As more targeted ingredients backed by quality research become available, and more innovative formulations make a market impact, the fields of potential become more fertile. As brand marketers ponder how to gain traction in new categories, the question arises: contract or private label?

Going the contract manufacturing route makes the most sense when a brand marketer is keen to physically compose a proprietary formula. Meanwhile, private label manufacturing experts can provide formulas already diligently researched—and sourced— to fulfill a company’s brand identity in any category or market desired.

Pretty much anything may be private labeled, as long as the plant has the expertise and capability. For example, the supermarket chain Stop & Shop has a huge cache of private label foods and beverages called Nature’s Promise—more than 650 products from soymilk to veggie chips to organic meats to salad mixes. This is in addition to nearly every good in the aisles, for its other private label brands (constituting more than 4,000 items). This particular entity, a supermarket, is invested in the power of private label, and this example serves to illustrate that, as a brand marketer, one can compete winningly in the naturals industry combining health foods with supplements and related healthy lifestyle products.

As Thomas T. Tierney, president and CEO of California-based Vitatech Nutritional Science, Inc., expressed, “Everyone sells something”—at least this is the statement attributed to William Shakespeare. Private label carries a promise of enterprise personality, credibility and passion. More important, it carries trust and commitment at a very personal level. A private label manufacturer understands this, as well as the uniqueness of each customer served.

Issues & Challenges 

It’s not about simply perusing a catalog of ready-made formulas, picking out what you want, emailing your art for a label, ordering and waiting for shipment. Working with a private labeler in this case is as detail-oriented as working With a contract manufacturer, and many of the same rules and attention to nuances apply. Today’s private label manufacturing specialists are sophisticated and meticulous in ensuring tight regulatory compliance. And as such, brand marketers need to be aware of what current potential issues exist.

According to Tierney, private label brand-building, requires the brand marketer to have investment capital to establish identity because slowness to market may mean loss of first-mover advantage. Also, legal issues may add complexity, as IP (intellectual property) protection is sometimes taken for granted. Safety stocks require space and freshness tracking. And a continuous stream of consumer contact via marketing strategies is necessary to dull the noise from national brand competitors. He cautioned, “FDA’s evolving regulations can get lost in your quest to achieve other priorities such as market share and quick money. A written business plan and Energizer Bunny enthusiasm can mitigate much of this,” he said. “Having a big sister financial backer in place (a chain store or franchise) is sometimes desirable.”

In the eyes of the FDA, according to Joe Veilleux, CEO of Pennsylvaniabased Euromed USA, the brand marketer is ultimately responsible for the product being produced. Compliance with the FDA GMP dietary supplement regulations is by far the most important factor for brand marketers who choose to use a private label manufacturer to produce their products. As an example, Veilleux related how earlier this year the FDA actually shut down the manufacturing operation of a nutritional supplement private label manufacturer (PLM) because it did not rectify GMP shortcomings the FDA found during a facility inspection. “This in turn affected all the brand marketers who were using this PLM. Not only did the brand marketer quickly have to find a new PLM, but the brand marketer had to, in some cases, change/adjust its product labels. This resulted in significant extra costs of lost time and money for the brand marketers involved.” 

Because Euromed is focused on herbs and homeopathics, the company recognizes specific challenges in this Realm. Veilleux said that the temptation for private label competitors is to cut corners and lower costs by buying herbal extracts from lesser known and very cheap third-world suppliers who may or may not be adhering to the quality controls (QC) required to be in compliance with U.S. FDA-mandated GMP rules. “Since we invest heavily in the QC, technology and PhD-level personnel required to identify and deliver pharmaceutical-grade extracts for human health maintenance, our products are priced higher than those of competitors who use the inferior materials. However, our products offer outstanding value because they provide the intended effect for consumers and they meet all the current FDA requirements.” 

Euromed has achieved NSF, GMP and ISO certifications which are imperative when dealing with plant-based materials—these unbiased third-party certifications are the brand marketer’s assurance that the private labeler is using ingredients that exceed all current FDA regulatory requirements so that the marketer will not have to worry about FDA-mandated product recalls, and the like, due to ingredient QC shortcomings. “In the botanical industry, a current issue is use of the wrong plant species either unintentionally (ignorance) or intentionally (adulteration),” Veilleux explained. “For example, the American Botanical Council (ABC) recently released a detailed article on the use of improper species of black cohosh, which can cause serious side effects for the consumer.” 

According to Kenny Flores, vice president of sales with New Jerseybased Reliance Private Label, a continuing challenge for most private label manufacturers is keeping their business and products current, fresh, relevant and in line with the national brands that retailers are also selling. Reliance uses more than 50 patented and trademarked ingredients and innovates products to keep pace with the national brands. Whole Food Multi Vitamins, Creamy delicious Omega Delight, (omega-3 fish oil), Green Coffee Bean Extract and the newly introduced Clean Fit Sports Nutrition line of products “are just a few examples of Reliance’s commitment to keeping brand marketers’ products fresh and relevant—two characteristics that are very important for private brand marketers,” he said. “If I am a retailer delving into my own private brand or a brand marketer, I want my products to be relevant, innovative and meet or exceed the quality of national brands.”

Continual Investments

As manufacturers with expansive plants, quality private label companies make continued large investments in order to deliver products that can compete aggressively in the market. Priorities often include safety, regulatory compliance and ecologically sustainable practices.

In June of last year, Vitatech announced reaffirmation of its FDA pharmaceutical licensing and a more than $2 million investment. Each year for the last three years (including 2013) , Vitatech invested in enhancement of its laboratory and manufacturing facilities. “It’s in the name of consumer safety and in support of customer growth. In addition to diversifying equipment vendors, we also favor transformational technology designed for pharmaceutical validation,” Tierney explained, offering the example that Vitatech has created an entirely new gusset bag filing capability that is volume- serviced by custom overhead feed systems. Next on the drawing board, Tierney said, are complete fulfillment and blister pack capabilities.

Further, Vitatech’s recent investment in state-of-the-art tablet and capsule fillers enables the company to press an additional 250,000 tablets per hour, bringing capacity to 3.8 billion tablets per year. With the installation of segregated overhead feed systems and new technology to automatically reject nonconforming tablets and capsules, Vitatech added enhanced speed and quality assurance to its manufacturing. The company has expanded encapsulation production with capacity of up to 1.2 billion capsules annually. Recent investments in quality control and EDI (electric data interchange) solutions provide speed, improved data accuracy and streamlined interactions with trading partners.

Within the past 18 months, Reliance Private Label has also made significant capital investment in its facilities and capabilities, according to Flores. The company is now fully integrated with manufacturing, packaging, distribution and corporate offices all under one roof. The new manufacturing facility features brand-new powder fill lines, tableting and encapsulation equipment. Products are manufactured in new Class 10,000 Clean Rooms, which, Flores explained, “exceed industry standards for air quality and moisture Control.” Further, Reliance maintains both temperature and humidity at levels that maximize stability and compositional integrity of all products. Reliance is also GMP certified and NSF Certified for Sport through NSF.

Euromed’s investments, said Veilleux, have helped the private label manufacturer of botanicals and homeopathics “to stay ahead of” the FDA-mandated regulatory requirements. Investments have also allowed it to offer products manufactured according to industryleading sustainable practices. “We have built an entire waste water treatment plant, and a water and solvent recapture and recycling plant, within our factory,” he said. “Therefore, we have zero toxic emissions into the local water system and we have saved hundreds of thousands of dollars in recapturing all the water and the pharmaceutical- grade ethanol we use as our primary extraction solvents.” 

Conclusion 

Overall, developing your own brand makes outstanding sense, observed Flores. The dietary supplement industry has evolved in a huge way and continues to grow energetically. Competition is fierce. Major national brands are now sold in supermarkets, pharmacies, vitamin chains, large natural markets and on the internet at unbelievably deep discounts. “According to market data, private brands are growing up to six times faster than national brands. Private brands are usually aggressively priced—retailers and brand marketers are able to price their private label product below the national brands and still maintain solid margins.”

Take a tour through your local stores that sell supplements, and call private label manufacturers for references. Because as consumers have assuredly become more confident in private label products and realize that the quality rivals that of national brands, there is room for successful niche launches.

Today’s private label manufacturing specialists are sophisticated and meticulous in ensuring tight regulatory compliance. And as such, brand marketers need to be aware of what current potential issues exist.

“According to market data, private brands are growing up to six times faster than national brands.” 

— Kenny Flores, vice president of sales Reliance Private Label