What do giant retailers Walmart, Costco, Whole Foods, Target, and Trader Joe’s all have in common? They’ve invested heavily (and successfully) in private label products.
The concept of a private label is rather simple and really smart: retailers such as Walmart buy products from a private manufacturer, like a beverage company, and then label and market these products under their own brand. This is as opposed to buying products from another company and keeping that company’s brand name on the products.
You’ve seen private labels like the Good & Gather brand on the Target grocery shelf, 7-Select drinks at 7-Eleven, the vast selection of Kirkland Signature products at Costco, and even the Amazon Basic products that have popped up in your search results on Amazon lately. Each retailer sources these products from outside manufacturers and then sells them under their own store brand.
Part of the reason that private labels have been so successful is due to customer loyalty: Customers trust their favorite retailers and their buying experience from these stores as much – or even more – than they do major name brands. Buyers believe a store’s brand will match the quality of the store’s shopping experience; if a store shares their values, its products will, too. For example, customers expect that Trader Joe’s products will not use high fructose corn syrup or other additives. Add to the mix that private label products are often sold at a lower price than name brands, and consumers are switching to private-label products with gusto.
That’s good news for the beverage industry, where retailers have turned for lower-cost, higher-quality craft drinks to expand their private label selection.
Here’s what the private label trend means for you:
- Retailers can compete with large, established brands, profitably.
Retailers have stepped up their private label beverage offerings over the last few years. Private label drinks now sit on store shelves alongside leading beverage brands and are chipping away at their sales. We’ve seen the demand increase in alcohol, cold brews, mocktails, energy drinks, health drinks, and more. We love when beverage developers come to WiseBev with a new beverage idea that has the potential to meet a market need no one else is addressing.
- Quality will be the differentiating factor.
While shoppers have been quick to switch to private label beverages because of the price, they expect the products will match the caliber and taste of a leading brand. So, value matters as much as it always has. Retailers are looking to strengthen their shelves with premium beverages that will meet or surpass the known beverage in taste. Quality will be one of the most important factors in their selection. Don’t risk developing a drink that’s mediocre and won’t get noticed; meet the standard of excellence by booking a call with WiseBev’s beverage experts.
- Beverages that are truly innovative will win the day.
Retailers have found the greatest success and profit in their private labels when they bring something new to the market and address an unmet need. The opportunity to join a private label will go to the beverage developers that best understand what the customer wants and deliver a premium product and experience at the right price point. This is our specialty at WiseBev: understanding the market, helping you develop a high-quality, craft beverage, and making that drink viable for the market.
Ready to take a chance at creating something innovative, great tasting, and that just might compete with the major beverage brands? Schedule a beverage consultation with our team of food scientists at WiseBev, and let us help you launch your next beverage idea.
