As the supplement industry rapidly grows, so do the opportunities for businesses and entrepreneurs who are able to quickly bring new products to market.
Developing new products takes time. However, supplement brands can accelerate their progress by partnering with experienced manufacturers that possess the necessary equipment, expertise, and industry connections.
Service agreements between manufacturers and brands come in different forms. Among these, contract manufacturing is a preferred arrangement for brands that want more direct control over product development. Under this type of agreement, a supplement brand designs a formula and hires a third-party manufacturer to produce it.
In the sections below, we’ll discuss why contract manufacturing is a great choice for innovative, growth-oriented supplement brands. We’ll also compare and contrast contract manufacturing with two other service agreement types: private label manufacturing and white label manufacturing.
What is Contract Manufacturing?
Contract manufacturing is a service agreement in which a brand outsources its manufacturing needs to a third party. Contract manufacturers possess facilities, equipment, expertise, and industry connections. They may also offer foundation formulas that brands can use as building blocks to develop new products.
In a contract manufacturing agreement, brands enjoy the benefits of a specialized manufacturing facility without incurring the expenses of ownership.
Under a contract manufacturing agreement, brands can develop products to their own specifications. While the manufacturing partner runs the facility and makes the products, brand owners remain involved in all key decisions regarding product formulation, sourcing, production, and quality control.
Key Advantages of Contract Manufacturing for Supplement Brands
Rather than selecting from a set of existing product formulas, contract manufacturing allows brands to create brand-new formulations with the assistance of experienced manufacturers. The key advantages of working with a contract manufacturer include:
- Tailored product development: customized design to meet exact brand specifications, including unique formulations and doses
- Quality standards: contract manufacturers offer advanced quality control systems, third-party testing capabilities, and certifications like NSF and GMP
- Cost-efficiency: brands save money on equipment, staff, and facility management
- Focus on other business areas: outsourcing manufacturing allows brands to focus on marketing, sales, and product development
Contract Manufacturing vs. Private Label Manufacturing
Contract manufacturing is just one possible service agreement that a supplement brand can enter into with a manufacturing partner. Another is private label manufacturing.
Similar to contract manufacturing, a private label agreement involves a manufacturer making certain products that are sold under another brand’s label. However, in a private label agreement, products are pre-formulated and selected by the purchasing brand.
Private label agreements may be simpler and cheaper for supplement brands but offer limited options for customization and bespoke formulations.
Contract Manufacturing vs. White Label Manufacturing
A third service agreement option between supplement brands and manufacturers is white label manufacturing.
White label manufacturing is similar to private label manufacturing. The difference is that the same white label products may be sold to multiple brands. Each brand sells the product as its own. The name “white label” refers to the concept of products with blank labels that different retailers can fill with their own branding. T
A white label agreement may be ideal for cost-focused brands that are satisfied with existing product formulations. However, contract manufacturing offers more opportunities for product uniqueness and targeted customer appeal. Contract manufacturing also offers superior strategic inventory control, with less demanding bulk purchase requirements compared to typical white label contracts.
Choosing a Contract Manufacturer for Your Supplement Brand
Choosing a contract manufacturer is a pivotal decision for your supplement brand. Factors to consider include:
- Proven track record: seek manufacturers with histories of long-term partnerships and regulatory compliance, along with positive testimonials from previous clients
- Manufacturing capabilities: make sure your manufacturer can handle your product type (liquids, capsules, etc.) and can meet your present and future volume needs
- Industry compliance: work with manufacturers that carry major certifications (e.g. GMP, FDA registration, and USDA Organic) and can produce special product types (e.g. vegan, kosher, and halal)
Most importantly, only work with a manufacturer that demonstrates trustworthiness and a commitment to helping your brand succeed.
Best Practices for a Successful Partnership with a Contract Manufacturer
A contract manufacturing agreement relies on trust and communication. At the onset of a partnership, both sides must work together to establish a communication schedule, preferred methods of communication, and key points of contact.
Collaborative product development is an exciting and challenging process. The ideal manufacturing partner is willing to engage in continuous dialogue as new ideas are presented, tested, and analyzed.
Once production begins, brand owners should remain engaged. This involves monitoring quality control reports and batch records, participating in audits, and discussing opportunities for improvement with the manufacturer.
Get Better Contract Manufacturing for Your Supplement Brand
Contract manufacturing offers an ideal balance of cost, quality, and brand identity control.
No matter which service agreement works best for your supplement brand, it’s crucial to find a manufacturing partner that understands your vision and growth goals.
At Yellow Emperor, we offer 100 foundation formulas to build on, along with an 80k bottles-per-shift liquid supplement production capacity. Contact our team today to discuss your contract manufacturing needs.
