The Unbottled Podcast: Private Label vs. Custom Formulas

https://youtu.be/ph78P-XS36k

Episode Summary

In this episode, Mark and Stephanie tackle private label vs. custom formula supplements.

Best Distribution channels

Mark notes that retail (e.g., Walmart, Whole Foods) often comes with strict formulation requirements known in advance, along with slimmer margins offset by higher volume. Direct-to-consumer means selling through your own brand's website to your own audience. Stephanie shares her personal buying habits as a consumer — checking an unfamiliar brand's website first, then often circling back to Amazon for fast shipping — which leads into a discussion of consumer adoption types: "early adopters" who chase what's new, "sneezers" who spread the word once they find something they like, and the "tried and true" majority who wait until a product is well-established before trying it.

What does a co-packer/co-manufacturer do?

Defined simply as the manufacturer that produces the product for a brand — whether private label, white label, pre-formulated, or fully custom.

Private label / white label

Products a manufacturer keeps pre-made and in stock, ready to be labeled and shipped for any brand that orders them. Pros: lower minimum order quantities (MOQs), lower barrier to entry, faster turnaround (usually). Cons: the brand isn't unique since the same formula is sold to multiple brands; if the product doesn't sell well, the manufacturer may discontinue it and pull it from the brand entirely; there's also a risk of buying older stock that's been sitting on the shelf; and if a manufacturer suddenly runs low, lead times can stretch far beyond the advertised window.

Custom formulas

A formula built specifically for one brand. Pros: full ownership, differentiation, and the ability to build something no one else has — which Mark describes as more personally rewarding, including an anecdote about a custom pet joint supplement and the feedback of watching a dog's mobility visibly improve. Cons: higher MOQs and higher cost, since it's made exclusively for that one brand.

Pre-formulated

A middle ground — the manufacturer already has a base formula in a given category (e.g., joint health, cognitive support, anxiety) that isn't sitting on a shelf yet, but can be tweaked to the brand's preferences. Mark compares it to getting a starting point from AI and refining from there.

Who each option is for?

Private label suits brands with a limited budget or uncertainty about market response — lower risk, lower commitment. Custom formula suits brands with confidence and budget to back a unique product. Not every co-manufacturer offers both; Mark notes that fewer manufacturers offer true private label today, and many that grow tend to shift toward custom work. From the manufacturer's side, there's an efficiency argument for running the same product repeatedly, but Mark (speaking for their own company) says he leans toward enjoying custom work because of the variety and problem-solving involved.

Recap and takeaway

Stephanie summarizes the episode in two phrases — private label equals speed and simplicity, custom formula equals ownership and differentiation. When asked what viewers should take away from the episode, Mark wants listeners to pursue whichever path they're genuinely excited about, since passion and enthusiasm for the product are what ultimately drive a brand's success, whether that's a stock product used to get started or a custom formula built from scratch.

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Full Transcript

MARK: Welcome to The Unbottled Podcast, the show where each week we go behind the label of dietary supplement manufacturing. In today's show, we're talking about private label versus custom formulas.

DANNY: Well, before we get started, we have a question that was submitted by a viewer, and they asked: how do you pick which is best for my brand? Retail versus direct to consumer versus omni-channel?

MARK: Are you saying retail like Walmart?

DANNY: That's what I'm guessing they meant. It's funny because I kind of pictured retail as Amazon, Walmart, da da da da. Direct to consumer, I've always kind of considered — like you said, you have a brand and you've got an audience and you are going to them through your website.

MARK: Retail, a lot of times, has a lot of qualifications that you probably should know in advance. Like if you want to go into a Whole Foods, you should design your product on the forefront knowing that they don't want these particular ingredients in there. Or they want this. So it's kind of good to know where you're kind of focusing your product to go retail-wise.

Hey, Walmart probably takes anything under the sun. I don't know.

It's just a little trickier, and then your margins are super slim, but you're going to hopefully make up for it in volume because you're in a big place.

DANNY: Well, I have a question for Stephanie. I'm not asking Stephanie because I think you're a shopaholic or anything — I'm asking Stephanie just because you're on the couch. I'd like to know an example of something that you buy direct from a consumer, or somebody that you're okay going to Amazon and just buying.

STEPHANIE: To be honest, lots of times if I don't know a brand, I'll go to their website first and I'll check it out, and then I go back to Amazon to see if they're selling there. And most times I do order from Amazon, just because it's fast shipping — in the next day or the next two days. That's typically my behavior as a consumer.

MARK: You know, it depends too. Some people are early adopters, right? They just want something new, and it could maybe have zero ratings, but they're kind of like, "I like to try new things." And they're just like, "I'm going to be the first to try this and tell you how awesome it was." We used to have friends like that in high school — they loved a backyard grunge band, and as soon as it became mainstream: "I don't like Pearl Jam anymore." You're like, what? They're singing the same songs you liked. Like, what?

And people are like that with products as well, right? Wanting to try something new and be cutting edge. Those are called the early adopters. And then you have the sneezers, which are the ones that get the information and then sneeze it all over everybody — "You're gonna love this" — and they want everybody to join the revolution that they started. And then at some point it breaches this hill and then it starts plateauing out or whatever.

I'm not an early adopter. I'm one of those tried-and-true. McDonald's has made a billion hamburgers — I guess I'll try one. You're like, oh, it's finally reached the point where I'm okay with it.

DANNY: And that probably should be the case with supplements — maybe see if they work first.

STEPHANIE: I just was wondering, Mark, can you give us a quick overview of what a co-packer is and what a co-packer does — co-manufacturer, however you like to call it — an overview in one or two sentences.

MARK: Okay, ooh.

STEPHANIE: I know — maybe three sentences if you need it.

MARK: Oh my gosh, maybe, I'm counting my words.

Co-packer, co-manufacturer, co-man — they're all the same thing. Basically just a manufacturer that makes the product. So whether it's private label or white label, pre-formulated or a custom product, they're the group that's doing all the manufacturing for you, the brand, if you're not making your own stuff.

DANNY: That was one sentence.

STEPHANIE: Basically.

MARK: It was a run-on sentence, yeah.

STEPHANIE:That's what I was going to say, but it still counted.

Okay, I have my question for you: can you please define the difference between private label, white label, pre-formulated, and custom formula, and the benefits of each? And I can repeat that.

MARK: Okay, well, let me see if I can do it from memory, because I'm getting old and I want to make sure that I can remember things, so I'm going to test myself.

White label and private label, in my mind, are the same. They're usually products that a manufacturer keeps on the shelf at all times to be able to use and throw your label on it at any given point — meaning a brand may make 5,000 or 10,000 bottles and put them on their shelf, just sitting there until somebody shows up and says, "I need 250 of those." Then they print up 250 labels, pull the box off, put the label on it, and send it off. They do that for a lot of brands. So you're not unique — your brand isn't unique — but you get lower MOQs. Your margin may not be quite as good because you're kind of paying for that premium feature of lower MOQs. The barrier to entry is lower and the price is going to be less, and you don't have a ton of overhead.

DANNY: Sometimes speed as well.

MARK: That is true, but I've heard some horror stories where there was a rush on something and you anticipated it — a manufacturer advertises a two-to-four-week lead time, and somehow they had a rush on something they ran low on, and now they're going to make it right now, and it's going to take them really probably like eight to ten weeks — and now you're without product because you're used to just getting it in two weeks. So you've got to kind of — it's not a fail-safe, but it's usually fairly reasonable, I would think.

DANNY: The other thing that might be a challenge with private label is — you mentioned manufacturers make maybe 5,000, 10,000 bottles waiting on the shelf — if they don't sell real great, they may pull that product.

MARK: You are making a great point, yeah. You run out of your product and now you don't have access to that formula anymore, right? And then, if you really wanted to keep it, you'd have to go into custom manufacturing, and you'd be stuck with the same MOQ on a custom.

The other thing — I thought you were going to go a different direction with that, but what you said is facts. I think the other side of that is, if it doesn't sell really well, it's sitting on their shelf for a long time — what's the expiration? Are you buying a product that's been there for eighteen months? I don't know. That's the benefit of having a custom — it's made to order.

STEPHANIE: So with private label, how do you differentiate yourself on the market?

MARK: I've seen people do some cool stuff with a custom supplement, just because they didn't know how the market would take to a particular brand. They're like, "I think this product will be awesome, so I want you to make whatever the minimum is for me, but I want you to put three different labels on them." They're like, "We're going to go a conservative label, a kind of wild one, and another one that's kind of in the middle on the branding." And they'll test the market and see what sells best, and then they'll be like, "Oh yeah, right in the middle was the sweet spot." That brand really kind of took off. And then they sell it — which I kind of think has some genius behind it.

STEPHANIE: I totally agree.

MARK: But you're not unique when you have a stock product, and — I've seen some brands just connect with people. I've seen some ones where the label looks like it's been printed — literally used clip art from the late '90s.

STEPHANIE: Perfect. It's nostalgic.

MARK: Right? Some people were like, "Oh, throwback." They're like, "Yeah, it looked like it was made in the '90s," and you're like, "That's never gonna sell." And they get this crazy awesome following. And I'm like, man, there's one thing that I know — that I don't know.

DANNY: I liked your question — what can I do to be more... I can't remember exactly how you put it, but how can I get my brand to stand apart when I'm using a private label formula? When I think of multivitamins — there's a lot of them out there. So when I go to choose a multivitamin, how much of my shopping decision comes down to how cool the bottle looked, or the brand? And if they're both $10 a bottle, I definitely go for —

STEPHANIE: I'm a sucker for a good label.

DANNY: But that was a great question. I loved that — that was a great question.

STEPHANIE: Okay, Mark, I have another question for you. Can you talk about what a custom formula is and what the pros and cons are for a custom formula?

MARK: Yes. So custom means it's unique to you. You've put some thought into this. You've looked at the market, you've seen the things — hopefully wanting to make it effective. And it's your baby, right? You get to be a creator, and there's something awesome to that, especially when you start getting reviews and people are saying, "Wow, this has made a difference." In pet supplements — when you formulate a pet supplement, the dog has no idea their owner gave them a joint supplement, right? They're just like, "Something new is on the food, looks like gravy," and they start eating it. And then, two, three, four weeks later, they're running around the backyard. That isn't placebo, right — the dog had no idea that whatever they put on the food in the last four weeks makes them run. You get that feedback, and that feels really good. It feels like you've helped solve a problem for people, which is awesome.

You probably still feel that way too if you were doing a stock product, or a white label or however we want to call them, because you help get that product out and people are benefiting from that. But the custom thing is just — I think it's cool, I think it gives ownership, I think you're unique. People can try to copy you if you get a lot of runway with it and are successful, but — the con of that is your MOQ is going to be higher, because it's your product; they're making this one time, it's for you, nobody else gets it. So that part is a little bit worse, your costs are a little bit higher, but ultimately there sure is something to be said about "there's nothing else out there like this, and we did it."

STEPHANIE: Very cool. I agree. What is a pre-formulated formula?

MARK: That's usually a stock product without being on the shelf, right? So you have a formula — the manufacturer typically already has them in key categories. Say we'll just take joint supplement — you have a joint supplement, it's out there, they already know it fits in the capsule at these levels and all the things, it flows. You reach out to a manufacturer, they say, "Yeah, we've got a joint supplement, we've got a cognitive something, we've got one that helps with anxiety, we've got one that does this." It's already there, but it's not tangible yet — they have to go into a custom mode of manufacturing. So sometimes people know a category they want to attack, but they don't know the specific formula, and you can probably still make some tweaks with some of those if it's pre-formulated. If you're like, "You know, I don't love that ingredient a ton" — it kind of gives you, I guess, maybe like AI would if you throw something out there and you're kind of like, "I just want an outline — okay, you gave me a good place to start, but I don't love it, let me do this tweak." That's kind of where pre-formulated comes into play. It's more unique because it's not just sitting on the shelf, it's not readily available — it's subject to those things, but it gives you a good starting point to attack a category.

STEPHANIE: I love it. That's fair. Who is private label for versus who are custom formulas for?

MARK: Yeah, private label would be — I'll just be blunt — if you don't have a huge budget, or you're not sure how the market's going to respond to a particular product, those are good options for you. You get to buy a low MOQ; if for some reason it doesn't go well, you're not stuck with thousands of bottles sitting in a fulfillment center somewhere that you're paying on every month. If you're very confident and you've got the budget, then custom should be your jam. Yeah, you should totally do that.

STEPHANIE: Does every co-manufacturer offer a private label versus a custom formula?

MARK: No, I don't think —

DANNY: The only reason I even put that in there as a question is I thought private label was much more prevalent. I don't think a lot of manufacturers offer private label.

MARK: I think there's a handful of manufacturers out there that do the private label thing. I think it used to feel like the ratio of manufacturers that only did custom, or only had the stock products, was maybe a little closer. Now there are a lot more manufacturers out there, and I think the ones that have outgrown the others are ones that are just doing custom stuff instead of stock stuff. But they're out there — usually those stock product manufacturers, that might be all they do, they don't do custom. You just come to them and it's, "This is all we offer, we've got 50 products, here's what we do," and they're really good at making those products.

STEPHANIE: As a manufacturer, do you prefer doing private label products or custom label products?

MARK: I don't know how honest I should be. In manufacturing, one of the things manufacturers love is making the same thing regularly, because you get really good at running those same things — the supply chain's really good, everything can be really good. If you're always doing a new tweak, you can still be very good at it, it just takes a little bit of extra effort to dial it in. And who doesn't want the path of least resistance? Of course you want to do something that everybody does — the machines do, we do, whether it's supplements or playing sports. You want to do something you're good at. You can control specifically the ingredients you want to use — meaning if you're using botanicals, you want to use a certain type of botanical, where somebody else might show up tomorrow and want fenugreek, but this type of extract, and everything's just slightly different. There's benefits to both. I think we like, at Canyonside, to do custom stuff, because mostly I think we're good at it. Well, there's that. But I think we like to be part of new — when people come to us, it's like, "All right, okay, let's try that twist, this is good stuff." Ultimately, machines, just like everything, just want to run the same stuff because that's easy, but easy isn't always fun.

DANNY:Stephanie — we're gonna put this on you now.

STEPHANIE: Oh, dear.

DANNY: I want you to recap what you just learned from Mark.

MARK: Ooh, nice.

STEPHANIE: Okay, so to recap today, what I learned is that private label, in two words, is speed and simplicity, and custom formula is ownership and differentiation on the market.

DANNY: Good job.

MARK: Very nice.

STEPHANIE: Also, question for you — if you could have the viewers take one thing away from this episode, what would you want them to take away?

MARK: To be excited about whatever process it is you're going to dive into, because passion trumps everything, right? So whether you're going with a stock product — and maybe that's just to get you in the door, and you'll come up with a new and improved version, awesome, if you're super passionate about it — or if you're going all in because you didn't find a stock product that resonated with you and your brand, and so you're going custom because you think you're going to add a unique perspective to the market, awesome. Whatever gets you out of bed in the morning and gets you excited about doing all the stuff — that's what's going to make your brand successful. Of course, it's got to have a good product behind it, but there's a lot of good stock products and a lot of great custom formulations. So, yeah, I guess the long and short of it is: whatever is going to make a difference in people's lives — including yours and the brand's — and get people excited, that's what you should do.

DANNY: I love that. Perfect answer.

Well, you guys, thank you for spending time with us today.

Thank you guys for hosting the show. This is your first — well, I guess the last episode was your first episode, but this is my first, like, official one. Super excited that you'd taken this time to join us.

This show would not be possible without your questions and comments, so we would ask you to please put your questions and comments in an email to us at info@canyonsidelabs.com, or put them in whatever platform you're watching this on — put it in the comments, and we'll try to respond to those in the show.

We hope you will tune in next week when we will talk about: what happens after I sign a manufacturing contract?

STEPHANIE: Very good

MARK: Contracts, that sounds scary.

DANNY: It does sound scary.

MARK: It's definitely not scary.

DANNY: Thanks for joining, you guys. We'll see you later.

MARK and STEPHANIE: See you.