Private label products or services are typically those manufactured or provided by one company for offer under another company's brand. Private label goods and services are available in a wide range of industries from food to beverage to cosmetics etc. They are often positioned as lower cost alternatives to regional, national or international brands, although recently some private label brands have been positioned as "premium" brands to compete with existing "name" brands. |
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Another use of private labeled products that has seen good growth is by small companies. Small companies usually do not have any input in the recipes or packaging of the products they buy. These small companies buy from a specialty food company that uses their recipes and simply label for the individual retail store. The reasons small companies look at branding products with their name is for the advertising benefits they receive. |
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The reasons for this business practice are several. A company, having identified a business opportunity in a new product or groups of products, may assess that setting up their own production line or facility may require a substantial investment in equipment, human resources, patents and so forth. In many cases, a viable alternative is to source from a specialized OEM company that has already made such investments and that has spare production capacity. |