NARRATOR: So what are private label brands? Private label brands are products manufactured mostly by a third party and packaged for sale under a brand name which is owned by the retailer. So yes, these brands get some preferential treatment with regard to arranging or listing, position on shelf, and visibility in retailer advertising, though no major retailer will admit to this preferential treatment.

You might ask, why do retailers make private label brands? The simple reason is profitability. With normal supplier-owned brands, grocery retailers typically make about 25% gross margin. With their own brands or private label brands, this margin can be close to 50% or more, which helps improve their overall profitability.