Product Code Database
A private label, also called a private brand or private-label brand, is a brand owned by a company, offered by that company alongside and competing with brands from other businesses.: "Any time a product is packaged under a label owned by a retailer, it can be called private label." A private-label brand is almost always offered exclusively by the firm that owns it. However, in rare instances, the brand is licensed to another company.. The term often describes products, but can also encompass services.
The most common definition of a private label product is one that is Outsourcing: company A makes a product for company B, which company B then offers under their brand name. However, it can also define products made in retailer-owned firms. For example, in 2018, Kroger had 60% of its private brands produced by third parties; the remaining 40% was manufactured internally by plants owned by Kroger. Private-label producers are usually anonymous, sometimes by contract. In other cases, they are allowed to mention their role publicly.
The term private-label product overlaps with the term white-label product. They are sometimes used interchangeably but don't mean the same thing. A private-label product is created exclusively for a client, who sets specific demands on what the product or service must contain. A white-label product is not created exclusively for one company, and although white-label manufacturers might offer customizations to their products, these are usually limited. The specifications of a private-label product are set out by the client, whereas a white-label product is more generic and already designed.
A store brand, also called a house brand or, in British English, an own brand, is a private-label brand and managed by a . This brand is almost always offered exclusively at the chain store that owns it; in rare instances, however, the brand is licensed to another company. Examples of store brands are Simple Truth by Kroger, Great Value by Wal-Mart, Clover Valley by Dollar General, Market Pantry by Target, and Specially Selected by Aldi. Store brands can also be eponymous, or named after the store, such as Joe's O's cereal by Trader Joe's. Store brands compete with , also called premium brands or name brands, with its items sometimes being called brand-name products. Examples are Coca-Cola, Lay's, and Kellogg's. The general appeal of store-brand products is that they are usually offered at a lower price than their name-brand counterparts.
Most private-label store brand products are manufactured by third parties, but companies owned by the retailer make some.: "The label owner may manufacture his own private label products or have them manufactured and packaged to certain specifications by outside sources, including imports." For instance, a vice president of The Kroger Company stated in 2018 that approximately 60% of their private-label products are Outsourcing. The remaining 40% is manufactured internally: in 2018, Kroger owned 38 plants, including 19 dairy farms, 10 bakeries, and 2 butcheries, strategically spread across the US. Similarly, Safeway Inc. owned 32 plants as of 2012. Most retailers prefer to keep the identity of their suppliers private, and accordingly have non-disclosure clauses in their contracts, making it difficult to determine the producer of a private-label product. In a few cases though, the manufacturer is allowed to mention it publicly, is revealed through a product recall, or in rare instances, is stated on the product itself. For example, the bags of Kirkland Signature coffee by Costco feature the text "Custom roasted by Starbucks".
Private-label brands emerged in the 19th century.. Until the early 20th century, their general focus was on delivering quality at a price below that of the national brands. In the first half of the 20th century, the quality of private brands diluted and their standards dropped. In their competitive struggle against national brands, low prices were considered more important than quality. In the second half of the century, this trend gradually reversed.. As quality and visual appearance improved, private labels rose to prominence in the 1970s and '80s.. By the 1990s, they were increasingly seen as a threat to the established brands. Also, from the 1990s onwards, a premiumization of store brands began to occur, giving rise to more expensive premium private labels. A survey conducted by the UK's Groceries Code Adjudicator in 2024 noted that retailers were introducing more own-label products and the adjudicator commented that this trend added to management complexities for suppliers.Belser, T., Groceries Code Adjudicator Conference 2024: Suppliers Should Find Their Voice (and Do GSCOP Training), Haddleton & Co Ltd., published on 29 October 2024, accessed on 31 October 2024
are often associated with store brands. Generic products were first introduced in the United States in 1977,. quickly winning market share from national and private-label brands. A 1981 academic article described them as products "without brand names, in very plain packages with simple labels and usually sold at prices below both the national and private brands with which they compete". Packages of generic products often feature only the name of the type of product it contains, e.g. "Cola" or "Batteries". Nowadays, the terms generic brand and store brand are sometimes used interchangeably. The term generic can be used as a pejorative toward store brand items that are perceived as bland or cheap.: "Similar stores like Aldi ... have a private-label concept but have not transcended the stigma of "generic" as Trader Joe's has, nor have they mastered the art of brand deception (or perception)."
A private-label brand is often produced by the same company that manufactures the national brand of that product. Different brands target different consumers. For instance, Kimberly-Clark makes Huggies diapers, but also produces a Walmart budget version. Allegedly, some store-brand items are identical to their name-brand counterparts: they are said to be literally the same product, except for the packaging and price. In other cases, a manufacturer can have multiple formulas for one product, creating a private-label version using one method and the national-label version using another.: Sometimes suppliers have multiple formulas for one product; they might produce a private-label version using one formula and the brand label with another. In 2007, a mass-recall of contaminated pet food products brought to light that more than 100 different brands of pet food, both premium- and private-label, were in fact produced by a single company: Menu Foods in Ontario, Canada. The ingredients and recipes they used differed substantially among brands, depending on what their clients specified.
In the United Kingdom, supermarkets have been criticised for "fake farm" private label brands.
Private-label store credit cards are sometimes compared to but not the same as co-branded credit cards. These cards usually feature the payment network logo, and sometimes the bank's logo. Unlike PLCCs, co-branded cards work like 'normal' credit cards, usable at any place where that type of card is accepted. For instance, warehouse chain Nordstrom offers a Nordstrom Store Card (private label) and a Nordstrom Credit Card (co-branded), both issued by TD Bank, N.A. and using Visa's network.
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