Best of Both Worlds: How Red Gold Found the Ultimate Balance Between Private Label and Branded
Building a successful brand can feel as precarious as balancing on a tightrope; it’s easy to lose your footing when so much is at stake. So far on the blog, we’ve covered co-packing, touched upon private label, and stressed the importance of pushing brand awareness. Interestingly enough, not only does Red Gold have experience in all of these areas, they’ve mastered the art of having your cake and eating it too.
“[The company started] with my great-grandfather, Grover Hutchinson. WW2 was going on and the government basically said, ‘we need help, we need all the food we can get to feed our troops overseas.’ He purchased a burned down canning factory in Orestes, Indiana and started making two products: tomato puree and whole peeled tomatoes.” Colt Reichart, Director of Creative Marketing (and a 4th generation member of the Red Gold family) begins.
A family-run business through and through, the tomato processing company has made a name for itself as the “Tomato Experts” within the Food and Beverage industry, even amongst some pretty hefty competition. As you can imagine, being a veritable private label machine as well as owning 4 lines of branded products requires a wealth of expertise that frankly, we’d be crazy not to tap into.
The Orestes Canning Company, as they were called, continued doing business post-WWII and well through to the 70s before it was decided that a change of pace was needed. The Red Gold label we know today was purchased from a canning company down in Indiana that had gone out of business. “We had our Red Gold brand but it was still so small,” Colt explains. “We were just beginning our push to really become a major player.”
The story doesn’t end there – Red Gold has always had a strong ambitious streak. “Fast forward to the year 2000. That’s when things really changed,” Colt, who’s been part of the company since the age of 15, recalls. “Tri-Valley was a big company on the west coast and they owned the Red Pack, Tuttorosso and Sacramento labels which were all really big on the east coast. They went out of business, so we purchased those labels and started packing for those brands… all the while really pushing the Red Gold brand.”
Red Gold continued to excel as a top-tier private labeler even as their own labels grew. It was only a matter of time before the company got into the swing of things. “Name a retailer and we pack for them […] We’ll make Kroger product and at the same time we’ll make our own branded product. We have two different sales teams, one sells private label and the other sells our brands, but they’ll always be sitting right next to each other on the shelves.”
Make no mistake, the move from being just a private label packer to having their own brands in the roster didn’t come without growing pains. “We had large regional brands,” Colt says. “It was no longer just about packing tomatoes and being done. Things were different now. We’re still, to this day, figuring out how hard it is to manage everything for all these different brands. Especially when our competitors are brands like Del Monte, Heinz, [and other] big CPG companies.”
The adjustment period that came with quadrupling their brand ownership wasn’t the only bump in the road. Colt goes on to explain, “I think in the beginning it did [cause rifts] a little bit because we weren’t that great at pricing our brands and going to market with them. But we have that solved now. Private label has its own spot on the shelf, pricing structure and more premium products. And the branded products have their own pricing so they don’t really compete. We’re not after the same consumer anymore.”
Red Gold is now in a place where most of the kinks have been worked out. As Colt puts it, “There’s a synergy […] As far as our competition goes, I’d say we’ve gone above and beyond. We’re aiming to be the most premium positioned now. We’re going to try to keep our prices where they are, but still be the most premium product out there.”
Now that Red Gold has grown into their britches, their only issues seem to be balancing the best of both worlds. As such, Colt has tons of great insight into some of the issues other companies in their shoes may be facing.
“Retailers for the private label [will say], ‘we want innovation!’ Well, usually it’s the brand side that leads with innovation and the private label side quickly follows. We were always a fast follower so we never really had to innovate before, we just waited for the competition to do something and we would quickly replicate what they did to offer it in private label. In order to be relevant in today’s world, brands have to be innovative, which also ties into production. In order to run something, you want a lot of volume to start it on the [production] line.”
And certainly production plays into pricing/cost. While Red Gold seems to have their system figured out, Colt isn’t blind to the sort of complications one might face in this situation, “We have our own trucking company, if you’re sending a truck out, it’s nice to have a full load, especially if you have multiple products. So the fact that we do sauces, juices, canned tomatoes, ketchup and we have both branded and private label makes it easier to do. That way they’re getting good pricing.” But what happens if a company doesn’t have such a broad portfolio and can’t make the volume work? Colt explains, “If we use the private label to pull up the volume and Kroger takes a product from the private label side, they may say, ‘why do I need the Red Gold branded version of it if I can have my own [private label version]?’ It’s about finding that balance and making the commitment to your brand(s).”
What it essentially comes down to is this: in order to be innovative you have to take risks. Whether you’re a private labeler hoping to introduce branded products or a brand hoping to grow as a private labeler, you must have an entrepreneurial spirit. And if that means incurring extra cost and making smaller runs than so be it. Long term, this can only mean a higher demand for your products, thus a higher volume and larger production runs. Colt agrees, saying “Be prepared. It takes a lot of investment and time. You’re going to have a whole new department essentially. You’re going to invest a lot of money in the beginning. You really have to be committed to it.”
Whether the bulk of your business is comprised of private label or vice versa, stay true to yourself and you’ll come out on top. Colt finished our interview by saying, “Our private label business is 40-50% of our business so it’s super important. Our brands don’t make up nearly that much of our business.” And why is that? “That’s our business. That’s what we want to do. That’s what we’re good at.”