What is private label?

For private label (or trade brand), it refers to those products sold under the brand of the distributor.
A clear and immediate example of this are all those products from brands like Carrefour, Coop, Conad, Eurospin, etc...

The private label market relies on the GDO (Large Organized Distribution) and is generally free from the entire marketing sector that, instead, concerns the more famous and prestigious brands.

Therefore, not having to bear a whole range of costs, the profit margin for the distributor (who acts as an intermediary between producer and consumer) will be greater.

The reduced cost of these products should not lead one to think about equally reduced quality. Far from it.

This is mainly due to two reasons:

• The distributor who takes on the responsibility of putting their logo on a certain product demands that it be optimal, so that their name remains synonymous with quality;
• Often, many of the products sold in this context come from the same manufacturers who produce for big brands. An example? The "Delizie del Sole" rice found at Eurospin outlets is the same rice you get when buying Scotti Rice.

For several years now, many consumers have been choosing private label products, convinced that they find quality as well as affordability in them.

The private label sector is therefore becoming an increasingly established reality, and one that fears competition from big brands less and less.

This is especially true considering that many consumers, once they have developed strong loyalty, are unlikely to abandon these products, preferring them for both price and quality.

Advantages and Disadvantages of Private Label

Among the advantages offered by private label we find:

• Control over production: the distributor has a higher margin of control over the production process;
• Cost control: Being able to closely monitor all production steps, the distributor also has the ability to determine the real value of the product, and consequently a competitive price (especially for themselves) and appropriate.

However, there is a disadvantage:

• Strong dependence: The sourcing of products that are sold under the distributor's brand depends entirely on the manufacturer. If the latter for any reason were to stop supplying, those products would become unobtainable.