Private label distributors are stiff competition for manufacturer brands, according to new national study from Affinity Group Sales & Marketing

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Oct 24, 2023, 12:48 ET

CHARLOTTE, N.C., Oct. 24, 2023 /PRNewswire/ -- Increased awareness of distributor brands and continued confidence in distributor and manufacturer branded products are contributing factors in foodservice operators' purchasing decisions, according to a national study by Affinity Group Sales & Marketing. The study was conducted in May 2023 among 841 operator decision makers nationwide, including commercial foodservice (70%), non-commercial foodservice (13%), K-12 foodservice (11%) and college and university foodservice (6%).

Nearly All Operators are Familiar with Distributor Brands

While operators may have been less knowledgeable of distributor brands in the past, the study's results make it clear that today's operator is well aware of this alternative to manufacturer brands. In fact, 93% of all operators are familiar with the term private label and 98% are familiar with the term distributor brand.

"Consumers may be less knowledgeable about distributor brands, but we found that the concept is well understood among operators," said Megan Teates, Executive Vice President at Affinity Group Sales & Marketing. "Operators comprehend the concept – they can identify which is which and they have a good idea why distributors offer them."

Operators' Perceptions of Distributor vs. Manufacturer Brands Vary, Especially by Type of Product

Operators are savvy about distributor brands' competitive positioning. Operators view distributor brands as lower priced alternatives to manufacturer brands and sometimes of similar - but never better - quality. Distributor brands score poorly for "premiumness" and quality, but very well for value.

Though the study shows operators are open to purchasing distributor products, manufacturer brands are still seen as having higher quality and brand equity. Although, the study indicates there is less differentiation between manufacturer and distributor brands than manufacturers may like. Manufacturer brands win on best quality and "premiumness." But for many other attributes, operators say manufacturer brands and distributor brands are equal.

When asked which attributes best describe manufacturer brands, distributor brands or both:

71% of operators say "availability" best describes both types of products
64% of operators say "dependability" best describes both types of products
56% of operators say "consistency" best describes both types of products
48% of operators say "authenticity" best describes both types of products

When it comes to areas where distributor brands succeed most, operators say they are more comfortable buying non-food items or commodity ingredients like oil. Currently, distributor brands win in non-food categories where quality is less of a risk. Operators say they are comfortable buying distributor brands for paper products (64%), plastic cutlery (63%) and cooking oil (53%).

Operators generally avoid distributor brands in categories where taste, texture and quality strongly influence the final product such as beverages (only 19% said they were comfortable), prepared soups and sauces (20%), french fries (28%), fresh meat & poultry (30%) and baking supplies (34%). However, operators may not be willing to stick with distributor brands for the long term. Nearly 8 in 10 operators (79%) said they plan to return to their manufacturer brand when available citing quality and consistency as top concerns.

Product Availability is the #1 Entry Point to Distributor Brands

The study shows a variety of reasons operators have and/or will switch to distributor brands. The number one stated reason for purchasing distributor brands instead of manufacturer brands is "sometimes it's the only one in stock" followed by "costs less; quality is just as good." In fact, 75% of operators have received unplanned distributor brand product swaps with 84% saying they received the swap because the national brand was out of stock. In many cases, once operators try the distributor brand, they won't return to the manufacturer brand. Ensuring product supply is even more important than strong brand awareness to maintain a manufacturer brand's position.

Staying Ahead and Driving Innovation

There are ongoing risks that the distributor brands' value proposition will continue to penetrate into the market. While price seems to be the key distinction between manufacturer and distributor brands, so is quality. The study finds manufacturer brands are still seen as having higher quality and brand equity. Staying ahead of the challenges and variables and the continued drive for innovation will help both brand manufacturers and distributors maintain relevancy. More and more, manufacturer brands will need to showcase whether higher quality is worth a higher price.

"In any market where distributor brands compete, manufacturer brands must continue to innovate to stay ahead," said Enzo Dentico, Chief Executive Officer of Affinity Group Sales & Marketing. "Whether the innovation is in packaging, formulation or even product bundling, being a leader in new ideas is an important strategy to maintain the prevalence of manufacturer brands."

Operators are more informed and accepting of distributor private brands than ever before due to the inconsistencies they've encountered through recent years, especially as it relates to availability and cost. The study further reiterates the need for more impactful actions by both manufacturer brands and distributor brands as operators continue to pivot and adjust to the ever-changing needs of their customers.

Study Methodology

Affinity Group's Distributor Brands Study is based on the responses of 841 food service operators to an extensive survey. The operators represented decision makers for dining operations in all geographic regions and food service segments. Results were captured during live interviews with the operators, conducted by Affinity Group field operatives. Affinity Group is committed to investigating and sharing the results of our thought leadership work on topics of interest to all parts of the food service industry.

About Affinity Group

Affinity Group's experience in all aspects of the retail and foodservice industry make us the perfect partner to help our customers grow their brand and drive results for their business. Our talented team of sales professionals has the in-depth knowledge today's culinary brands need to make sure they stay connected to a community of resources and relationships. For more information, visit www.affinitysales.com.

SOURCE Affinity Group Sales & Marketing