Growth in Store: Serving Up Opportunities for Private Label
By Jake Mayer
Private Label Trends
The beverage industry is turning over a new leaf as trends support brisk growth and
reveal hot opportunities for private label. While newsworthy trends are beginning to
unfold, savvy sellers explore the impact these changes have on consumer behavior
in concurrence with their marketing strategy and product offering. Small and mid-
size business is no longer using other brands, entering the market is their own
propriety brand that defies tradition and repositions with a premium image and
Private label is upscaling in both perception and practice as black tea fires up to
green chai spice. Originally perceived as an affordable substitute to the national
brand, the generic brand is stepping aside to the new concept in private label – the
premium private label brand. Premium, specialty and gourmet product sales are
surging as the seller’s own brand evolves and expands into new market segments
building company and product awareness.
As demographics and culture change, so does market demand for new satisfying
beverage offerings complimenting lifestyles of comfort, pleasure and luxury.
Consumers are snubbing their nose to commodity tea; they desire high quality,
tempting flavors brewed from the finest ingredients. Major health and wellness
trends are driving sales of private label brands as consumers seek healthy
alternatives to traditional products, switching to natural, organic and nutritious
beverages such as specialty fruit, herbal and green teas.
Distribution channels are opening up in the service sector as private label is no
longer a marketing success used exclusively by retailers. Businesses, from high-end
hospitality to professional services, are serving up signature brand beverages to
enhance the client experience while at the same time build company recognition.
Generic private label brands are becoming a popular pick in international markets
with the premium private label brand soon to follow, and there is room to grow.
Marketplace dynamics indicate there has never been a better time for small and
mid-size business to consider the power of private label to market, sell and profit
on their own brand products.
Private Label, A Phenomenon All of Its Own
Traditionally, private label went hand in hand with generic household staples
including tea and coffee. The term “private label” was used interchangeably with
“generic brand.” Consumers have long expressed favorable views to generic brands,
as an AC Nielsen study supports, citing private label brands as an extremely good
value for the money and a good alternative to national brands. Large discounters
had the economy of scale advantage, marketing generic label by employing a low
price, high volume system to generate profits. Of course this made it difficult, if
impossible, for smaller firms to compete.
The exciting, really pioneering news in the survey is consumers are now seeing
private label to be higher priced and of equal or higher quality in comparison with
other brands, unlocking opportunities for small business. Sellers are now
successfully fighting fierce competition, armed with a proven small business
marketing tactic; pull in profits with smaller sales volumes by offering a high price,
high quality, unique brand through the support of a private label wholesale partner.
A Healthy Future for Private Label
Demographic and cultural trends favor propriety bands, positively impacting the
growth and earning potential of exclusive brand offerings. Inspired by volumes of
medical information and continuing scientific research major trends in health and
wellness are here to stay. As the 80 million baby boomers age, over half who have
reached 50, they are becoming more health conscious and it is not just the baby
boomer. A recent survey shows 72% of all adults feel they should be making
healthier choices. In response, retailers are rolling out new natural and organic
lines, made from pure health promoting ingredients, a popular choice being green
tea rich in antioxidants. Looking for ways to de-stress and relax naturally
consumers are also adding chamomile and other herbal teas to their list of favorites.
The U.S. Census Bureau predicts an increase in diversity in the United States with
high growth rates in Asian and Hispanic populations, interestingly, they share a
cultural attribute – loyalty. Using private label, a seller can gain trust and loyalty
with a quality product specialized to a specific ethnic group. These niche markets
are typically geographically concentrated making small and regional firms a good
fit. Serving consumers directly on a day to day basis in their local establishments
allows a business to understanding their patrons’ cultural needs and desires. Small
business should pay close attention to the unfilled requests of up and coming ethnic
markets as their national competitors are. Last year Celestial Seasonings introduced
new teas to the Hispanic community focusing on flavors and herbs of chamomile,
linden and other ingredients popular among the group.
The US economy is also showing signs of healthy, yet stable economic growth, with
long-term prospects remaining favorable. The growing number of living
comfortable, affluent American consumers represents a niche market that is
insensitive to price, and have unfulfilled needs for high quality, unique products and
services. These consumers are responsible for a large percentage of premium,
specialty and gourmet purchases. Asians, who enjoy their ceremonies of tea, will
also influence the market. A highly educated and a wealthy group, research shows
Asian-American households have the highest median income, $59,000, in the five
major racial/ethnic groups with the white, non-Hispanic category closely following.
Private Label Anytime, Anyplace
The service industry is driving private label brands into non-traditional avenues and
leaving their mark. Distinguished food service and hospitality companies are putting
their own name on the beverages they serve giving their patrons a taste of
something only offered at their establishment. Beyond hospitality, other service
industries are joining the trend, personal, entertainment, business and professional
services to name a few. Serving signature brands build and reinforce their business
image and ambience, in addition to enhancing their client experience. Many of
these service companies are adding on profits centers, complimenting the core
business through direct sales of their carte items.
Afternoon tea has become tea anytime, anyplace and anyway, as the opportunities
are endless. Teahouses are evolving into bubble tea cafes serving a frothy hot or
cold beverage made from tea, milk, sugar and tapioca balls, alluring the younger
crowd. The over 21 age group is sipping up creative and flavorful cocktails of tea,
liquor and ice at trendy tea bars and lounges. What these entrepreneurs have in
common is the ability to introduce their own brand that set them apart from their
competitors, with the support of a private label wholesaler.
In the beverage industry distinct trends are pouring out opportunities with
consumers ready to taste. Changes in consumer perception, demographics, lifestyle
and culture lay the foundation for a unique offering of products and services. To
capitalize on these trends sellers are no longer stocking standard off-the-shelf
brands. Instead they are formulating a custom blend of product, label and package
to create their own exclusive brand, satisfying the unfulfilled needs of changing
consumer tastes. Private label is a powerful ingredient in their recipe for success.
Trends and marketplace dynamics point out now is the time for small and mid-size
business in all industries to consider the power of private label to leave their mark.
Jake Mayer is the owner of Lapis Teahouse, a manufacturer of http://www.lapisteahouse.com private label tea and custom blend herbal products
that works with both large and small companies. He can be contacted to build your
brand at [email protected]
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Growth in Store: Serving Up Opportunities for Private Label