Private label coffee means a coffee roasting company selling its coffee under the name of its customer’s branded label. It allows the customers to produce their own brand and the manufacturer company can concentrate on making good quality coffee without taking the pains of building a brand name and aggressive marketing.
The benefits of private label coffee are many but there are also certain disadvantages which cannot be overlooked.
Let’s have a look at the advantages first:
• The retailers have a number of incentives to promote private label products and can have the packaging and the labels custom made so as to meet their specifications. It also gives them the power to control their inventory in stock.
• Private Labelling allows the operators control over many factors such as sales, marketing and even pricing. Not only can they personalize the coffee by lending it some characteristics which are unique to their brand, they can do it in a lot less time than they would have had they developed the coffee from scratch.
• For the manufacturing company too, the label works wonders when it comes to differentiating the company and its standards. This is because none of their competitors carry the same label and no other brand is associated with the quality of their coffee.
• Going for a private label helps the manufacturing company to maximize its sales as the brand operator is sure to have a much wider coverage than the manufacturer. So, it saves costs associated with distribution and marketing.
• It is a well known fact that coffee customers develop their own store preference. Branding plays a huge role in ensuring the loyalty of customers.
• Fundraising is another area where the private label can do wonders. Conventional fundraiser strategies don’t even come close to the customer base that can be created with the help of a charitable event-cum-fundraiser. And charitable events need a reliable and dependable name to succeed, which is provided by the brand.
• The brand is supposed to take care of the needs of the consumers. So, market research is another area where the brand is sure to have done considerable work. Thus, the coffee manufacturer can be sure of its sales as the brand operator knows the customer tastes and has spent time, money and effort experimenting with them.
But as I mentioned above, there are some disadvantages of private label coffee too – both for the retailer as well as the manufacturer:
• Cost savings may not be as much at times when the volume of the product bought from the manufacturer is less than a certain minimum level. And the tricky part is that there is no fixed rule as to how much volume guarantees sufficient profit margins.
• If the packaging requires too complicated a design, then the profit margins have been seen to be less – for both the operator as well as the retailer.
Hence, while the merits of private label coffee, generally, outweigh the demerits, it is advisable to undertake sufficient amount of market research before going through with the project.