Gone are the days when you could only dream of starting your own beverage business because of the high initial investment. Now, you can start it without worrying about renting a factory, buying equipment, or hiring experts.
Yes, you read it right. It is possible.
Selling private-label beverages frees you from the need to set up a whole factory. You just need to find a good manufacturer, discuss your specifications, packaging, and labeling details with them, and they will do the rest for you.
If you are new to private labeling or thinking of jumping into it, this article is for you. In this article, I’ll go over what private label beverages are, the market growth, and the benefits of private label beverages business.
Table of Contents
What Are Private Label Beverages?
Private labeling is a model where you buy products from a third-party manufacturer and sell them under your brand’s name. Private label beverages mean that the beverages are produced by a private-label manufacturer tailored to the buyer’s (retailer’s) ingredients, packaging, and labeling requirements.
It is a great option for businesses to stand out from the competition and create robust brand equity. One of the benefits of private label beverages is that they help companies enhance their sales and profitability by enhancing margins and lowering costs.
Growth Of The Private Label Beverage Market:
The diverse benefits of private label beverages enable their market to grow quickly. Customers are always on the lookout for new beverages with exciting tastes and packaging, and so are the companies. A private label manufacturer provides this exclusivity to make the beverages stand out from the crowd.
Due to the benefits, the market for private label goods is constantly growing, and it has increased from 17.7% to approx. 19% in the US from 2019 to 2023.
In 2023, the private label food and beverage market had reached 153 billion US dollars in sales.
Selling private label beverages is not only popular because of customized ingredients and labeling, but it also offers a variety of other benefits.
Benefits Of Private Label Beverages:
High-profit margins:
One of the most attractive benefits of private label beverages is that it helps you sell beverages at a higher price than your competitors. This is because when you purchase directly from the manufacturers, you don’t need to worry about the manufacturing or any other labor costs.
Moreover, the manufacturer offers better deals when you buy products in bulk. Hence, you have a higher profit margin because no middlemen are involved.
Customization:
Another benefit of private label beverages is that you can sell your unique drink with customized packaging and labeling. Whenever you approach a private label manufacturer, they provide you with a catalog detailing their recipes and drinks. Moreover, they also provide you with details about the nutritional facts, ingredient list, and packaging details that they will customize according to your requirements.
Some private label manufacturers also provide free label design services. Their design team will design the labels for you, or you can also choose from their pre-made designs.
When these efforts are done with the right expertise, it results in a remarkable product that sets itself apart from the competition.
Lower operational costs:
In a private-label beverage business, you don’t have to spend a lot of money on operations and production because the manufacturer is handling it for you. The operational cost is low, and you can spend that money on your product branding and marketing.
If your product’s branding and marketing are strong, it will get the attention of customers in no time. And if the taste is awesome, you can easily build a loyal customer base.
Less Risk:
Adverse market conditions can badly affect your factory, but when a third-party manufacturer is making the products, you don’t need to worry about any major losses. The risk of loss is less because you don’t have any factories or laborers to worry about.
Variety:
Various private-label manufacturers offer a wide variety of products like water, soda, juice, coffee, tea, energy drinks, and more. This variety allows you to enter any market that excites you and start your beverage brand.
Exclusivity:
One of the amazing benefits of private label beverages is that you can create a unique product with relatively little investment. This uniqueness offers you a competitive advantage over other stores and companies.
This exclusivity is more than just the name of the product. It involves the packaging, logo, slogan, and taste.
Conclusion:
Private label beverages have become quite popular as retailers look for ways to differentiate their beverages from their competitors. It offers various benefits to the seller, including high profit margins, low cost, less risk, a wide variety of products, and exclusivity.
The 2024 Power of Private Brands report from FMA shows that around 55% of consumers have increased their purchases of private-label goods over the past year.
So, if you think you should take this big leap and step into the field of private labeling, go for it. The only thing is to ensure that you choose a reliable manufacturer for it.
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