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What is a private label product?

A private label product is manufactured by a contract or third-party manufacturer and sold under a retailer’s brand name. The retailer specifies everything about the product – what goes in it, how it’s packaged, what the label looks like, etc.

Reasons to Buy Private Label Brands

According to TIME, most consumers “have gotten clued in to the fact that many generic store-brand foods are actually made by the same companies that produce the higher-priced, name-brand stuff,” which “come out of the same factories with the same ingredients…with the only difference being the label.” The author goes on to say that the result of switching from a name brand to a private label is “an easy way to save 30% or so, without sacrificing quality.”

Lower cost and similar quality to name brands, are two reasons to make the switch to private label branded products.

Private label brands lower costs by outsourcing production and logistics to large national brand manufacturers with excess capacity, or to specialty manufacturers who focus on a limited variety of products, eliminating the need for large capital investment. In addition, marketing costs for a private brands are incremental or nonexistent. This presents a significant cost savings to the retailer, a portion of which is passed along to the consumer in the form of lower prices.

While quality can be defined in many ways, most consumers feel there is little difference in the quality of a private label versus a national brand product. Consumer Reports has conducted blind taste tests between store brand and national brand products to poll consumers about the quality of store brands. They reported that more than 80% of those polled (about 24,000) indicated the private label brand to be the same or better than the national brand. Consumers are always looking for ways to save money, even on necessities. Using private label brands is a good place to start!

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