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Private Label Tea To Brand Your Business

By Serena Norr

As part of an ongoing series, this report will debunk the numerous concerns pertaining to private label tea and finally put to rest whether such a program is right for your business.

A signature tea brand is a powerful image that can add a defined value to your company, product, or service. Once staggering behind the specialty coffee market, tea is now booming in popularity as small business owners are realizing the power of branding their unique look through a private label. To capitalize on these trends companies are no longer carrying established name brands but employing custom labels and packages to create an exclusive private label. A successful private label system can not only provide numerous marketing and sales benefits by increasing your client base through product awareness but signify your brand as an exclusive product that can bring in a loyal surgeance of repeat customers. But instilling a private label tea system is no easy feat. The nature of cost, quality, design, to what companies actually manufacturer private labels have baffled many interested business owners. It is crucial to understand what such a system entails, before you decide to take the leap.

Understanding Private Labels
According to Steve Smith, founder and president of Tazo Teas located in Oregon, “Years ago black tea was considered to be the cheapest you could find on the market.” The packaging was very generic and didn’t differentiate much between brands. Smith noted, “Lipton saw they could market their blend better by establishing a signature look that would change the perception of how consumers viewed their tea.” Retailers soon followed that has led to the peak of the private label tea boom that is currently taking place. “As larger companies began to implement private labeling there was a shift to higher quality and value,” Smith added. Consumers now consider private label brands an affordable extravagance that is associated with distinctive and premium products that is revolutionizing the perception of the modern cup of tea.

Questions Surrounding Private Labels
Though installing a private label system seems like an ideal marketing tactic to survive against the competition, there are many factors to consider. Many companies recommend that small business owners perfect their labeling as well as conduct intensive research to find the right tea blends. Many businesses are excited about instilling their own distinctive brand. They often put all their energy into the perfect design, the perfect label, and the perfect containers without placing strong empasis on choosing the actual grades of tea. The problem lies when consumers, impressed by the packaging sample a less than perfect tea. When deciding to implement a private label system, it is important to keep in mind that the modern tea drinker is very brand sensitive. The most significant method to understand your potential customers is through research by looking at brands already established in the industry that have a good reputation.

Such a program and its rewards do not occur overnight. Most companies suggest waiting up to a year to before considering utilizing a private label system. In addition, manufacturers require some lead-time from the day of delivery. As a general rule, John Davidson of Davidson’s Tea located in Nevada suggests, “If you contact a company on October 15th looking to implement a private label by December, its probably not going to be processed until February for a July delivery date.” Additionally, the private label manufacturer may have his own imperatives in terms of production, with your order being pushed aside in favor of his own customers’ needs.

Another aspect when considering going private is the nature of costs. Although the cost of your tea in bulk will be less when bought from a private label supplier, there is also the costs of marketing, labels, and shipping by the supplier. Since this system is more expensive, it is important to keep tea stored properly. Private label gets complex in regards to storage. Smith added, overstocking teas will only make the tea old and stale. Michael Cramer of Adagio Teas located in New Jersey recommends that your store shouldn’t instill an actual storage area since you want your unique blends to attain the highest quality of freshness. It is best to know your inventory from month to month. “If you go too far from month to month inventory, your tea will not retain the same amount of freshness and become stale; losing the whole purpose of even having a private label in the first place,” Cramer added. People don’t want stale tea in a pretty package.

Building Relationships
Once you decide on a private label manufacturer you are essentially working together in a new partnership. Davidson says, “The private label wholesaler and reseller will bring together knowledge, experience, and creativity in the design of a captivating label. There are endless choices from loose leaf to tins to fit your unique needs and complement your business image. Private label production builds trust in brand selection and custom blending teas for flavor, aroma, and quality. Davidson advises companies to contact companies already producing products similar in character to what they are interested in, whether it be RTD, instant, teabags, loose-leaf, specialty packaging, mainstream, organic, etc.

“Private label is a very ‘dialogue’ driven process, requiring a lot of open communication between the buyer and supplier with respect to labeling, costs, product profiles, logistics, time constraints, and long term planning,” Davidson added. It is important not to work with a company you are not fully comfortable with in the communication process or problems will be inevitable down the road. See the relationship as long term and flexible. It is crucial to make your budget clear from the beginning. Many companies may offer the most expensive package and payment options at first, but it important to state how much you want to spend and have the company work around your budget. They are also in a business and will work with you.

Do It Yourself
Going through a private label supplier is not always an option for some small business owners. According to Cramer, “Tea shops believe they need a private label tea system to bring in customers.” Cramer suggests, “Such a system is best for shops that have a lot of volume to compensate for the costs of packaging.” Dilhan C Fernando, marketing director at Dilmah Tea of Sri Lanka, said, “Price has been a main strategy for these fledgling private label brands to assert themselves on the market. The best companies to use are those that is supported by a clear vision, expertise, and commitment to tea.” Davidson said “Tea packaging, like any private label packaging is particular to the market the purchasing company is servicing.” Before you actually go through a manufacturer Cramer recommends that smaller shops should create their own labels. “Developing a private label is a relatively easy task since there are a number of packers in Asia particularly who will gladly assist in such development,” stated Fernando. The most significant factors in finalizing that selection is determing how much you can spend on tea, which is where many private label owners get confused as most do not have more than a basic knowledge of tea and would not be able to assess the quality of teas offered to them.

Once you choose the right grade you can begin to work on your signature label that doesn’t have to be complex. Many small business owners believe that expensive packaging will bring in customers. In most situations that is not always the case. The less-is-more mantra is often used as a model as most new cafes opt for simple designs that may only have their name printed on recyclyed paper or a sticker with the company logo. The main component to focus on is establishing your brand identity that sometimes a manufacturer cannot grasp.

Smith is also a proponent for instilling your own personalized tea labeling. He suggests purchasing loose tea in bulk along with packaging materials and labels. “Invest in a quality printer and handcraft your label or hire an artist to define your brand,” Cramer said. This allows owners to attain full creative control and make adjustments in design, when necessary and have 100% of artistic control of what gets placed on the label. This unique approach creates the appearance of a signature product that defines your personal touch establishing your brand, until you are ready to go big.

Tea & Coffee - August/September, 2006

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