Private Label Brands Outpace National Brands, Creating Opportunities for Co-Packers
Private label brands are on the rise, overtaking national brands, especially in the mass market area, as consumers look to less expensive alternatives that still provide the taste and healthy ingredients they seek in today’s foods.
Private label brands have surged 40 percent over five years in mass retailers, far outpacing national brands, according to the Private Label Manufacturing Association (PLMA). The industry group analyzed Nielsen data revealing that private label dollar volume in the mass retail channel increased more than 41% over the last five years, compared to a gain of only 7.4% for national brands.
This substantial growth is because they provide convenient and affordable alternatives to consumers, according to TMR Research. Private label food products fit well into the rising consumer demand for premium and healthful products, increasing the growth of the private label food market.
To take advantage of this market opportunity, many companies are turning to co-packers for manufacturing, HPP, and cold chain solutions.
Private Label Outpaces National Brands in Mass Market Retailers
Retailers are seeing this increased growth and are looking to leverage these opportunities. As mass market channel sales grow faster than supermarkets, the trend becomes more significant.
The trend was even noted by Warren Buffet, who said in a CNBC interview that well-known national brands had 2018 sales of $26 billion compared with the $39 billion in sales posted by Kirkland, the private label of Costco, the leading warehouse club.
Why Companies Turn to Co-packers
With the increasing demand for private label foods, manufacturers are shifting from producing a similar branded product to introducing innovations in the private label food marketplace. Private label food products enable retailers to stand out in the market. As a result, manufacturers are engaged in developing premium, relevant and superior private label food products.
Many large supermarket brands prefer to outsource their private label to co-packers, for cost and capacity reasons. They are also spending more time engaged in merchandising and promotion activities, instead of actual production.
Smaller companies and startups often don’t have the resources or know-how to produce their own products. They also may not be familiar with all the quality assurance requirements, including validation studies, tools for control points, risk assessment and crisis control plans.
Instead of investing in new technology and equipment, which can be a multi-million dollar capital expense, some turn to co-packers and cold chain suppliers. These co-packers already have the equipment, expertise and labor needed to manufacture safe, healthy and great-tasting food and beverages.
For instance, Universal Pure, a leader in high pressure processing (HPP) services, also provides value- added cold chain services, including beverage blending, bottling, kitting and assembly, and tempering. With the company’s acquisition of Stay Fresh Foods this past summer, it has added co-packing services for juice manufacturers – including blending based on the company’s unique ingredients and recipe. This is in addition to HPP and distribution services, all of which play a significant role in the companies’ long-term success.
With its industry leadership in HPP, Universal Pure’s expansion into juice blending and cold chain services offers a one-stop shop for producers and retailers. Universal Pure has the experience and expertise, infrastructure and capacity, flexibility and redundancy, and strategically located operations to meet food companies’ needs.
PLMA 2020 Showcases the Strength for Private Label
Universal Pure will be sharing its co-packing, HPP and cold chain solutions at PMLA 2020. Visit us at Booth F3238 to learn more about our services.
