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Differences in the Product Development Process for Smaller Companies and Private Label Foods

It is important to note that the product development process for smaller companies may be different from the processes used by large manufacturers. Smaller companies generally have limited resources for new product idea generation and testing and may have limited expertise and budgets for cutting-edge scientific research. In addition, advertising budgets may be non-existent, and product sales may be limited to smaller retailers due to the prohibitive expense of slotting fees to sell products in larger retailers (Fuller, 2005).

Product development for private label products also differs from the product development carried out for large national brands. Most private label foods are produced by contracted manufacturers or retailer co-ops, although a few retailers own their manufacturing plants (Leader and Cuthill, 2008). At times, processors of brand name products will also make private label products to utilize excess plant capacity (Ward et al., 2002). Typically, private label products aim to copy product concepts that were developed initially by brand name manufacturers. This allows the products to be produced with fewer research and development costs and allows retailers to sell items for which the product concept has already been tested as successful in the marketplace (Leader and Cuthill, 2008). This marketing strategy, along with the absence of slotting fees and lower sales force and advertising costs, allows private label products to be sold at lower prices than brand name products. On average, retailers generate 25–30 percent more profits on sales of private label products than brand name products (Private eyes, 2007).

Challenges to Introducing New or Reformulated Products with Reduced Sodium

There are a number of challenges to reducing the sodium content of processed foods. As mentioned in the description of the role of sodium in foods (Chapters 3 and 4), product taste, shelf life and safety, and other physical attributes of foods can change and become unacceptable if too much sodium is removed and not replaced with other functional ingredients. In addition, costs of reformulation are seen as prohibitive for some products. Further, certain types of products, such as organic products, may be limited in the types of sodium replacements that are allowed for use.15 Of these challenges, food industry participants in the committee’s public information-gathering workshop (March 30, 2009) cited concerns about

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7 CFR § 205.600-606.



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