What Is Private Label Food? A Maker's Guide

Private label food is food made by one company and sold under another company's brand. The store brand on a grocery shelf is the familiar example: the supermarket didn't make those crackers, a manufacturer did, to the store's specification, with the store's name on the box. For a small producer, private label usually arrives as a question from a customer: a grocer, a café, a gift shop or a hotel asks whether you'll make your granola, sauce or chips with their name on it instead of yours. It can be steady volume with no marketing cost, at a lower price per unit and with real risks if you don't plan for them. Below is how it works, how it differs from white label and co-packing, how to price it with real numbers, and what goes on the label.

The short version

• Private label: you make it, a retailer sells it under their brand, often to their specification.
• White label: a ready-made product many brands can buy and put their own label on.
• Co-packing is the reverse: you own the brand, someone else makes it.
• Expect a lower price per unit than your own wholesale, in exchange for volume and no marketing.
• The label names whoever's name is on it, qualified with "Manufactured for" or "Distributed by".
• Get the store's printed packaging, minimums and an exit clause in writing.
• TaroStack runs the private-label product beside your own, same batches, separate labels and lots. More below.

Private label, white label, co-packing

The words blur in practice, and plenty of people say private label for both of the first two. What matters is in the agreement: whether the recipe is exclusive to that retailer, who owns it, and whether you can still sell the same product under your own name. If you're on the other side of this, a brand looking for someone to make your product, that's a co-packer, and how that works is in what is a co-packer.

Why stores do it, and why makers say yes

A store's own label usually sells for less than the branded product beside it and still earns the store a better margin, because nobody is paying for the brand's marketing. Local private label is a selling point too: "our own granola, made down the road".

For a small maker, the appeal is volume that doesn't depend on you selling it. One grocer's standing order can fill your kitchen two days a week, every week, with no stall to staff and no ads to run. The trade-off is that the customer's name is on the bag, so the shoppers who love it are loyal to the store, not to you.

Pricing private label, with numbers

Windward Roots, the made-up taro business I use in these examples, makes 5 oz taro chips for about $2.10 a bag, all in, and sells them under its own label to a distributor at $3.41. A regional grocer asks for the same chips in its own pouches, 2,000 bags a month.

Less per bag, more per month, and the private-label bags need no marketing. The catch is the grocer's printed pouches: the printer's minimum is 10,000 at 33 cents, $3,300 of packaging that can't go on anything else. If the grocer drops the line after two months, 6,000 pouches are worth nothing. So the agreement should say the grocer buys any of its packaging you're holding if it stops ordering. How the own-label price was built is in how to price handmade items for wholesale.

What goes on the label

A packaged food's label has to name the manufacturer, packer or distributor, with its place of business, and if the name on the label isn't the company that made it, the name has to be qualified with words like "Manufactured for" or "Distributed by" (21 CFR 101.5). So a store-brand bag of Windward Roots' chips can carry only the grocer's name, as long as it reads "Distributed by" the grocer. The rest of the label (ingredients, allergens, net weight, nutrition facts) is still required, and the agreement should say who checks it.

Your kitchen is still the facility making the food, so if it has to register with FDA, it registers whether the bag carries your name or the store's. Facilities that manufacture, process, pack or hold food must register unless an exemption applies (21 CFR 1.225 and 1.226). The barcode is usually the store's, since the brand owner assigns it; how those codes work is in GS1 barcodes for small food producers. This is general information, not legal advice.

What to agree before the first run

Where this stops working

Private label means the same product as two items: your chips and the grocer's chips. Same fryer, same batch, different pouch, different barcode, different customer, sometimes a different shelf-life rule. On a spreadsheet they share a row until the day they shouldn't: the grocer's pouches run out before a delivery because nobody counted them separately, a batch packed in the wrong pouch gets shipped, or a recall at the grocer means working out which of the week's fry runs went into their bags and which into yours.

How TaroStack does it

TaroStack treats a private-label product as what it is: the same recipe, packed into a different finished product, for a customer with their own rules.

One batch, two products, clean lots. The fried chips can be a component, and each finished product has its own packing recipe: your pouch and label, or the grocer's. Each packed run gets its own lot code and date, and the batch record notes which lots of taro and oil went in, automatically. So when the grocer asks which fry run is in a bag, the lot on the bag answers it, and a recall report shows which supplier lots went where, which customers got them, and what's still on your shelves.

Their packaging is counted as its own item. The grocer's printed pouches are packaging with their own stock level, reorder point and supplier lead time, so the reorder list shows them in days of cover at the rate you pack them, and planning says when they'll run short. Stock that isn't moving shows how long since it last went out, so you see the leftover pouches early, while there's still time to talk to the grocer.

The customer's rules are in the system. The grocer is a customer with its own sales orders, picking list and delivery notes, and its own shelf-life rule: if it wants 60 days left at delivery, oldest-date-first picking respects that, and planning flags a batch made too early for it before it's made. Margins are reported per product on actual cost, so the private-label line's real 28.1%, or whatever it turns out to be, is a screen rather than a guess.

Lots, recalls, customers and their shelf-life rules are on every plan, from $49 a month; recipes, batches, margins on actual cost and planning are on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

What does private label mean in food?

Food made by one company and sold under another's brand, usually a retailer's. The store brand at a supermarket is private label: a manufacturer makes it to the store's specification, with the store's name on it.

What is the difference between private label and white label?

Private label is usually made for one retailer, often to its own specification and sold only by it. White label is a ready-made product sold to several buyers, each putting their own label on it. Many people use the words for the same thing, so check the agreement.

Is private label food profitable for a small producer?

It can be. The price per unit is usually lower than your own wholesale, but the volume is steady and there's no marketing cost. In the example, private label earned less per bag and more per month. Watch the risk of printed packaging you can't use elsewhere.

Whose name goes on a private label food product?

The retailer's name can be the only one, as long as it's qualified with wording like "Distributed by" or "Manufactured for", with its place of business. The ingredients, allergens and other required label information still apply.