Manufacturers Are Growing Private Label Programs

This is the second part of a four-part article about private branding.

Manufacturers and distributors both approach private branding in different ways.

For example, Midlab has always worked with customers to offer private labeling, since the company didn’t have any of its own national brands when it was created in 1984, says Schenk. Today, however, the manufacturer differentiates between what it refers to as “private labeling” compared to “private branding.”

“Back then, we were calling on people and we were trying to sell them private label,” says Schenk. “Now we do what we consider to be private brand, and private brand is different than private label. Private label is less expensive and not as good. A private brand is as good or better than the national brands, at a competitive margin.”

Today, Midlab no longer offers what it calls private labeling solutions, only private branding. The company works closely with a distributor partner and its marketing team to create a brand website, marketing literature, selling programs and various other programs.

Midlab’s private branding program eventually gave rise to another variation, which the company calls “control branding.” Midlab offers several national brands, which it sells to numerous distributors in any part of the country. It’s control brands, however, are only licensed to specific distributors. Midlab then provides these distributors with a geographical market in which the distributor can sell the control brand without competition from another distributor of that product. The control brands are designed for distributors that may not want to invest in creating an entire private brand program.

“We came to see a need that there were a lot of distributors that didn’t want to invest the bandwidth to develop all of that information on their own and needed a more turnkey approach,” says Schenk. “So Midlab developed the control brands that come with a fully developed marketing program and selling tools, such as a website, catalogs, literature, wall charts, plus some advertisement.”

As Midlab’s private branding solutions continue to grow, its control brands are expanding at the fastest rate. In 2015, Midlab’s national brands account for about 25 percent of its business, the true private brands account for about 50 percent and the control brands account for about 25 percent.

Athea has also offered private branding for as long as the company has been in business: 50 years. Today, about 90 percent of what the manufacturer produces is for private brands. The distributor always creates the brands, with Athea providing design support and assistance with everything from basic label creation to navigating EPA and FDA regulations.

There are still some distributors that prefer national brands, but Athea encourages all of its customers to look into private branding.

“End users today are much more savvy with product knowledge, and in an age where so much information is available at the touch of a button, people are shopping around more than ever and easily able to compare products,” says Patton. “Private labeling allows a distributor to differentiate themselves from the competition, and minimize end users from shopping around and easily finding the exact same product from another source. All of our customers that private label have been able to take advantage of that differentiation and keep end users coming back to them with reorders.”