HAIN Hain Celestial Group Inc

Amazon.com Inc. has quietly begun its first broad push into perishable private-label foods, enabling the online retailer to test new products with generally higher profit margins.

Amazon this week began offering for sale on its website whole-bean and ground coffee under its new Happy Belly label, pitting itself against crosstown rival Starbucks Corp. Amazon also has rolled out bottled Mama Bear baby food in two flavors.

Similar to its rollout of private-label clothing lines over the past year, Amazon released its new products with virtually no fanfare.

The Wall Street Journal reported last month that Amazon is planning four brands of private-label foods, diapers and cleaning supplies, including Presto! and Wickedly Prime. The new labels are sold exclusively to members of its $99-per-year Prime membership.

Such in-house brands tend to be lucrative for both their manufacturers and retailers, in part due to savings on brand development and marketing. By creating its own products, Amazon may be able to design packaging to reduce shipping costs, as well as better control profit margins.

Store brands reached $118.4 billion in U.S. sales last year, up about $2.2 billion from the prior year, data from the Private Label Manufacturers Association show.

An Amazon spokeswoman said she had no comment.

Amazon seems to be hoping to establish its brands as something other than just discount alternatives to mass-market competitors. Bags of 12-ounce Happy Belly coffee cost $9.99 each, about $2 more than Starbucks's breakfast blend, but about $3 less than Starbucks's French roast in a similar size. And it is less expensive than some small-batch roasters.

Amazon's apple blueberry organic baby food costs $12.49 for a dozen 4-ounce jars. That compares with $12 for a variety 12-pack of Earth's Best brand organic baby food from Hain Celestial Group Inc.

Amazon has taken pains to disguise the provenance of its new private labels. Neither of its product description pages identify Amazon, and a customer service phone number is for AFS Brands Inc. in Seattle. A representative there said the acronym stands for Amazon Fulfillment Services.

Still, the baby food comes with "no surprises," Amazon advertises on its site, and is "grown without potentially harmful pesticides or chemical fertilizers." Happy Belly coffee, meanwhile, is "grown by small-scale farmers" and is "sustainably sourced."

The brands aren't Amazon's first foray into private labels, which generally rely on unnamed third parties to make them. It has a wide range of goods under its AmazonBasics line, such as batteries, tripods and bocce ball sets, and sells its own Pinzon brand linens.

It quickly pulled its Elements diapers after discovering design issues in early 2015, though it still sells baby wipes under the name.

Write to Greg Bensinger at greg.bensinger@wsj.com

(END) Dow Jones Newswires

June 29, 2016 14:05 ET (18:05 GMT)

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