Building a Private Label Brand

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Building a Private Label Brand

By Anna Wolfe - 12/02/2012
Having a private label brand, especially one with the owners smiling faces are on the label, helps to build relationships with customers. "We love that our family in their cupboard. It is a way for us to extend our family in to theirs," says Jennifer Daurora of McGinnis Sisters.

Large retail chains, with their buying power, ample storage and high-volume sales, have long been known for their private label brands – everything from staples such as milk and butter to value-priced frozen vegetables to ethnic-inspired marinades to organic pasta sauces and non-food items.

These days, retailers of all sizes, from the one-shop operator on up, are creating thriving house brands starring specialty food and other gourmet products.

Many gourmet retailers don't have the shelf space (and cash flow) to buy pallets or containers of traditional private label products. But many gourmet retailers find willing private label partners through tapping specialty food producers and local purveyors.

McGinnis Sisters' private label coffee, which is roasted by a local company, is a best seller.

For McGinnis Sisters Special Food Stores in Pittsburgh, private label "has always been a part of what we've been doing," says Jennifer Daurora, business development director. "When we find something we love, we ask, 'Can you do it for us?'"

Known for its perishables and specialty items, McGinnis Sisters opened its doors in 1946 and over the years has expanded to three specialty food stores. Starting with jams and barbecue sauces, the family owned retailer has expanded into more product categories such as pickles, beets and baking mixes.

To drive sales, McGinnis Sisters' sticks with a tried-and-true technique. "We do a lot of sampling. That's our No.1 promo," says Daurora. Products are sampled in aisles. McGinnis Sisters also offers serving suggestions, and the product are always well merchandised. To drive awareness, the store's brand mentioned in the store's newsletter and used in gift baskets. In cooking classes, the products are often used.

The family-owned retailer's private label selection is "growing more and more," says Daurora. "As private label variety has increased and quality has gotten a lot better, we've gotten into more product categories."

Putting the Special in Specialty
Private label is a recent addition to Cardullo's, a third-generation, family operated specialty food store. When Donez Cardullo-Tavilla and her siblings took over the Cambridge, Mass.-based institution after their father's death in 2009, Cardullo-Tavilla, who serves as president and CEO, expanded the store's brand.

Increasing competition from Amazon, Whole Foods Markets, mainstream supermarkets and discounters is one reason for the growing number of Cardullo's-branded products.

Cardullo-Tavilla remembers a time when the store, which opened its doors in 1950, was the destination for specialty food. The Cardullo's brand builds up the retailer's selection of exclusive products.

"No one can say, 'I saw Cardullo's Rainbow Grinders at Christmas Tree Shops,'" explains Cardullo-Tavilla. "With private label, there's no comparison. You're not going to see Cardullo's Ginger Teriyaki Sauce anywhere else."

Nonetheless, Cardullo's branded products account for "a small percentage" of the retailer's SKUs and includes product categories such as bread dippers, sodas, preserves and sauces.

"It is one of those things that everyone is doing," Cardullo-Tavilla says about private label.

Local Connections
Whenever possible, the McGinnis Sisters prefer to source products from area producers. "If we can, we love to work with local vendors. We've been doing local since the 1940s, but we won't exclude a great product from elsewhere," explains Daurora.

Cardullo's private label includes Italian-made pasta and coffee roasted in Maine.

Last year, McGinnis Sisters brewed up a new relationship with a local coffee roaster which has been advantageous for both the roaster and the retailer. "Our coffee has become one of our best sellers in our private label line," notes Daurora. "We introduced just over a year ago and our customers love it. We work with a local roaster and have been pleased with the sales of both the bulk and bagged bean coffees.

Through a partnership with Coffee By Design, a Portland, Maine-based roaster, Cardullo's, too, added an exclusive coffee blend to its line.

"There's a big drive to buy local," notes Cardullo-Tavilla. It is sort of forces to buy local. Cardullo's was famous for gourmet food from around the world for the first 55 years. And now, from around the corner."

Working with local and regional vendors is a growing part of Cardullo's business. In fall and winter, Cardullo's carries some of the farmers markets vendors' products in store. One local company makes an exclusive jam for the shop.

"My first order was 24 jars, not a pallet. To her, that was a huge order," says Cardullo-Tavilla.

Because of the products local or specialty roots, customers are willing to spend a little more on the products, observes Cardullo-Tavilla.

Overall, there's a lot of work that goes into creating a private label brand, Cardullo-Tavilla explains, but the challenges are worth it. "There's plenty of trial and error. There's been times when we get a product it is not how it tasted at the food show. There have been times when we've had to cut ties because the products are not up to our standards," she says.

"After all, we're putting our name on it."

Supply Side
Select specialty food suppliers cater to smaller runs
A high-quality private label line can build customer loyalty, and opens the opportunity for cross-selling other private label products.

Terrapin Ridge's unique flavor combinations, such as this best-selling Cilantro Ranch Dressing, are available to private label customers.

"Gourmet retailers have to do it. Consumers are looking for consistency. (And having your own brand) is what really separates your store from everyone else on the street," says Andy LaPointe, director of marketing for the Elk Rapids, Mich.-based consultancy, Start a Food Business.

He also owns award-winning specialty food brand Traverse Bay Farms. The line, which includes jams, jellies, dried cherries, steak sauces and salsas, is distributed in 42 states.

"Everything I teach and consult with independents, we've done it. We have experience of bringing product to market," says LaPointe.

LaPointe advises gourmet retailers should to place their brand to go head-to-head with their best-selling specialty products.

"Folks are buying consistency of experience. The brand is only a representation. It doesn't matter what the brand is," says LaPointe. "It is where the magic happens that matters."

There are small manufacturers out there that have small minimums and are willing to work with small retailers.

Terrapin Ridge, based in Clearwater, Fla., offers all of its specialty food products for private label.

Since buying the specialty food manufacturer in 2010, Mary O'Donnell, co-owner and president, has doubled the number of SKUs and updated the packaging. The company's philosophy is "to offer different items that larger gourmet manufacturers don't have," O'Donnell explains. Fresh and inspired flavors include Cilantro Lime Ranch Dressing, Coconut Chocolate Sauce and Peach Honey Mustard.

Whether buyers are looking for private label or Terrapin Ridge–branded products, O'Donnell advises them not drop anything that's currently on the shelf. Instead, she encourages retailers to "bring in something fresh and new for their customers," explains O'Donnell, who has 25 years in the consumer packaged goods industry. "So there's no overlap."

When it comes to private label, O'Donnell has noticed that bigger retailers and chains are getting "more sophisticated" with their offerings. At the other end of the spectrum, she's fielded an increasing number of requests from entrepreneurs looking to sell their own line of products at farmers market.

Most of Terrapin Ridge's private label customers use other manufacturers as well. "For the most part, they've all got other private label items, and they're adding to what they have."

In general, amongst her private label customers, O'Donnell says the retailers want to differentiate themselves by emphasizing their brand. In touristy areas, some retailers sell more if they have their name on it, she observes.

Braswells has a 10-case minimum on its private label products.

Like Terrapin Ridge, Savannah, Ga.-based Braswell Foods is always adding SKUs. At press time, the sofi-award winning specialty food company offers its private label customers 458 SKUs across 26 product categories such as pickles and preserves. "We have a pretty vast array," says Chris McMahon, marketing director. "We're always adding stuff."

Minimum order is 10 cases and Braswells offers packaging in a variety of shapes and sizes. "The accounts we do range from major grocery stores to neighborhood fruit market and catching everybody in between."

In the specialty segment, the trend for private label products continues to be all natural. "Looking at the ingredients most of our products are simple: sugar, fruit pectin, citric acid," notes McMahon. And in response to customer requests "we're moving all our formulas over to pure cane sugar."

Davidson's Tea offers many custom solutions for retailers of all sizes.

For about four years the company has offered a selection of certified organic products. "There's not a big boom for organic, but we're glad we have it," says McMahon.

Superfruits are popular in specialty private label products, agree McMahon and LaPointe.

With shrinking household sizes, smaller sizes that contain one or two servings are increasingly popular amongst gourmet private label products. "It used to be 16 ounces. It's going down to 12- and 8-ounce jars of jams and salsas and sauces. No matter how much they like it, they're not eating it with every meal of the day," notes LaPointe. "People are more concerned about wasting food than ever before."

McMahon says amongst his retail customers, he's noticed more and more private label products –including more nonfood items. Companies can create private label silicone spatulas, gift baskets, wine accessories and even electric grills.

"Outside (the specialty food) industry, it is getting easier to do private label," observes McMahon. "More and more, you can get anything with your name on it."

A Better Appearance
"A great trend is that labels are getting better," notes McMahon. "Marketing is becoming more of a focus. Customers are stepping it up and getting more visual."

With specialty items, consumers "buy with their eyes. An attractive package might be how you get them first time," says McMahon. "The label definitely grabs them and then hopefully the product." Braswells carries dozens of stock labels and can do semi-custom labels where the retailer's labels are created and then overprinted on an as-needed basis with the products nutrition information.

Like Braswells, Davidson's Tea is another specialty purveyor that accommodates private label programs of all sizes. From a single store operator to a large grocery chains, the Reno, Nev.-based company offers customized private label solutions. Davidson's has created a "vertically integrated supply chain," explains Kunall Patel, sales and strategy director for Davidson's Tea. It works directly with tea plantations, importing a variety of teas and herbs into the U.S. and blends and packages them at its certified organic and kosher facility.

"We blend and package and ship nationwide. We do it for our own brand and for our private label customers," explains Patel.

From a single-store operator to a large grocery chain, the tea company offers numerous customizable solutions: bulk and bagged loose-leaf tea, unwrapped tea bags, tea bags packaged in a semi-custom box to tea bags printed with the private label customer's name, and packaged in custom packaging.

"Every small scale private label program is going to be different," Patel says. "We have to customize to their needs. What we offer for single store account depends on what package looking at. Tea bags, brewed bag iced teas, loose leaf bulk teas–all three have different requirements."

Thinking outside the box, literally, can make a private label tea program accessible to the smallest of retailers. Bulk bins and glass jars for bulk teas and standup pouches of loose leaf tea for the shelf can be easily branded with the retailer's private label.

For retailers of all sizes, with some creative thinking and finding the right vendor, private label can be a lucrative option.