---
title: "Private Label: No Retreat for Brand Owners"
description: "In recent years, Sam's Club's Member's Mark and Pangdonglai's DL have popularized private labels, prompting almost all retailers with regional or larger scale advantages, whether KA, CVS, or snack channels, to push forward their own private labels. This has created a direct conflict: private labels and branded products compete for limited shelf space. Balancing the proportion between private labels and branded products is a complex issue for both retailers and brand owners. For brand owners, OEM private label production neither enhances brand value nor earns brand premiums, but retailers inevitably tilt resources toward private labels. This is an unavoidable trend, forcing brand owners to make painful choices."
author: "张振宇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2026-04-25"
categories: "Brand Marketing, Retail Formats"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/private-label-no-retreat-for-brand-owners-98ef05b3/"
markdown: "https://xinjignxiao.com/en/articles/private-label-no-retreat-for-brand-owners-98ef05b3.md"
original_source: "https://mp.weixin.qq.com/s/WkiZEn749wp3SgfESiRckA"
translation: "https://xinjignxiao.com/zh/articles/%E8%87%AA%E6%9C%89%E5%93%81%E7%89%8C%E8%BF%99%E9%81%93%E9%A2%98-%E5%93%81%E7%89%8C%E6%96%B9%E6%B2%A1%E6%9C%89%E9%80%80%E8%B7%AF-98ef05b3.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/private-label-no-retreat-for-brand-owners-98ef05b3/"
citation: "张振宇. “Private Label: No Retreat for Brand Owners.” New Distribution, 2026-04-25. https://xinjignxiao.com/en/articles/private-label-no-retreat-for-brand-owners-98ef05b3/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Private Label: No Retreat for Brand Owners

> In recent years, Sam's Club's Member's Mark and Pangdonglai's DL have popularized private labels, prompting almost all retailers with regional or larger scale advantages, whether KA, CVS, or snack channels, to push forward their own private labels. This has created a direct conflict: private labels and branded products compete for limited shelf space. Balancing the proportion between private labels and branded products is a complex issue for both retailers and brand owners. For brand owners, OEM private label production neither enhances brand value nor earns brand premiums, but retailers inevitably tilt resources toward private labels. This is an unavoidable trend, forcing brand owners to make painful choices.

In recent years, Sam's Club's Member's Mark and Pangdonglai's DL have popularized private labels, to the extent that almost all retailers with regional or larger scale advantages, whether KA, CVS, or snack channels, are pushing forward their own private labels.
This has led to the most direct conflict: private labels and branded products compete for shelf space. Retail shelves are limited, and how to balance the proportion between private labels and branded products is a complex issue.
This is true for retailers, and even more so for brand owners.
OEM private label production neither enhances brand value nor earns brand premiums, yet retailers will tilt resources toward private labels.
This is an inevitable development trend, and brand owners have to make painful choices.
If they refuse to cooperate, retailers will turn to OEM factories to solve the problem and allocate shelf space to private labels; if they cooperate, retailers will still replace branded products with private labels, causing brand owners to fight against themselves, even affecting other channels.
Learning from history: under channel pressure, brand giants' choices are not entirely consistent.
From mature overseas historical experience, brands have gone through such agonizing processes and ultimately made logically self-consistent choices.
However, when facing retailers' strong attitudes, they have not all made identical choices.
Looking back at their decisions today, there seems to be no right or wrong. It is more about how brand leaders weigh and make choices under cooperation pressure.
Let's take North American Costco as an example, because its private label Kirkland covers a wide range of products, allowing us to see the different choices of brand giants.
1. Quaker Oats (under PepsiCo Foods) chose to counter retailer pressure with differentiation.
When Costco launched high-value Kirkland oats at prices 20-30% lower than Quaker Oats, a large portion of shelf space began to tilt toward Kirkland.
Kirkland, to seize oat shelf space, used OEM products to attack Quaker Oats under PepsiCo.
Initially, this move put PepsiCo in a very passive position, as it was difficult to take action on price: lowering prices would trigger a chain reaction of price erosion across all channels, while not lowering prices would lead to continuous sales decline and eventual replacement.
They realized that when a pure price war is hard to win, brand value must be reshaped.
Therefore, in 2014, Quaker Oats launched Quaker Real Medleys (premium oatmeal cups with chia seeds and goji berries), directly attacking Kirkland's organic breakfast products.
It was this product innovation differentiation strategy that prevented OEM factories without product capabilities from imitating, effectively stopping Kirkland's price suppression and winning back some shelf space from Kirkland.
This also clarified PepsiCo Foods' subsequent strategy against private labels: unwaveringly focus on brand value and product innovation.
2. Starbucks, after much deliberation, chose cooperation to prevent competitors from seizing opportunities.
Between 1997 and 1998, Kirkland launched a new coffee bean with "Roasted by Starbucks" prominently printed on the packaging. This product sold well in North American Costco for 22 years.
This move raised questions from the outside about Starbucks, which had been pursuing a premium route: why were coffee beans of similar quality sold at much higher prices in Starbucks stores than at Costco?
Coffee beans that Starbucks OEM-produced for Kirkland.
In terms of positioning, there is a clear gap between Costco and Starbucks customer bases; from that perspective alone, the cooperation should not have happened.
For Starbucks at the time, this cooperation was also very agonizing. From a brand perspective, it was a matter of "choosing the lesser of two evils."
But the reason that ultimately facilitated the cooperation was simple: if they did not embrace cooperation, Costco would inevitably turn to Peet's Coffee.
At that time, Peet's was Starbucks' biggest competitor in North America. Obviously, for Starbucks, giving competitors the opportunity to increase market exposure and enhance brand influence was the last thing they wanted to see.
3. Kimberly-Clark actively followed up and chose cooperation to seize shelf space and attack competitors.
In the diaper category, Kimberly-Clark and Procter & Gamble have been locked in long-term battles in North America. Therefore, any shelf opportunity, especially changes in major channels, is of great concern to them.
When Costco planned to use Kirkland private label for diapers, Kimberly-Clark actively supported and promoted the cooperation.
The cooperation went smoothly, and the benefits were obvious.
As Kimberly-Clark's OEM diapers for Costco hit the market, Costco gradually removed P&G's Pampers diapers from its national shelves. In the single-channel competition, Kimberly-Clark gained a clear advantage.
Diapers OEM-produced by Kimberly-Clark for Kirkland, competing on shelves with its own brand Huggies.
But the drawbacks were also obvious: mothers found that diapers produced in the same factory had price differences of more than 20%, so naturally they shifted from buying branded products to private label products.
Moreover, when other channels like Walmart learned of this, they took a tough stance and demanded that Kimberly-Clark open OEM cooperation. In the end, Kimberly-Clark's profits were severely impacted due to the OEM business.
Final Thoughts
Due to space limitations, I have only cited a few examples to illustrate brand owners' choices. The same issue has been repeated countless times overseas.
It can be seen that even brand giants have their own considerations when facing this historical challenge.
There is no best choice; only the choice that better fits the brand's current development needs.
The trend is unstoppable, and the flourishing development of private labels will inevitably affect brand owners. This is not hard to understand.
The difficulty is, given the impact, how to minimize it.
In other words, it is a question of how brand owners weigh and choose among growth, profit, competition, and retailer-supplier relationships.
This is also a problem that brand owners in the domestic FMCG market must face and solve in the coming years.
Confrontation or cooperation? OEM or innovation? Left or right?
On June 4-5, 2026, in Hangzhou, we will hold a China Private Label Industry Chain Conference. Heads of private label from leading retailers, decision-makers from brands who have truly tackled this issue, and factories most adept at supply chain collaboration will sit together in the same venue for the first time—they will tell you how they made their choices.
The trend is unstoppable, but choices can be made with greater clarity. Welcome to register for the conference. This may be your chance to hear the most authentic voices before making decisions.


---

## Citation metadata

- Publisher: New Distribution
- Author: 张振宇
- Published: 2026-04-25
- Canonical: https://xinjignxiao.com/en/articles/private-label-no-retreat-for-brand-owners-98ef05b3/
- Original source: https://mp.weixin.qq.com/s/WkiZEn749wp3SgfESiRckA

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671