Trending away from private labels to in-house products

The move away from manufacturing private labels for other companies to producing in-house branded product lines is a growing industry trend. It is also a strategy that is helping protect Canadian manufacturers, which have been ravaged by over 400,000 job losses since 2001, from having to compete solely on price with cheaper off-shore options. But experts warn this strategy can only work if consumers scoop up products for the promises associated with them, rather than just their functional merit.

Five years after this trend began to take hold, the early adopters are reaping great rewards and setting the example of how to help preserve this Canadian industry.

“Smart manufacturers prioritize building brand equity over short-term revenue-generation that stems from the production of merchandise for other companies,” said Glen Eisenberg, president of Precision Advertising in Montreal. He is the marketing specialist behind many manufacturing transition stories including Cartise International, whose line now enjoys a loyal following and sells in 1,800 retail outlets across North America.

“Selling an image on top of a product allows emotion to play a role in the consumer’s purchase behaviour. Manufacturers must recognize that their future business needs to be about selling values like status, self-esteem and novelty rather than just the functional merits alone of cosmetics, food or clothing.”

Manufacturers that want to build beyond private labels have two options: licensing a brand or building an entirely new one. Licensing a brand is often the easier of the two, since it just involves creating the new product and can leverage an established and often well-known, name.

Those that choose to build their own product’s identity must incorporate the support to turn a product into a coveted brand. “It means ensuring a product has a defined identity and speaks to a specific consumer,” Eisenberg said. “This identity can then be supported with trade shows exhibits where buyers can experience the product, advertising that speaks to its developed image and marketing tools that support the item at the store level.”