House of Cards? Navigating the High-Stakes Game of Private Label in Jan/San

Picture the scene. It’s a friendly, high-stakes poker game that’s been going on for years. On one side of the table sits the Manufacturer, a seasoned pro who taught everyone the rules. On the other, the Distributor, a sharp, ambitious player they mentored. The chips—market share, customer loyalty—have been passing back and forth in a familiar, profitable rhythm.

Then, there’s a tell.

The Distributor, instead of looking at the branded cards the Manufacturer dealt them, glances down at a different deck under the table—one with their own logo on it.

Welcome to the Private Label Predicament, the most dramatic and delicate game in the jan/san industry today. It feels like a betrayal to one side and a declaration of independence to the other. But what if it’s not a zero-sum game? What if both players can leave the table richer?

First, let’s understand why both players are making their moves.

THE DISTRIBUTOR’S PLAY: WHY THEY’RE GOING ALL-IN

If you’re a manufacturer, it’s easy to see a private label launch as an act of aggression. But for a distributor, it’s a calculated move driven by powerful motivators.

• The Margin Motive: This is the most obvious card. Private label products, free from the manufacturer’s pricing structure and marketing costs, almost always offer a richer margin. In a market where every penny counts, this is an incredibly seductive proposition.
• The Control Card: After the supply chain chaos of the early 2020s, distributors are wary of being at the mercy of a single source. Developing their own line gives them perceived control over their destiny—from sourcing and inventory to branding and pricing.
• The Customer Lock-In: When a customer is happy with “Regional Supply Co. Premium Bath Tissue,” they are loyal to the distributor, not just a national brand. It makes that piece of business stickier and far harder for a competitor to poach by simply offering a discount on the same branded product.

THE MANUFACTURER’S REACTION: READING THE TABLE

For manufacturers, watching a trusted partner launch a competing product can feel like a direct hit. The reaction is a mix of legitimate business concerns and a very real sense of partnership erosion.

• The Sting of Betrayal: The raw emotion is real. “We spent years training your sales team, providing marketing funds, and making joint calls to build this market. Now you’re using that knowledge to compete against us with a knockoff?”
• The Fear of Cannibalization: The immediate question is, “Will this new, cheaper product simply replace the sales of my own brand?” The fear is that the distributor will now only present the branded option as a token gesture.
• The Quality Quandary: You’ve spent decades building a reputation for quality. What happens if your partner’s private label toilet paper is flimsy or their soap dispenser leaks? That poor experience can tarnish the customer’s perception of the entire category, making it harder for anyone to sell premium solutions.

CHANGING THE GAME: FROM POKER TO PARTNERSHIP

The tension is real, but the outcome isn’t predetermined. A private label launch doesn’t have to destroy a partnership; it can be the catalyst that forces it to evolve into something more transparent and strategic. It’s about moving from a game of secrets and bluffs to one with clear rules of engagement.

Here are actionable steps for both sides to not just survive the private label game, but to thrive in it.

ACTION STEPS FOR DISTRIBUTORS: PLAY YOUR HAND WITH INTEGRITY

1. Practice Strategic Transparency.Don’t let your key manufacturing partner find out about your new line from a customer. Proactively tell them your strategy. Frame it as creating a “good, better, best” offering, where their brand represents the innovative “best” solution. This transforms a perceived betrayal into a business strategy discussion.
2. Define the “Swim Lanes.”Come to the table with a clear plan for preventing channel conflict. Propose which market segments are for your private label (e.g., price-sensitive, bid-heavy accounts) and which are for their brand (e.g., Class-A properties, healthcare facilities that require specific certifications or innovative technology).
3. Commit to a Quality Floor.Reassure your partner that your private label won’t be junk. A race to the bottom on quality ultimately damages your reputation, making you a less effective partner for their premium brands in the long run. Your credibility is a shared asset.

ACTION STEPS FOR MANUFACTURERS: HOW TO STAY THE HOUSE FAVORITE

1. Build a Moat Around Your Brand.You cannot win by being a little cheaper. You win by being irreplaceable. Double down on innovation (IoT-enabled dispensers, sustainable solutions), superior performance, and world-class support. Give your distributor a powerful reason to lead with your brand—because it solves customer problems in a way no private label can.
2. Offer a “Managed Private Label” Program.If you can’t beat them, supply them. Many top-tier manufacturers now offer to produce a distributor’s private label line. This bold move keeps the manufacturing revenue in-house, ensures product quality, and deepens the relationship, turning a competitor into a client.
3. Reward True Partnership.Instead of pulling back in frustration, lean in. Offer enhanced marketing funds, exclusive access to new technologies, and more dedicated sales support to partners who demonstrate a clear commitment to growing your branded products alongside their own. Make loyalty a demonstrably profitable strategy for them.

The rise of private label isn’t a sign that the partnership model is broken. It’s a sign that it’s maturing. The choice is yours: you can play a tense, zero-sum game of poker, trying to bluff your partner out of the pot. Or you can put your cards on the table and work together to build a bigger, more profitable game for everyone.