If the term Ingredient Branding isn’t completely known to you yet, then you came across the right place. We will answer the most common questions on Ingredient Branding, provide best Ingredient Brands examples and lead you to additional sources on our website to discover the topic of Ingredient Branding in more depth.

What is the definition of Ingredient Branding?

On Wikipedia Ingredient Branding is defined as “creating a brand for an ingredient or component of a product, to project the high quality or performance of the ingredient”. Another popular definition is Intel’s  “a promotion of a brand within a brand to the end user”. We like the definition by Uggla / Filipsson based on Baumgarth (2004) and Rizeboos (2003): “Ingredient Branding is a specific form of brand collaboration, distinct from co-branding that highlights a specific component or brand attribute to enhance a product or service that can potentially become a category point-of-parity, create multi-level visibility, awareness, differentiation and preference in the down-stream value chain” (© The Icfai University Press, 2008).

Our own definition of Ingredient Branding is quite simple:  we call it PARS PRO TOTO, a part taken as a whole. What does that mean? It means that the ingredient is becoming a trigger for the buying decision in favor of the final product. The ingredient can be a material, a component a production process, a specification or a service that is positively influencing the buying decision of the end user. That benefits its direct customers to sell more end products with that specific Ingredient inside.

In that sense Ingredient branding is a long-term orientated vertical co-branding between the provider of a component, material or service and the provider of a final product that incorporates that particular Ingredient. The two probably most known applications of such a long-term Ingredient Brand Model are the build-in of INTEL® processors into computers, laptops or mobile phones and the production of waterproof apparel and footwear incorporating Gore-Tex® fabrics or laminates.

Why should a company think about Ingredient Branding?

The vast majority of companies are not able to adequately convey the entire value they are creating for their respective value chain. Often, they are locked-in their role as an anonymous supplier. Their value and their contribution to the finished product is unknown to most market participants beyond their direct customer line. Therefore they are exposed to the "Lopez-effect"; named after the once famous Head of Purchasing at Volkswagen, who was known for his merciless negotiations with suppliers. Price & margin pressure, unfavorable payment terms and exchangeability as a supplier are the economic consequences. Not a great place to be in. Ingredient Branding provides a valid solution  to escape from this unfavorable position in the supply chain.

How is the Ingredient Brand Model properly applied?

The fundamental principle of Ingredient Branding is to apply a Multi-Level Marketing Model, where the component or ingredient is promoted to at least one level further down in the demand chain than its direct clients with the clear target to stimulate a pull for the specific component throughout the demand chain. This gives the Ingredient Brand supplier the opportunity to reduce its sole dependence on its direct customers and escape their economical pressure. By communicating the benefits of the Ingredient, a company starts to build first awareness and later insistence for its component in the downstream value chain. Doing this consistently and successfully over a longer period of time, helps the company to elevate its position in the value chain and emerge from the role of a supplier to the position of a business partner.

After the recognition of the Ingredient Brand by the relevant target audience, various push-marketing activities can be executed together with direct customers and distribution channels (e.g. Retail) in order to stimulate the sell-out of the finished product made with that branded ingredient.

Our experienced team has consulted in over 30 projects on 3 different continents for brands like Primaloft®, Econyl®, Isko™, Biosteel®, Gore-Tex®, Westport™, Lenzing, We aRe SpinDye® or terracare®. Click here to see some examples of successful Ingredient Brand implementations.

What is the difference between Ingredient Branding and Co-Branding?

Ingredient Branding highlights a specific component or brand attribute to enhance a product or a service. It is a long-term process in which the ingredient is becoming a part and cannot be separated from the final product. The Ingredient Brand can create awareness, differentiation and preference for the final product in the down-stream value chain.

Co-branding on the other side typically involves two finished consumer products used in a single product or service. The purpose of Co-branding is to capitalize on the equity of each brand and enhance the success of the total product. It has more promotional character than Ingredient Branding and is short-to mid-term orientated. Good examples of successful Co-branding are Omega & Biosteel, Panzerglass & Swarovski, McDonalds & KitKat, Nike & Apple, GoPro & Red Bull or Adidas & Five Ten.

How do Ingredient Brands differ from so called self-branded components?

Self-branded components are only available within one brand, like NikeAir or Audi Quattro. Ingredient Brands are available through multiple brands and ideally in various applications, performance levels and price points, which are crucial elements to successfully build an Ingredient Brand. Self-branded components, which are offered exclusively by one brand require enormous marketing power to become known and relevant to the target audience, thus they lack the important Ingredient Branding function of a “trusted seal”, which can be found in the product offerings of multiple brands. So only very few and strong consumer brands are able to successfully establish self-branded components exclusively available within their brand ecosystems.

Which are the best examples of the most successful Ingredient Brands?

Ingredients Brands can be found in various industries, from fashion, food, consumer electronics to e-mobility, electronics and banking & finance. Gore-Tex, Shimano, Dolby, Teflon, Tetra Pak, Paypal or Android are just a few Ingredient Brands that have successfully become triggers for the buying decisions of finished products incorporating them as relevant components and adding value to their host brands.

The best-known example of an Ingredient Brand is without doubt Intel with its “Intel Inside” campaign, launched in 1991. It has helped fuel almost a 12-fold increase in net income for the company and making the microprocessor brand a key decision-driver in the personal computer purchase process. 

But Ingredient Branding has moved on since the 20st. century and a next generation of Ingredient Brands are emerging for example in the fields of sustainable fashion and the circular economy. You can read more about that here.

What are advantages and risks of Ingredient Branding?

Advantage: As an Ingredient Brand you step out of the role of a supplier to become a business partner on eyesight. This allows you to create a competitive differentiation and capitalize on the positive image of the end products made with your ingredient. By applying an Ingredient Brand strategy, you can increase brand awareness and brand loyalty among your customers and create entry barriers for competitors in your sector.

Disadvantage: On the other hand, stepping out of anonymity by acting as an Ingredient Brand comes with a great responsibility. Your brand becomes identifiable, which means that your activities are now visible for competitors who may adopt a similar business or marketing approach. Additional costs and resources for marketing, customer service and quality management occur as well. Another risk associated with Ingredient Branding is that collaborations with unsuitable brand partners can dilute the equity of your own brand over time.

The key question to establish an Ingredient Brand is therefore, how much increased value can a product, component or service add to the finished product to make that Ingredient relevant for the buying decision? What is relevant today has changed and it might not only be a performance driven criteria, but could be also influenced by soft factors such as attitudes, brand values, transparency or sustainability efforts. Therefore we have developed the Next Generation Ingredient Branding Model. In this model you can learn that the relevance of a component for the buying decision of the final product can differ from product to product, from category to category.

 How to build an Ingredient Brand Strategy?

In order to build your Ingredient Brand, you must first be clear about what it means for your company to become a brand. As mentioned above, both benefits and risks arise from this situation and building a brand also means profound organisational changes if you want to launch and manage a brand successfully over time.

The next step is to define your brand in all relevant dimensions, but most of all to find your brand promise with which you can become a relevant component. The creation of your brand framework and identity (your required brand infrastructure) is then followed by the brand activation, where a demand pull is build-up through meaningful, purpose-driven marketing programs. 

Now it is the time to start acting as an Ingredient Brand in all functions of your company and to constantly manage the push/pull activities of the demand chain. If you do that consistently over a longer period of time you will be finally able to extract more value out of your innovation by achieving a price premium, strengthening the ties with end users, building up brand equity and creating a stronger position within your supply chain.

But be aware of a serious misjudgement we are often confrontated with and that is the belief that you can build an Ingredient Brand only through the push-function via your direct customers and distribution without establishing a corresponding pull-function on the other side.

In the starting position, Ingredient Branding is a hen-and-egg situation. Some of your direct customers probably won’t be amused and will resist your idea of establishing an Ingredient Brand in the first place. Retailers have proven over the past 50+ years that they use any brand to their advantage that can potentially generate them more revenue and profit, but building a brand for a supplier, that is not in their general business interest. And Distribution/distributors deliver no added value for a brand. They fulfill solely the logistics and distribution function.

Also you have to start conducting your brand partner network. Ingredient Branding is much more than putting a tag and a label on the finished product. It is a Brand & Business Model by which a company actively manages its total brand experience through multiple layers of direct and indirect customers and communications. The ability to manage such a brand network is crucial, as the total brand experience of the Ingredient Brand is perceived in the entirety of its appearance, directly and indirectly through its partner network.

Luckily, in today’s digital and content driven Marketing world, there are endless opportunities to create the pull-function through smart and meaningful communication activities, which are also an integral part of the BRAIND offering.

If, after reading this initial information, you are ready to delve deeper into the topic of Ingredient Branding, we recommend that you fill out our Ingredient Brand Fitness Check now!

Alternatively, you can make an appointment for an initial orientation meeting with one of our experienced Senior Consultants to conduct an initial evaluation of your Ingredient Brand idea.