Before offering a private label line, retailers need to carefully consider product selection and then choose a business partner who can deliver the goods. “When a retailer chooses to develop a private label dietary supplement, they directly control all aspects of the product from the formulation, manufacturing and testing of the product to the marketing and roll-out of this new product,” said Scott Stobaugh, sales manager, contract manufacturing/finished goods, Nutraceutix Inc. “This direct control ensures their customers that they are receiving the highest quality product possible.”
Interestingly, consumers’ positive perception of the quality of private label products is rising even as federal regulations are tightening the production requirements across many categories, not least of which are dietary supplements. In particular, the implementation of mandatory GMP (good manufacturing practice) compliance for producers of dietary supplements has impacted the number of companies producing such products.
“We’ve found many of the smaller manufacturers are either going out of business or changing their structure,” said Peter Sokoloski, NOW Foods private label manager. “This has caused some alienation of the retailers, and it forces the stores to shop around for larger manufacturers that can fulfill their needs.”
Melissa Barns, national sales manager, Reliance Private Label Supplements, echoed the observation, adding, “There are fewer private label manufacturers for retail stores, although still many contract manufacturers for large-run private label programs than there were 10 years ago. This was partially due to the increased regulation of all types prior to GMPs. The fallout of the GMPs will happen over time, as some of the less prepared companies are forced to adjust. The major difference with GMPs is it diminishes the ability, or increases the cost, of making small manufacturing and packaging runs due to some increased documentation. This will diminish in a few instances the ability to accommodate special size requests or carry products that don’t sell well.”
The cost equation is something private label companies have to address. “There are more regulations and guidelines, which is great for the industry, but does add cost to overall production,” said Jason Provenzano, executive vice president of sales and marketing, Nutricap Labs. “We make sure our clients feel the effects as little as possible.”