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A Look at Domtar’s Private-Label Brand Advantage

Categories: Ideas and Innovation
Domtar’s Private Label Private Brand Advantage

Private-brand products have come a long way from the plain packaging and inferior quality that characterized the category decades ago. Today’s private-brand products are not only packaged with eye-catching colors and appealing graphics that rival the look of national brands, but the product quality is also often on par with that of national brands.

Consumers are taking notice of the shift. According to the Private Label Manufacturers Association (PLMA), private brand dollar share in 2015 was 17.7 percent, the highest ever measured. The category is growing at a similar pace as national brands: Both saw two percent growth in 2015.

More good news for private brands comes from millennials, who have now overtaken baby boomers as the largest living generation. According to a Mintel report, 42 percent of millennials agree that private-brand products are more innovative than national-brand products. This bodes well for the ongoing growth and consumer acceptance of private brands.

“There’s no longer a stigma attached to buying private label products.” said Michelle Selders, president of Brand Verbalist, a brand strategy firm. “For many consumers, it’s now the smart choice. Although they may first try a private brand when they’re forced to look for a lower price option during tough times, many never return to buying their previous brand when things look up. Once they realize that the product meets their needs and the quality is there, they frequently find there’s no reason to go back.”

She added, “For retailers, a private brand can be a big win, too. They have more control over the product, can better meet their customer’s needs and can optimize their profit margins.”

Domtar’s Private and Partner Brand Programs

Domtar is at a particular advantage when it comes to this market, due in part to its 40-year history of producing private-brand products in the pulp and paper industry. Domtar is the largest producer of copy and printer paper in North America and has brand partnerships with some of the biggest office supply companies in the world, which means you’ve most likely purchased Domtar paper as a private brand.

Now Domtar is bringing that depth of experience into the personal care industry, with the acquisition of the largest private-label baby diaper manufacturer in North America in 2013.

“We are excited about our partner-brand products,” said Brad Goodwin, president of Personal Care division in North America. “We emphasize the word ‘partner’ because we don’t just provide a product. We work collaboratively with retailers, make sure they get the product they want and provide marketing support, all of which enables us to create a true partnership.”

Private-brand products help retailers to stay on pace with or even jump ahead of consumer buying trends. “It used to be that many private brands were ‘me-too’ products,” Selders said. “But now, in many cases, these products are filling a market gap and better meeting consumers’ needs.”

Insights and Innovations Make the Domtar Difference

One of the ways Domtar supports its private-brand partners is through its own consumer insights. This focus on end users’ needs enables Domtar to deliver a product that is not just a copy of what’s already on the shelves. Using proprietary market research, consumer testing and feedback from sales, Domtar offers the category and product knowledge retailers need.

For example, market research showed that increased absorbency was the most important attribute to mothers shopping for diapers. So Domtar’s production team worked to increase the absorbency of our partner-brand diapers by as much as 10 percent.

While high-quality, innovative products are important for retailers to remain competitive, the packaging itself is just as important. Some of the biggest changes in recent years in private-brand pulp and paper products have come in how they are packaged.

“Even in private-brand programs, Domtar is focused on helping our customers create innovative solutions to the challenges of buying and handling paper,” said Katie Zorn, a director of marketing in Domtar’s pulp and paper division. “For example, we offer smaller pack sizes and shrink wrap cartons that are easier for individuals to carry around their homes and offices.”

The same holds true on the personal care side, where the look of products is almost as important to consumers as quality and absorbency. “One of the most important things we look at is diaper package design, and we try to make the graphics on the packaging and on the diapers themselves more modern,” Goodwin said.

Marketing support is another key factor in the partner-brand relationship. Domtar’s team helps its customers by creating marketing programs to drive growth through support materials, seasonal promotions, and contests or incentives.

But perhaps most importantly, Domtar brings good communication to all of its partnerships.

“We work to make sure that each of our partner businesses is getting what they need to best serve their customers,” Goodwin said. “That goes from creating the prototype all the way to providing marketing support once the product is on the shelves.”