In an effort to live healthier lives, many Americans have added dietary supplements to their daily regimens in addition to eating “better.” But as the economy has become shaky in recent years, it has forced them to reevaluate their spending habits and turn to private label products as an alternative to get what they seek at a better price. And now that the economy is slowly starting to climb out of the recession, many consumers have decided to stay loyal to the store brands to which they switched.

According to a 2011 study by GfK/Roper for the Private Label Manufacturers Associations (PLMA), 80 percent of those surveyed believe private label is either “equal to” or “better than” national brands.Further, 50 percent think that private label products they now buy have been “improving.” 

“Private label products continue to be a highly desired option for priceconscious consumers,” said Navin Advani, director of the New Yorkbased ADH Health Products, Inc. “Given the sluggish economy, this demographic continues to grow rapidly.Additionally, consumer perception of inferior quality of private label products relative to national brands is diminishing. The reality is that the quality standards to manufacture a store brand compared to a national brand are equivalent.”

As interest in private label continues to grow, manufacturers and retailers alike are focusing on the growth potential of the category. “Private label is one of the largest growth categories in the natural products channel,” said Peter Sokoloski, private label manager for NOW Foods in Illinois. “This is true when the economy is good, but when it took a downturn, our sales of private label picked up even more. It seems that consumers are doing whatever they can to stay healthy; they turned to nutritional supplements to meet that challenge.”

Now that more consumers have recognized the many benefits of purchasing private label brands, retailers are considering investing in creating a private label for their stores.According to Sokoloski, carrying a private label line can draw customers back into the store, as it is the sole place that the product they use is carried.“Simply put, private label products drive consumers back to the retailer where the items were originally purchased,” he explained. “If you have a great product in a great package, the consumers will latch onto it, and with the retailer’s name on the label, it means their customers have only one place to go for repeat sales.”

In addition, private label products offer a daily advertisement, every time the purchaser uses the product, which can perpetuate customer loyalty.“With a private label product, you have the ability to create a complete and cohesive strategy for a product that will fit your market,” explained Brianne Vaskovardzic, director of marketing of Private Label Nutraceuticals in Georgia. “Creating a targeted product builds value to allow a business to create a higher ROI (return on investment) through effective marketing and advertising.”

Target Customer 

While many retailers have taken the plunge and invested in their own private label line, others are beginning to see the many benefits of having their own store’s brands. Recognizing the success many mass market stores have had, independent retailers aim To replicate that success on a smaller scale, but with a personal touch.

“I see all consumers as potential private label buyers. The data shows that it is only a question of market position,” said Kenn Israel, vice president of marketing for the Californiabased Robinson Pharma, Inc. (RPI).“For the mass retailer, private brands can be used to leverage market power to offer a ‘best value’ proposition on commodity items. For the small independent retailer, one must play to the very reason why the customer is not at Costco or Walmart: they want a premium product, they want something better—it is up to you to deliver.”

Unlike in the past, when the target customer of dietary supplements was a very health-conscious consumer, the rising cost of health care has broadened the range. Parents are purchasing supplements for themselves as well as their children, and aging consumers are more inclined to purchase supplements as well. “The main customer is one who knows natural products, but is looking for the perceived value that private label offers,” said Sokoloski.“In this economy nobody can afford to waste their dollars, so private label offers them a good solution at a good price.”

Trends 

Although it is evident that private label is becoming a more than “just a trend” in the market, some manufacturers advise the retailers that they work with to play it safe. “Private label is traditionally a me-too category, and there isn’t usually a lot of innovation,” said Sokoloski. “NOW Foods has a wide variety of products to choose from, and this is a great opportunity for retailers to get what they need and possibly something else to keep them ahead of the competition.Going forward, we see an increase in the overall quality, but a reduction in the number of companies that are able to produce at this same level of quality.” 

According to Sokoloski, NOW Foods offers fast turnaround, low minimums, low prices and the flexibility To take on a variety of projects.With one of the widest assortments of products, the company offers items that others do not, including liquid blends and packeting of stevia, and other natural sugar replacements.

Many manufacturers recommend starting with the basics. For example, a multivitamin, vitamin D and omega- 3 fish oil are some of the staple supplements that customers purchase across the board. “Private label products continue to be a highly desired option for price-conscious consumers,” said ADH’s Advani. “Given the sluggish economy, this Demographic continues to grow rapidly.Additionally, consumer perception of inferior quality of private label products relative to national brands is diminishing. The reality is that the quality standards to manufacture a store brand compared to a national brand are equivalent.” 

ADH Health Products, Inc. offers turnkey manufacturing services for dietary supplements. This includes everything from product development to manufacturing to product testing to fulfillment and inventory management.“Of course, we can compete on price, but what really makes us unique is our level of service, ability To innovate and our long-standing track record of honoring commitments to our clients,” said Advani.

However, with the rise in popularity of TV doctors like Dr. Oz, consumers are becoming more knowledgeable about what is available—which is causing some retailers to think twice about just covering the basics when it comes to their private label lines.“We see a growing interest in whole foods supplements as a general category,” said Advani. “The mature categories of probiotics, fish oils and vitamin D supplements continue to be strong as well. As usual, we always see transient spikes in demand for ingredients/products featured in popular media, notably on Dr. Oz or Oprah.”

For instance, recently Dr. Oz mentioned both raspberry ketone and green coffee bean extract on his show, which sent viewers in droves to find products that contain these ingredients. “Green coffee bean extract has received a great deal of positive press as a new, promising study shows dramatic weight loss with no side effects in a group of test subjects,” said Private Label Nutraceuticals’ Vaskovardzic.

“Raspberry ketone has gained a tremendous following from consumers, as some health care practitioners have named it a ‘potent fat burner.’ Retailers of raspberry ketone products have rushed to keep up with the heavy flow of orders for this product.Private label and custom formulation orders of green coffee bean extract and raspberry ketone have dramatically surged within the past two months.”

Private Label Nutraceuticals is a full-service provider of nutraceutical product development, manufacturing, distribution and marketing. According to Vaskovardzic, the company offers its clients the ability to create a custom labeled product with low minimum orders, which helps its clients develop a profitable brand with less upfront investment. Private Label Nutraceuticals also offers complete marketing strategy support for its clients.

Manufacturers offering customization is key in creating a private label line with an independent retailer. “We have the ability to take a product concept, which is sometimes just desired label claims, and create a finished product. If a client is looking to Innovate off an existing product, including NBEs (national brand equivalent), we have the ability to modify its dosage form or process it in a unique way to create a differentiated product,” explained Advani. “For example, we could take a capsule and turn it into a chewable tablet, or reformulate it into a delayed release product.”

Safety and Support 

In addition to retailers demanding a quality private label product line that is proven safe, consumers demand results from the private label products they purchase. Therefore, it is imperative that manufactures supply information about what certifications they have, which standards they comply with and if they do third-party testing to their retailer partners.

“On safety, working with a vendor that maintains extensive third-party quality certifications is critical. If they are not transparent then something is likely being hidden and it is [a retailer’s] responsibility as a marketer to know,” said RPI’s Israel. “Effectiveness is a loaded term in the natural products industry. I think that accuracy and quality is far more important than efficacy, as safety can be compromised—just look at how many very effective weight-loss, body-building and male sexual function products were ‘effective’ because they were adulterated and contained drugs or other banned substances.”

RPI offers a full range of services in contract manufacturing, store brand and private label for solid dose nutritional products. According to Israel, the company leads the country in soft gel capacity and has significant abilities in tablets, capsules and packaging.No other company can rival its capacity and RPI is the most extensively third-party certified manufacturer in the industry, according to Israel.

“RPI is certified by NPA, NSF, STR, USP, and has a drug manufacturing license and is a registered drug manufacturing facility,” he added. “With more than 50 full-time staff in QA and QC, and more than $3 million invested in in-house laboratory infrastructure and instrumentation, we are committed to quality.”

While private label seems to be flourishing, success does not happen overnight. It takes some time for customers to come around to trust and become loyal to the brand. Many retailers rely on the knowledge and support of their manufacturers to guide them through the process.

“Private label manufacturers should be more than just a producer of goods—it is important to have knowledgeable support that can help with every step of product development, from conception to manufacturing, from marketing to distribution,” explained Vaskovardzic. “A reliable manufacturer will be able to help you determine a product that will work in your market, as well as assist in logo/label/package design, a comprehensive marketing strategy, as well as fulfillment and logistics.”

Packaging 

While safety and effectiveness of the product are most important, packaging should not be forgotten. The product packaging will catch a shopper’s attention and a label that looks amateur and homemade may give them the wrong impression.According to Israel, retailers and manufacturers should work on the look of the label and package to make sure it creates the message that they want to send. “Packaging serves two purposes, the first is to protect the product, the second is to make it Beautiful and attractive to consumers,” he said. “Private brands have never had less of a disadvantage in packaging then presently as digital graphics and presses have allowed the private brand to create a fantastic-looking product package.” 

“Retailers seek packaging that fits their business model and what they’re trying to present to their customers.It might be a medicinal or pharmaceutical- type label, it may be something colorful that implies how natural the product is,” added Sokoloski.“For the most part they’re looking for color and design that presents their business in the best possible way.Usually a quality label is what’s needed to get the job done, though some retailers go the extra step with unique packaging. In most cases this is only for the very largest retailers since there are minimum order levels that have to be achieved to make that work.”

And as more consumers see the benefits of switching to their local independent store’s private label line, more independent retailers will consider creating one. “Private labeling is gaining more momentum as buyers move away from offering less competitive, lower margined national brands,” concluded Vaskovardzic. “As retailers understand the importance of developing a strong fit between product and brand, and look for more financially efficient ways to bring supplemental products to their consumers, private labeling will continue to a popular option to building a strong presence in the marketplace.”

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