifies what the label looks like.
The term derives from the music industry, where it was used to refer to records that were yet to be released to the general public. Radio stations and DJs would be sent promotional copies of the same record with white labels on.
Although the branding is in the hands of retailers, white label products themselves cannot be altered. This offers slightly less flexibility than private label products, where buyers can approach manufacturers with their own set of criteria. For example, a supermarket can request from a roaster a specific blend or roast profile that they know their customers will enjoy. This is also known as “toll roasting”.
White label coffee is a practical solution for both retailers and roasters. For retailers, it’s a more affordable option than private label coffee because the manufacturer doesn’t have to build an entirely new process to create and develop the retailers products.
Instead, they can create the same coffee again and again, and distribute it to retailers who will simply sell it under different labels. For roasters, it offers a consistent and reliable source of income without having to worry about branding costs.
However, white label coffee does have its downsides. Once a retailer finds a coffee they like, it limits the capacity of the roaster to change and experiment with different coffees. They can become restricted to only roasting coffee in a certain way, which, after a while, can become repetitive and dull.
What To Consider Before Offering Private Label Coffee
Private label coffee roasting has been a popular option for specialty roasters for a number of years.
Not only does it offer high profit margins and low marketing costs, it also provides a reliable and consistent revenue stream. Demand for private label products is growing, particularly in Europe, with more than 40% of sales at UK supermarket brands Tesco and Sainsbury’s coming from private label products.
It also allows roasters to fill the time when they are not serving their own customers. In a post on their website, Pharmacie Coffee Roasters write: “We recognised that whilst our roaster lay idle, we had the opportunity to share, not only our equipment but also our knowledge.”
What’s more, because the branding is left to the retailers, roasters can focus on the roasting side of their business without having to worry about promoting their own products. They can dedicate their time to honing their craft and doing what they love.
However, like toll roasting, private label coffee roasting isn’t suited to all specialty roasters. While there are obvious benefits in terms of revenue streams, the lack of control and limited room for creativity can put some roasters off. Rather than roasting the way you want, you will have to adhere to the demands of the retailer in everything from roast profile to flavour notes.
Furthermore, like ghost writing, all the hard work that goes into producing the private label product is hidden by the branding of another company. This means that you won’t receive the recognition or experience the same customer interaction that you would if you were selling directly to the consumer.
However, if you are able to offer private label coffee alongside your regular offerings, then this shouldn’t be too much of an issue. It can also help you generate the necessary income to eventually go off and roast the way you would like.
At MTPak Coffee, we offer a range of low minimum order quantity (MOQ) stock bags for specialty roasters looking to offer private or white label coffee. Our plain stock bags are the perfect option for those after a simple yet effective way of packaging their coffee, ready for distribution.
For more information on our sustainable coffee packaging, contact our team here.
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