Private Labels Can Boost Profits
Ontario Orchards began selling private label items about 20 years ago. “What we look for are items that will complement our business,” said Kathy Ouellette, manager of Ontario Orchards. “They have to have a nice package and label, excellent quality in taste, be available at all times, and be affordable and competitive, and also, something that is different than the other products.” Photo courtesy of Ontario Orchards.

Private Labels Can Boost Profits

More businesses finding success in selling products under their own private labels

By Deborah Jeanne Sergeant

Nelson Farms operated the Taste New York booth at the New York State Fair this past summer. The farm operates a food processing incubator that enables other businesses to develop their own private label goods to sell as their own. Photo by Deborah Jeanne Sergeant
Nelson Farms operated the Taste New York booth at the New York State Fair this past summer. The farm operates a food processing incubator that enables other businesses to develop their own private label goods to sell as their own. Photo by Deborah Jeanne Sergeant

Whether it’s Wal-Mart’s Great Value line of goods or the jelly made and sold by a local farm, a private label brand represents an alternative to a name-brand product.

Large store private labels — like Wal-Mart’s — depend upon value for its sales, since “generics” or “store brands” cost much less than brand names or local private label items.

Decades ago, private label items were often considered lower in quality; however, since the 2008 Great Recession, they’ve grown in popularity. According to CB Insights, “US private-label food sales grew three times faster than those of national manufacturers’ products” in 2017.

“Premium” generics that use upscale ingredients or recipes have also helped stores sell more private label goods. Many consumers embrace products with local private label as they would a premium generic, such as pasta sauce sold by a local restaurant, or jelly sold by a farm, without as much regard to price. Selling these products can provide the business with many benefits.

Making private label goods can help a farm curb waste. Perishable produce can be difficult to sell to processors. Factors such as a bumper crop, transportation issues, timing of harvest, too many other producers nearby or little local need for the produce can cause farms to throw away good food.

“Especially in this area, it provides a shelf-stable, value-added product even though the growing season is short,” said Samantha Clark-Collins, associate director of retail operations for Nelson Farms in Cazenovia.

Nelson Farms operates a food processing incubator that enables other businesses to develop their own private label goods to sell as their own.

Jars and jars of salsa, spaghetti sauce, Bolognese, and barbecue sauce long after tomato season is over, can keep a farm market’s shelves stocked or provide another item to sell online or at a farmers market that can attract more customers to the booth.

Private label items can also help farms sell more of their main product. For example, a farm selling maple syrup may sell more if they provide private label pancake mix to accompany the syrup in a gift basket.

Restaurants represent another common business producing private label items, such as a condiment or sauce served at the restaurant.

“They get told, ‘You should bottle it,’” Clark-Collins said. “Then they come to us and we’ll help them do it.”

While it may seem counterproductive to enable diners to make it at home “just like the restaurant,” private label items from restaurants can provide a means of marketing that draws patrons back while making money on selling the product itself.

Selling a private label product to the public isn’t as easy as cooking up a few batches in the kitchen and bottling them. Clark-Collins said that the recipes must be approved through Cornell Food Venture, the legally approved body to do so in New York. The recipes have to be shown safe in how they’re prepared with step-by-step directions and measurements in weight, preservation, scaling and labeling, among other elements. Maple and honey have a lot of exemptions from these regulations because nothing else is added and they contain nothing that could cause sickness.

“We have a full-time product development person who can help them know what to do from A to Z,” Clark-Collins said.

The process to gain approval for a recipe can take months. That is why Nelson Farms has numerous pre-approved recipes on file. If a farm’s bumper crop of red raspberries would otherwise spoil, Nelson Farms can pull out recipes that take red raspberries and cook up whatever the farm would like in the batch size they request.

“We own the rights to the product recipe and they can put their own label and branding on it,” Clark-Collins said. “Someone couldn’t bring their grandma’s chili sauce and we’d pack it.”

She added that most customers have no idea that the farm itself didn’t develop the recipe or package it; however, using the farm’s own produce adds a layer of authenticity. Buyers also feel good about purchasing local. In fact, many are willing to pay more for a private label item and perceive that their small-batch and locally sourced ingredients offer better quality than a national brand.

There’s also the factor of scarcity, which can drive consumers to purchase items they think are in limited supply, such as those made and sold locally.

“A lot of times the name and story sell the product,” Clark-Collins said. “People look for the brand.”

Packaging and labeling that includes how the family developed the product often entice customers.

Nelson Farms, a partner of SUNY Morrisville, focuses on items sold in jars, but does produce dry items like spice rubs and mixes. The business has limitations on what it can do with dairy items and cannot produce items containing meat.

A local example of private label success is Ontario Orchards. In the Oswego-based store, shoppers can find Ontario Orchards branded mustard, jelly, jam and more — along with private label items from other area farms.

“What we look for are items that will complement our business,” said Kathy Ouellette, manager of Ontario Orchards. “They have to have a nice package and label, excellent quality in taste, be available at all times, and be affordable and competitive, and also, something that is different than the other products.”

Ontario Orchards began selling private label items about 20 years ago.

“Our best tips for other farms, restaurants and entities is that you need to like the product that you want to use,” Ouellette said. “Make sure it is a product that is 100% to your satisfaction.”