Have you ever prowled around a grocery store and found the shelves full of snacks from brands you didn’t recognize, like “Great Value,” “Freshness Guaranteed,” or “Good & Gather?” You know, generic sounding brands that make you feel like you’re eating a prop from a TV series that can’t afford to show a box of name-brand Raisin Bran? Well, the stores call those “private labels” and if you don’t know where they come from, that’s just what the stores want. So, what is a “private label brand” and who actually makes these private label products?
What is a private label product?
Basically, “private labels” are products that retail chains pay manufacturers to make so they can sell them exclusively in their stores. Think of them as “store brands,” but hidden under a slightly fancier name. Some private label brands examples include Walmart’s “Great Value” and “Sam’s Club” lines, along with Target’s “Good & Gather” and “Favorite Day” brands. And Trader Joe’s is pretty much nothing but private label items.
Private label items tend to be cheaper than those from big name brands, since stores don’t have to spend as much on advertising, expensive packaging, or the “stocking fees” that retailers charge brands to get on store shelves. And stores make better margins on their own products than they do from the bigger brands, which means more profit.
But if they’re store brands, then why don’t they just say so?
Well, some do. For example, Kroger has a private label that’s just called “Kroger.” But slapping a fancy sounding brand name on a product can make it seem like it’s better quality.
And some buyers can be snobby about buying what they see as “generic” products. Which is why Kroger also sells food under their “Simple Truth” and “Private Selection” brands.
But the biggest thing to remember about private label products is that the stores don’t actually make them themselves. They hire outside manufacturers, who then slap the store’s labels on the products and ship ‘em to the store. So that “Kroger” brand peanut butter isn’t technically from Kroger, but some other, unknown company.
Then who actually makes private label products?
That’s the big secret that the retailers and manufacturers don’t want you to know.
Typically, the products are made by the same large manufacturers who also make brand name products. Why would they compete against themselves? Because private labels can be a dependable source of extra income. After all, if you’re already packaging coffee, why not make a little extra and sell it directly to a store? And private labels can be a useful way for manufacturers to set up a strong relationship with a retailer, especially when they’re trying to convince them to keep their brand name products on the shelves. But either way, manufacturers don’t like to openly reveal that they’re making private labels, since it undermines their bigger brands. And retailers typically don’t like revealing where these products come from, since it can lead to other retailers poaching their suppliers.
In fact, these private labels are so secretive that we just don’t know where many of them come from. And often, the only way to find out is through recalls, since products from the same factory will be listed under the same recall notice, even if they’re under different labels.
So, that private label energy bar you find on the shelf probably comes from the exact same factory as the brand name energy bar right beside it. It’s just a little cheaper and a bit more mysterious.