Private Labeling

by Diane M. Calabrese | Published May 2025

 

A good name makes a product easier to remember and promote.

Companies spend a lot of time developing names for themselves and for their products. One shortcut to naming is to give at least some products the same moniker as the company. Simple and direct at the same time.

Not just any product can become a namesake. There are proprietary considerations. But private labeling widens the range of possibilities.

A manufacturer asks, ‘Should I offer to private label my products?’

And a distributor asks, ‘Should I pay a manufacturer to put a private label on the products I sell?”

Both manufacturer and distributor of a product aim for the same things. They want to ensure the purchaser is so pleased he or she returns and buys again and also refers new customers.

The manufacturer has an interest in the success of the distributor, and if a distributor’s label on a product will bring more return customers, everyone along the business-to-business chain wins. That includes the end user, or contractor, who uses the product.

Distributors want to build a bond with the end users who buy from them. True, an end user may remember a product and its distributor even when both have a different name. But would it not be better to consolidate the two so the end user is certain to return to distributor of ‘any-name-here’ to purchase the product ‘any-name-here’?

Private labeling must be cost effective, bringing a genuine return on investment. It also must be possible.

Not every manufacturer is open to private labeling agreements. Many manufacturers of equipment use a network of distributors that incorporate the brand name of the manufacturer, for instance.

Private labeling is common in the sphere of chemicals. “It’s a growth opportunity if the products align with or near other formula raw material needs,” says Mike Gruver, the general manager at Hydrus Detergents in Estherville, IA.

“You always are looking for economy of scale opportunities to produce products while driving cost of your own manufacturing processes and supply-chain where possible,” explains Gruver. And on each side of the equation – manufacturer vs. distributor, careful evaluation must be made.

“Each company has to look at the formula cost versus required raw material inventory for production versus production capacity equipment to decide what’s best for their operations,” says Gruver. “Our own threshold may vary from four drums to four totes annually dependent on those three basic questions.”

As implied in the foregoing, manufacturers of products generally – but not always, both sell independently under their names and also private label. In doing so, they generally provide advice to distributors who might be interested in private labeling arrangements.

Does Gruver’s company consult with prospective clients about private labeling? “We do look to strategically align with customers who are looking at multiple products and have a focus on creating a detergent brand as a part of their business plan.”

Distributors gain a unique opportunity with chemicals. “Private labeling of their detergents is a great way to build a brand that aligns with their equipment sales [and] service business,” explains Gruver.

 

Prioritizing

A distributor wants to serve as many regular customers as possible. For some distributors the best model of business is a commitment to sales and service. Chemicals are sold but without a private label.

Other distributors may discover that matching privately labeled chemicals and equipment brings the best returns. Prioritizing takes analysis and constant reevaluation.

“Private labeling provides the opportunity to build your own brand, as opposed to working to build the brand of your supplier,” says Joseph Daniel, vice president and general manager at ITD Chemical in Tucker, GA. “The long-term benefits of building your own brand are immense, and the value of your company will increase as a result of this strategy.”

In developing a business plan that includes private labeling, the volume of sales becomes a critical bit of information. “Typically, private label manufacturers do require significant minimum volumes to build a private label program,” says Daniel.

But there are exceptions, And Daniel’s company is one.

“[Our company] has pursued a strategy to provide private label chemical programs under very low minimum order requirements,” says Daniel. “This provides an opportunity for small players to build their brand from the ground up without significant capital expenses.”

That’s vital information. It means a distributor that has a coherent model from combining sales of equipment and chemicals – and possibly much sought-after service, can build from the earliest stages of his or her business.

“[Our company] consults on a daily basis with potential clients who are interested in private label chemical programs,” says Daniel. “We have responsive and knowledgeable sales representatives who can answer all questions and help customers launch their private label programs quickly and easily.”

The pluses that derive from private labeling are many. Hooking a customer who sees promising bait everywhere – ads chasing him or her around in the digital world, isn’t easy. The more products a company has that carries its name, the more likely that search for a specific product will bring a prospective customer to a website or door where more products come in view.

Convenience matters to every purchaser, including a busy contractor. A distributor that can sell a customer a branded package that includes chemicals, ancillaries and pressure washer – and perhaps service, will give the seller a boost with buyers who appreciate turn-key solutions.

The private label on a chemical that serves as an optimal fit for a machine indicates that a distributor has gone through the effort to serve the buyer. The buyer takes that as an indicator of how serious the distributor is about serving the customer.

 

Good business

The bottom line must always be in view. Hence, it’s not altruism that motivates a manufacturer to private label for other companies while it also sells under its name.

The mechanics of the legal and liability arrangements can get quite complicated with private labeling. Hanging over chemicals, for instance, is the cradle-to-grave responsibility for hazardous chemicals that the Environmental Protection Agency (EPA) sees.

Then there’s Prop 65, which requires labeling of potentially carcinogenic compounds on an any product – not just chemicals, sold in the Golden State. Distributors who opt for private labeling will have to be certain the manufacturer from which they buy meets the warning label requirements. Every trusted manufacturer will meet the requirements as an integral part of conducting good business.

The trust between a manufacturer and a distributor must be reciprocal. A manufacturer wants assurance that any company for which it private labels will not alter products or in any way misinform buyers about the way the products should be used.

Deep trust between manufacturer and distributor means that when a distributor has a unique need, such as for compounding a small amount of chemical for a customer, the manufacturer is likely to be able and willing to accommodate it.  And there’s much to be gained in general from agreements.

“Companies that create their own private label brands aside from selling major brands as well, provide alternatives that will build and strengthen their brand identity by offering exclusive products under their name, differentiating them from competitors,” says Gus Alexander, CEO of FNA Group in Pleasant Prairie, WI.

“Companies can tailor product features, packaging, and branding to align with preferences and market demands,” explains Alexander. “Companies are better equipped to quickly respond to trends and introduce new products without the lengthy development times associated with major brands.”

Private labeling enables a distributor to tailor certain products to appeal to customers in the region being served. The label can highlight the environmental friendliness of a product in California. Or it might emphasize the performance of the product in frigid winter conditions in Minnesota.

The concept the distributor has for a private label gives a big boost to the manufacturer that serves a wide geographic area. Local businesses know their customers best.

Across many years in business, a distributor develops ideas about how certain products might be changed just a bit. Most of the time, a distributor does not have sufficient interest or capital to set up a manufacturing component. (But sometimes it happens.)

“Partnering with a manufacturer for private labeling eliminates the need for in-house production, reducing operational costs and eliminating manufacturing costs,” says Alexander. The partnership gives the distributor a great deal of flexibility when markets change.

A private label also gives the distributor more control. “Businesses set their own pricing strategies and promotional plans, rather than following manufacturer-imposed pricing structures,” explains Alexander.

A manufacturer is highly unlikely to want its distributors to each be selling the same machine or detergent at wildly different prices. It could happen, but with private labeling the differences in price do not matter.

The fundamentals though are what make private labeling an attractive option for some distributors. “High-quality private-labeled products can foster customer trust and encourage repeat purchases,” says Alexander.

The name of a good company on a good product that’s privately labeled wins the day for both distributor and manufacturer.