Private Label Beverages

Consumers have an ever-growing array of choices in the beverage aisle, ranging from name brands like Coke and Pepsi, to private label drinks such as Safeway Select. A 'private label' beverage brand, are usually owned by producers who wish to participate in a robust category with their own line of beverages. Historically, private label brands or 'me-too' value-oriented brands offer lower quality but better prices than name brands. However, this perception has changed over the years, as private label offerings have significantly improved in quality and consumer satisfaction. Private label has a presence in virtually every beverage category in the U.S. Store brands are private label products. They are in the largest and the smallest of beverage categories. Carbonated soft drinks, milk, bottled water and juices are prime categories for private label beverages. Although carbonated soft drinks remain popular, as the market has evolved and consumer tastes have shifted, private label has moved into the non-carbonated category which includes bottled water and fruit beverages, as chronicled in the 'Private Label Beverages and Contract Packing in the U.S.' report, conducted by Beverage Marketing Corp. Branded products like Coke, Pepsi and Dr Pepper still dominate the industry, but the sheer size of the carbonated soft drink category has created an opportunity for private label brands. For the most part, the leading companies have done an effective job at blunting further inroads of private label through strong marketing of their products, leveraging their vast distribution network, and by pricing their products so that they are more in line with private label pricing schemes. The milk category boasts the largest and most developed private label activity. In 2007, private label account for more than 62% of U.S. fluid milk sales. Milk is the only category with more than half of its sales in private label. The greatest amount of private label milk sales are in non-fat, low fat and whole milk, while a smaller percentage of sales come from flavored milks and milkshakes. Consumers may not be as brand loyal with bottled water as with other categories. However, a large number of branded waters are experiencing success in the market, but this varies by water type. Waters that often serve as substitutes for tap water, such as so-called retail bulk water in large packages, tend to have the greatest amount of private label. Over 42% of retail bulk water sales were private label a few years ago. Private label juice well represented within the U.S� This may provide an opportunity for private label because consumers may be less brand-loyal. In a recent sample, over 14% of shelf-stable fruit beverage sales in supermarkets were from private label. Once again, the category segment lacks significant differentiation that offers solid returns for private label. The branded leaders in this category have managed to withstand private label through strong branding and marketing, often revolving around package design and a promotional focus on the purity of their product. It is also notable that similar to milk, branded products have greater strength in the flavored segment of their categories. A private label brand can help retailers take advantage of a robust industry segment with a high quality product that suits customer needs.