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Private Label:
The Best Kept Secret In Coffee and Tea

(continued)

Choosing a Private Label Company
If a company has decided to go the PL route, there are a few things to consider. Kevin Daw advises: “The first step is to focus on your target market, then conceptualize the type and look of the coffee and packaging you desire to market. From there, artwork must be created to fit the parameters and the actual packaging can then be created. The process can take anywhere from three to 12 weeks depending on the type of program being created.”

Stuart Daw warns: “It takes time to work up your private label with the right quality coffee. While that is not terribly difficult, you can simply opt to have the supplier pack one of his standard blends in your graphics in the mean time.”

Choosing a PL company that has a good reputation for caring about coffee or tea quality as well as packaging is important - that way the company can leave the most technical packaging decisions up to the PL if they so desire. Danny O’Neill of The Roasterie, a roaster that does PL in Kansas City, Missouri, says, “[Retailers] put their trust in us as their supplier,” he says. “We work jointly on colors, artwork, labels, etc. but our customers have trusted our judgment in terms of packaging content.” David Dallis of Dallis Brothers Coffee Co. in New York City has fostered a similar trusting relationship with his clients: “Only the larger private label customers care all that much [about our packaging decisions],” he says. “Most restaurant and wholesale customers are happy with how we package and ship and do not have issues. The biggest issue is really labeling more than choice of materials.”

Customization and/or specialization are also an important aspect to look for in PL company. One reason for this is that there is no one-size-fits-all packaging solution, so the PL must possess the proper machinery. “Private label production for large chains can only be effectively handled by companies that are prepared to invest in high-speed packing lines,” says Ian Lay from Accord Services Ltd., a PL tea firm in the U.K. “This immediately precludes them from producing short runs suitable for smaller retailers. It is the smaller retailer that we look to for our business. We have invested in a wide range of equipment that gives us flexibility and at the same time we concentrate on the quality end of the market.”

Secondly, the PL provider who is a tea or coffee specialist can provide you with up-market teas and coffees in limited runs, which is something that larger companies cannot do. “We aim to give our customers exactly the right teas for their particular market. It is only after considerable discussion and the tasting of many teas that a decision on what teas should be used is finally made,” Lay says.

Also, if the PL offers a wide selection of coffees or teas, their clients can offer their customers exactly what they choose: be it one spectacular blend or a variety of choices. If they are willing to do a variety of roasts, the client has even more control over the product.

“Each of our clients suggests, specifies or selects the coffees they wish to have packaged and we roast to order accordingly,” says Kevin Daw. “On any given day our two plants may roast over 80 separate coffee blends to be packaged in configurations ranging from a 14g filter pack to 2,000lb bulk totes and all sizes in between.”

All the reasons above have made PL coffee a real presence in the U.S. coffee and tea industry. Says Karen Gordon of Coffee Holding Company in New York City: “Store brand has gained market shares over the brands the last several years. Considering how low coffee prices have been during this period that is no easy feat. But with a commitment to quality at a cost savings to the consumer, private label coffee’s future seems bright; today, tomorrow, and for many years to come.”

A Future for Private Label in Asia
While store brands have been thriving here, in Asia, the PL market is still in the development stage. In a market where image is vital, it is hard to convince the consumer of something they are not familiar with.

“Every product has a life cycle, and gourmet PL coffee is in its growth phase at this time in the world market,” says Kihnke. “Starbucks has raised the proverbial coffee tide, which provides for all quality programs to rise up.”

One large retailer in Singapore tried to develop its own PL, but eventually had to abandon the idea due to lack of interest. For a smaller retailer, the required production lines are simply too great to justify the changeover. In the case of Thailand’s Tesco Lotus, the success is probably due in a large part to the name. Tesco might be just another supermarket in the U.K., but in Thailand it is a British supermarket. In a strange twist, there may be some prestige with having “British” Tesco brands on the kitchen shelf far away in Asia.

A major obstacle to PL in Asia, and especially in Singapore says Claude Verly from Boncafé in Singapore is that, “Consumption is not huge at home. In Singapore, there is no history for it. People wake up in the morning and rush to work, often without breakfast. They eat out at lunch, and even for dinner. Few people go home and then have a coffee. The home coffee machine business is just starting over here.”

Boncafé would “love” to do PL, but the interest is still in its infancy. “There is definitely interest,” says Verly. “Some of the big hotels would like to try it, and none have it at the moment, but the problem is the commitment to quantity.”

One solution is to go for a “generic” PL, such as the one that comes from Boncafé, with their simple foil bag, and to add your own sticker to it. But that is missing the whole point of having a PL.

“The main benefits of private labeling are margin and retailer esteem,” says Kihnke. “Customers are the most valued commodity for a retailer. A quality private label program creates loyal customers.

“It is a relatively simple relationship of risk and return. Gourmet private label programs make money, and create an invaluable bond between customer and retailer.”

The players are in place, and as the market develops, private label will become a force in Asia.


Tea & Coffee - August/September, 2002
ASIC 2014

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