Private label vs OEM: where they differ

Private label (a product sold under the retailer's or importer's own brand) and OEM (original equipment manufacturer, production to the buyer's own recipe or specification) differ on one question: who owns the recipe and who owns the brand. Under private label the buyer owns the brand and the supplier usually owns the recipe. Under OEM the buyer brings both the product requirement and the brand, and the supplier does the making. This piece explains both models in plain words and says how Color of Vietnam can work in each.

Three ways a product reaches a shelf

In packaged food, a snack can arrive on a shelf by three routes:

• Branded: recipe, packaging and brand all belong to one company. Our four brands travel this route.
• Private label: a retailer or importer wants a product carrying their name. They pick from what a supplier already makes or has developed, and change the packaging to their brand.
• OEM: the buyer arrives with a specific requirement, sometimes a recipe of their own, and needs someone to make exactly that.

In practice the line between private label and OEM is soft. Many projects start as private label, the buyer asks for recipe changes, and the work drifts into OEM. The better approach is to ask about each right of ownership separately.

Who owns what

Before anyone talks about price, we lay four things on the table and ask who each belongs to:

• The recipe: who holds the ingredient ratios and the process. Usually the supplier under private label, usually the buyer under OEM.
• The brand and packaging: name, design, every word on the pack. In both models these belong to the buyer, who is responsible for what is printed under the rules of their market.
• Facility certificates and records: ISO 22000, Halal and FDA registration belong to the production site. The buyer may use copies for their authorities and customers, but does not own them.
• Test data: shelf-life results and laboratory reports. Agree who pays for them and who may use them.

Writing these four lines down at the start avoids most later disputes, especially once a product sells well and both sides start wanting more.

How Color of Vietnam can work

We are a brand owner, not a factory. Our products are made at partner facilities in the Thach That – Quoc Oai industrial park in Hanoi, to our recipes and standards. That position allows three kinds of cooperation:

• Importing or distributing our four brands as they are. This is our main route and the one we are preparing for export.
• Private label built on a recipe we already have, such as a cashew bar or a rice cracker, packed under the buyer's brand. The recipe stays ours, the packaging is the buyer's.
• Development to a buyer's own brief, when they bring an idea or a written specification. We handle recipe direction, small trials and coordination with our partner facilities.

What we do not promise is to take every request. If a product needs a line our partners do not run, or ingredients outside the ones we know well, we say no early rather than accept and deliver half a job.

A recent question about a nut bar

An importer asked whether the Natural & Healthy cashew bar could be packed under their brand, with a little less sweetness for the palate of their market. That request sits exactly between private label and OEM.

We answered with four questions before any price: who owns the adjusted recipe, who designs the packaging and takes responsibility for its content, how the partner facility's certificates would be used in their paperwork, and whether the minimum order fits one production run. Once both sides agreed on those points, we moved to a small trial with reduced sugar, and only then to a quote. That order costs a few days at the start and saves starting over once a sample is already in hand.

What a buyer should ask any supplier

Whichever model you choose, ask plainly: who keeps the recipe if the cooperation ends, may the supplier sell a similar product to others, which certificates are valid until when, and who is told first when a recipe changes. A supplier who answers these questions directly is usually the supplier who delivers the right goods.

If you are an importer or distributor considering private label or a product of your own built on Vietnamese ingredients, get in touch through our Contact page and tell us the idea. We will reply with the four questions above.