Natural Foods Merchandiser

Private label gets good looking

With new private label personal care lines debuting in Whole Foods Markets and Earth Fare stores, the idea of store-brand, natural or organic cosmetics and creams doesn't seem so farfetched anymore. After all, private label supplements and grocery items have been staples on natural food store shelves for years. Why not extend that marketing strategy to your personal care aisles as well?

We quizzed two natural personal care product formulators who specialize in private labels for small manufacturers, spas, salons and healthcare providers. While they rarely produce products for natural foods retailers, they agree it can be done—but there are pros and cons to building and maintaining a personal care store brand. Here's what Paul Lieber, CEO of Royal Labs Natural Cosmetics in Johns Island, S.C., and Sherion Stevens, president of Dallas-based Golden Butterfly, say you should know before taking the private label plunge.

Don't sacrifice quality

"In the olden days, people thought if they bought a private label brand it would be cheaper or inferior, but now that's not the case," Lieber says. That's particularly true among natural personal care formulators. Although there are fewer than a dozen U.S. companies that specialize in natural and organic cosmetic private labels, standards are generally strict and quality is high. Golden Butterfly's night cream, for example, contains only sweet almond, avocado, grapeseed, vitamin E, jojoba, rosehip seed, evening primrose and rose absolute oils; extracts of aloe vera, grapefruit seed and witch hazel; purified water; and nine essential oils. Royal Labs doesn't use harsh surfactants such as sodium lauryl sulfate, petrochemical ingredients or paraben preservatives.

Customization costs

Natural personal care private label companies are divided into two categories: those that will design a custom blend solely for your store and those that formulate standard blends you can put your own label on. Lieber, whose company specializes in custom blends, says that frankly, "Most natural foods stores aren't big enough for [custom] private label." Royal Labs is formulating the new personal care line for Asheville, N.C.-based Earth Fare, and Lieber believes the 15-store chain is "right on the cusp," size wise, for custom-designed products.

A private label line can require a lot of service.

The reason? Minimum-order requirements. Royal Labs' minimums are between 2,500 and 5,000 units per product. "One store would have to buy 2,500 grapefruit lotions at once. It would be rotten by the time they sold all of it," Lieber says. And that isn't the only expense. Royal Labs also charges up-front fees of about $1,000 for formulation and $1,500 for testing per product, Lieber says. In addition, customers need to supply their own packaging.

If you're willing to buy a standard formulation, minimums are much smaller. Golden Butterfly's smallest order requirement is 12 units, or $300, Stevens says. There is a little customization allowed—adding scent to an unscented lotion, for example—but otherwise buyers need to stick with the existing formulas used in Golden Butterfly's line of skin, hair, body and bath products. The company also provides containers, but customers need to supply their own labels. "There are lots of companies online that will make labels for you for not very much money," Stevens says.

Can your customers afford it?

Private labels save stores money by cutting out the middlemen, thus increasing profit margins. They can also promote store loyalty. If a customer likes your private label shampoo, she'll need to come back to your store to buy more rather than going to one of your competitors. And while she's there, chances are she'll pick up some groceries or supplements as well.

But although private label products may be cost-effective for you, they might not be such a bargain for your shoppers. Some private label formulations wholesale for prices your customers are used to paying retail. For instance, an 8-ounce bottle of Golden Butterfly's shampoo wholesales for $7.20. The night cream is $19.20 for 1.5 ounces, facial cleanser is $7.20 for 8 ounces and antioxidant lotion is $8.70 for 8 ounces.

But there is a more cost-effective option: buying in bulk. Golden Butterfly sells gallon containers of many of its products for substantially less—$60 for a gallon of shampoo or facial cleanser, for example. You could bottle your own private label line or make the gallon containers part of a fill-it-yourself house brand.

Marketing challenges

The final factor to consider when contemplating private label personal care is how much time and money you have to maintain and market the line. A private label line can require a lot of service. "You have to think about when you're going to change the packaging or the formulations and how you're going to promote it, and someone needs to be in charge of ordering it," Lieber says. "In some cases, it's just one more thing to worry about besides keeping your store shelves full."

Vicky Uhland is a Lafayette, Colo.-based freelance writer and editor.

Natural Foods Merchandiser volume XXIX/number 12/p. 1,10,12

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