Private Label Beverages
Consumers have an ever-growing array of
choices in the beverage aisle. The choices vary from name brands
like Coke and Pepsi, to private label drinks such as Safeway
A “private label” beverage brand is owned by a retailer who wishes to participate in a robust category with their own line of beverages produced at beverage manufacturing facilities. Historically, private label brands have been perceived as “me-too” value-oriented brands which offer lower quality but better prices than “name brands.” This
perception has evolved over the years as private label offerings
have significantly improved in quality and consumer satisfaction.
Private label permeates virtually every
beverage category in the United States. Private label beverages,
also known as store or home brands, can now be found in the
largest and the smallest of beverage categories. Although
carbonated soft drinks remain popular, as the market has
evolved and consumer tastes have shifted, retailers in private
label have moved into more non-carbonated products, like
bottled water and fruit beverages, as chronicled in the latest
edition of Beverage Marketing Corporation’s ‘Private Label
Beverages and Contract Packing in the U.S.’ report.
label carbonated soft drinks, private label milk, private
label bottled water and private label juices are considered
prime categories for private label beverages.
like Coke, Pepsi and Dr. Pepper still dominate the industry,
but the vast size of the carbonated soft drink category has
created an opportunity for private label brands, which are
typically purchased by value-conscious consumers. For the
most part, the branded company leaders have done an effective
job at blunting further inroads of private label through strong
marketing of their products, gaining widespread distribution,
and pricing their products so that they are attractive to
the mass market.
The milk category has the most developed
private label business and the largest. In 2007, private label
account for more than 62% of U.S. fluid milk sales. Milk
is the only category with more than half of its sales in
private label. The greatest amount of private label milk
sales are in non-/low-fat milk and whole milk. A small amount
of private label sales are in flavored milks and milkshakes.
The strength of brands like Coca-Cola,
Pepsi, and Red Bull ensure that retailers struggle to gain
a strong foothold in the lucrative carbonated and energy
drink sectors. Additionally, the higher market share of flavored
milk brands compared to whole milk highlights that any product
category where companies have to concoct their own formulas
to create a unique taste, offers an advantage to national
brands over private label.
While consumers may not be as
brand loyal with bottled water as they are with some other
categories, there are a wide number of branded waters that
are experiencing solid success in the market. The success
of brands varies by water type. Waters that often serve as
substitutes for tap water, such as so-called retail bulk
water in large packages, tend to have the greatest amount
of private label.In 2007, 42.5%
of retail bulk water sales in supermarkets were private label.
Private label juice is solidly represented
within the United States. The category is more fragmented
than other established categories, thus providing an opportunity
for private label because consumers may be less brand-loyal.
In 2007, 14.4% of shelf-stable fruit beverage sales in supermarkets
were accounted for by private label.
Once again, it is a
category segment that lacks significant differentiation that
offers solid returns for retailers. The branded leaders in
the category have managed to withstand private label by strong
branding and marketing, which, in the bottled water sector,
often revolves around packaging that stands out and a promotional
focus on the purity of their product. It is also notable
that, like milk, branded products have great strength in
the flavored water sector.
A private label brand can help
retailers take advantage of a robust industry segment with
a high quality product that suits its customers’ needs.
If you are interested in a private label
beverage project, we can help you. Power Brands is an industry
leader in private label beverage development for private
label drink, private label bottling and any other service
that may be needed to create your very own private label
beverage. We can help design your label, assist in branding,
provide a custom formulation, and find the right contract
manufacturer to suit your needs.