The great flaw of the private label market

Choosing a private label service provider at Vitafoods Asia, or any big show, is a struggle. What are private label companies missing? A new, service-based business model provides the answer

When entering a large trade show, a representative of a brand owner company, looking to acquire private label services, is faced with many issues. Blaž Gorjup, Chairman & Founder of PharmaLinea, a company dedicated to providing scientifically substantiated private label food supplements, shares his experience: “Visitors at shows are bombarded with information, yet gain no clarity. The problem is two-fold: there is a great lack of private label products with proven efficacy and added value for the end user. Additionally, the manufacturing service, commonly provided, is very limited and offers little support to the client. It all originates from the same flaw – most private label companies are based on production and exchange of materials, neglecting service and exchange of information.”

Manufacturing companies typically leave out several intelligence aspects, such as research of a client’s market, or insight into developments of the raw materials field. Without information on specific market needs and the latest cutting-edge raw materials, private label products can only be developed generally, lacking differentiation and exclusive ingredients. Repetitive products have to rely on price-competition, which is often accompanied by commodity ingredients and compromised quality.

Gorjup goes on to add: “A growing number of clients is focusing on high quality food supplements and work through medical detailing. Both they and their customers demand scientific proof of product efficacy, which is a rarity in several health areas. Immune support, one of the top three reasons people take food supplements, is the perfect example. Products typically consist of a variety of commodity herbal extracts, with efficiency claims related to bibliographical data. These have no direct connection to the exact ingredient used in the product, apart from the Latin name. Additionally, data on stability of active ingredients in the finished products is often non-existent.”

At Vitafoods Asia, PharmaLinea will be presenting >Your< Immuniq Product line. It is based on exclusive branded ingredients and highly supported with scientific data, along with actual feedback from users. The R&D department achieved stability in several convenient single-serve and liquid product forms, with solid data confirming it.

"The Immuniq product line is an example of how we feel private label food supplements should be designed – to benefit the end user, not just to be sold to the brand owner," says Gorjup.

Traditionally, manufacturers limit their service to production, leaving the client to deal with product development, marketing and sales challenges alone. Even though private label companies have access to priceless insight on several aspects of the business, they do not utilize this information. Blaž Gorjup states: “At PharmaLinea we work closely with the most prominent ingredient companies, gathering knowledge otherwise never passed through the chain in the industry. Additionally, collecting experience from launches of our products in different markets worldwide allows us to provide consultancy based on best practices. We believe private label companies should play a key role in helping clients minimize risks with new product launch and achieve sustainable success.”

Access to relevant intelligence is proving essential in both product development and client consultancy and old-fashioned manufacturing companies will require a major shift in their business model if they are to provide value for brand owners and end users.

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