Tom Branna, Editorial Director04.01.15
I want what I want when I want it; it’s not just the mantra of spoiled kids and megalomaniacal bosses, it’s often the cry of entrepreneurs, too. Thanks to contract manufacturers, new players in the household and personal products industry know where they can get it! Outsourcing can save money and time for startups and established players alike. At the same time, opting for made-to-order, as opposed to do-it-yourself, enables newbies to focus on what they do best or enter a category with little capital investment. All are reasons why sales of contract manufacturing services continue to post double-digit gains year after year, say industry experts.
“Outsourcing has been growing and is projected to continue to grow at a 15% CAGR,” according to Lisa Shambro, executive director and founder of Foundation for Strategic Sourcing, Longmont, CO.
She expects the heady gains for contract manufacturers to continue for several reasons:
“Starting your own company is very appealing to a lot of people,” noted one industry veteran. “You can be making $80,000 to $120,000 by Year Two, and working from your own home at the same time.”
It should come as no surprise that contract manufacturers contacted by Happi agree with all of those advantages, and add a lot more of their own. Sure, they’re biased, but they’ve also been around the block a few times to know what makes one entrepreneur succeed and another one fail. It’s not only about the concept; it’s about the execution, too. And that’s where choosing the right contract-manufacturing partner is critical to a company’s initial and long-term success.
But it’s not all about getting products to market quickly. It’s about getting them there economically, too. For example, to help new customers keep the total cost of their project down, Gar Labs has published all the packaging suppliers that it once brokered. The move was made so that Gar customers could compete with the low cost products being manufactured in China and quickly know whom all the packaging companies are and buy from them directly, according to Tom Raffy, owner of Gar Labs.
“We make less on each order,” he acknowledged, “but since we started publishing the packaging suppliers, we have had a 300% increase in reorders because our customers now have competitive pricing.”
What They’re Buying
Few observers of the personal care and household space get the 30,000-feet view while working elbow-to-elbow in various segments like contract manufacturers. As a result, they’re often privy to the latest trends and fashions well before products appear in the popular press. When they spot a trend, it’s usually spot-on. At Gar Labs, for example, Raffy has seen a dramatic increase in men’s styling aids, particularly pomades.
“They have grown to the point that we installed a dedicated department for hot filling them,” he explained.
At the same time, there’s renewed interest in conditioning shampoos as well as more orders for body butters and BB creams, according to Raffy.
For more than 50 years, Lady Burd Cosmetics has specialized in putting people into the beauty business, explained Allan Burd, VP and director of product development, Lady Burd Cosmetics. The company manufactures and sells a full range of color cosmetics, powders, custom pressings, skin care, mineral makeup and cosmetics accessories to existing cosmetic companies, entrepreneurs and makeup artists—essentially anyone who wishes to sell their own line of beauty products.
“We have thousands of colors and formulas in our stock line, and also specialize in custom formulations and filling for many branded lines,” said Burd. “We also provide brand developing services including professional logo printing and custom labels.”
Right now, lips, bright colors and full coverage long wear lip formulas are trending. Demand for high-end skin care treatments is rising as well, because, as Burd notes, good skin never goes out of style.
At Kleen Test Products, some of the trends that are running across multiple categories include increased interest in antibacterial/disinfecting products, the need to blend and fill more complex formulations and continued interest in new forms of packaging that increase functionality and are more sustainable, explained Doug Arnold, senior vice president.
CoValence Labs develops and manufactures cosmeceuticals with a global fusion of elegant textures coupled with natural and science-driven actives, according to Melinda Wochner, chief operating officer and VP-marketing.
“In the past, it was either about the beautiful textures or the results generated by the actives; but now, the drive is to marry both modalities,” she explained.
But whatever they’re selling, a startup has to find the right manufacturing partner.
“They need to look for expertise, longevity and experience in the market,” explained Karla Horton of Unicep. “They should partner with someone that will treat their product like their own.”
Verla is a private label manufacturer specializing in turnkey services for luxury fragrances, high-end skin care, performance-driven color cosmetics, bath and body products (like creams, powders and scrubs) hair care and nail lacquer.
“We are ISO 22716, ISO 9001 and organic certified,” explained April Vignone, president, product and packaging development, Verla International. “We offer customized turnkey programs to meet the individualized needs of our clients, including marketing assistance, manufacturing, packaging, blister/shrink/cello wrapping, kits, pack-outs, EDI, and warehousing to shipment of finished product including drop shipping.”
Verla’s in-house mechanical engineering department builds all phases of its filling equipment from design concept to cutting the steel and constructing the equipment from the ground up.
“We are known for our ability to fill and seal all types of unique heat seal tubes, like tube within tube, side by side tubes, extremely large and very small tubes,” added Vignone. “Designing our own equipment has made a significant impact in our high speed filling equipment for fragrances and all loose and pressed powders.”
Verla’s R&D and innovations team also works directly with leading raw material companies to strategically create and manufacture new raw materials for state-of-the-art products. Finally, the company has a distribution warehouse onsite and ships to over 4000 stores weekly.
What They’re Facing
Half of all small businesses in the US fail within the first year, according to Small Business Trends, and 95% fail within the first five years. Despite those sobering statistics, dozens of startups make their debut in the rough-and-tumble world of personal care every year. And while they face some daunting obstacles, choosing the right manufacturing partner means that they don’t have to go it alone.
According to Raffy new, over-reaching regulations by the Food and Drug Administration and state agencies is one of the biggest problems facing startups and established players alike.
“These agencies started treating topical ‘non-dosage’ cosmetic products as though they were consumables or internal OTC products,” explained Raffy. “It made no practical sense from a consumer safety stand point but ended up raising our cost through increased staffing to meet regulatory compliance.”
But an over-reaching regulatory agency isn’t the sole province of the US.
“Industry regulations are constantly changing and it isn’t easy to keep up with them, particularly in the European Union (EU),” noted Burd. “That’s why we have a full regulatory department so we keep up on the changes. We are constantly reformulating and keeping our customers up to date, helping them every step of the way so they can register their products in different countries.”
Burd noted, too, that in uncertain economic times, some clients have had to include lower budget items in their product lines. Lady Burd Cosmetics was able to accommodate them by helping them modify their product lines to meet their budgets without sacrificing anything other than a slight change in style, he recalled.
If startups manage to overcome aggressive regulations and actually get their products made, they still have to contend with a lot of competition.
“There could be six companies introducing products into the same category,” explained a spokesman for US Nonwovens. “You have to be tenacious; work 16 hour days and be willing to travel around the country. If you don’t have it in you, don’t bother. You’ll run out of gas in two years.”
Vignone told Happi that young companies and entrepreneurs are an important aspect of what drives the industry to the next level. Often their ideas and concepts are new and cutting edge, but without the resources and infrastructure, it can leave them challenged with meeting cost objectives, time lines and marketing goals. In contrast, at larger corporations it is difficult to react quickly, especially to market trends, where a normal product launch is one to two years.
“We provide the platform to significantly reduce launch time to 12 weeks so they can capitalize on quick emerging trends as they arise,” explained Vignone. “For smaller companies the challenge is meeting the timelines in order to ship on time and having the financial freedom to move quickly and efficiently through the process. In this case, we are very pro-active in managing the time-consuming details to keep them ahead of deadlines and offer financial resources so they can focus on their marketing and retail objectives.”
If You Can Make It There…
And yet, just because a company has a product made, doesn’t mean that they’ve made it. Contract manufacturers told Happi that their customers are having trouble getting placement on retail shelves.
“The retail industry is focusing more and more on selling national bands to the exclusion of new and better local brands, so our customers resort to selling their products on the internet, typically on Amazon.com,” noted Raffy.
Marketing has become a huge hurdle for new cosmetic/skin care brands coming into the market, too, said Wochner, who noted that a new brand is far more successful if it already has distribution and clever marketing.
“We have seen a handful of brands have the most beautiful packaging and gorgeous products, but they couldn’t get the product in anyone’s hands,” she recalled. “On the flipside, we have seen brands that didn’t have the best packaging, however, they knew how to get the products in the end users’ hands, and continue to thrive.”
When CoValence first started out in the professional skin care market, it was all about what was inside of the bottle, recalled Wochner.
“But, now with the expansion of media, a company’s distribution and marketing plan is critical, which is why we help our clients think around the marketing, not just the creation, of a product,” she said.
Clutter, according to Burd, can be a real killer.
“There are many cosmetics brands out there. What will make yours different? What will make yours stand out?” he asked. “This is why color, packaging, formula, and image are so important.”
Lady Burd Cosmetics helps its clients with that by having so many different formulas, colors and packaging styles to choose from. In addition, the company launches new products more than four times a year to keep its customers on-trend.
According to Karla Horton of Unicep, new companies must differentiate their brand and bring “new” to the retail shelf.
“They need a great product, inviting brand, packaging that will stand out, and a sampling program,” she explained. “What we can provide is a turnkey service. We can mix, fill and package—so their product is ready to sell.”
Of course, getting started isn’t cheap. One contract manufacturer told Happi if a newcomer doesn’t have $250,000 to get going, they should keep their dreams to themselves.
“Everybody is making something, somewhere,” he cautioned. “The volume is there, but the margins are in the gutter.”
That’s why it is critical for companies to carefully evaluate their would-be manufacturing partners.
When selecting a contract manufacturing partner, it is very important to look behind the curtain to evaluate the depth and experience of the company that you will be trusting to manufacture your product and the quality of the facilities and equipment that will be used to produce your product, explained Arnold, who added that the contract manufacturer’s financial health should also be evaluated.
“These evaluations should take place at the start of a relationship and then on an ongoing basis,” he suggested. “Too often, the contract manufacturer selection process starts with a toll price bid and then moves quickly to the manufacturing stage without further evaluation of these important, non-price factors.”
CoValence Labs educates would-be clients on the process and the cost, too, by offering start-up cost worksheets.
“The last thing we would want to do is to start creating a product and then realize they cannot afford it before it even launches,” explained Wochner. “We are transparent with the costs.”
Depending on their distribution availability, the CoValence team will typically point them to its private label products in lieu of customizing.
“The private label products are fully developed for someone to take ‘as is’ and try their hand with the process, before jumping into the more complicated task of product customization,” advised Wochner.
For its larger clients, Unicep offers services that they may not have in house—especially with blow-fill-seal packaging. According to Horton, Unicep also acts as an extension of their business and can supplement their internal resources when it comes to manufacturing.
“With our formulation services, we can assist with creating new products, or improving those currently on the market. For newcomers, contract manufacturing is a way for them to enter the market. It’s difficult for startups to have all of the necessary resources. If they have a product that has a place in the market, along with a business plan and marketing strategy—we can typically help with the rest.”
Demand & Supply?
Of course, not every outside manufacturer has similar capabilities. Ava Anderson Non Toxic is a privately-held, direct sales company making personal care and household products. Non Toxic was working with eight different outside manufacturers but has moved some production in-house and is now down to just two outside vendors. Here’s what the company’s president had to say about why she stopped working with the other contract manufacturing firms.
“They weeded themselves out. They couldn’t keep up with demand,” said Kim Anderson founder and president, Ava Anderson Non Toxic. “We grew 300% in 2014, [and we thought it would have] inspired them to invest in new machinery or new people, but they weren’t interested in doing that.”
As a result, Ava Anderson Non Toxic decided to bring production in-house and is currently manufacturing about a third of its products at its new Rhode Island facility.
It can be even more difficult for fledgling startups. Adina Grigore has shifted the production of her brand, S.W. Basics of Brooklyn, from her kitchen sink to its own space in New York to contract manufacturers as her company has grown from selling on Etsy to independent retailers to, most recently, Target. This Spring, seven of S.W. Basics products will be offered in Target’s new Made To Matter Collection, a curated arrangement of natural, organic and sustainable products.
When Grigore was selling her skin care products—which include moisturizer, cleansers, lip balms and more—at local markets, she was able to manufacture products at home, and keep her day job. In 2011, when she decided to take the plunge and focus on S.W. Basics, she quit her job as a personal trainer, hired a designer and moved production to a new space in New York. But she soon realized a contract manufacturer would make more sense—only it wasn’t so easy to find one.
“I called manufacturers from 2011 to 2013,” Grigore told Happi. “People didn’t want to work with our formulas.”
Today, S.W. Basics works with three CMs, including the very first that took on her lip balm in 2013. “I knew I could meet their minimums,” said Grigore, adding that that she’s sure more companies would take her calls these days now that’s she working with Target.
While every new player should look for price, service and quality from their contract manufacturing partner, Raffy insists that service is the most important of the three.
“New customers constantly tell me about companies not taking their calls or not offering them any technical help or advice; they are desperate for information, and we are happy to share it,” he told Happi.
Lady Burd Cosmetics advises newcomers to work within their means.
“If they have a small budget, then we can start small with them,” insisted Burd. “This way they can make sure that their idea has a foundation before they invest a lot of hard work and money into their dream. Nothing is impossible!”
Why Me?
Every contract manufacturer has a specialty of some sort. Lady Burd Cosmetics, for example, provides a one-stop shop for entrepreneurs seeking to create an entire line of products, according to Burd.
“Our customers are assigned a personal sales representative that will show them our entire line, giving them the option of what formulas, colors and packaging they want for their company,” explained Burd. “We can also assist them with logo design and package printing to help them create the image they are looking for. We will service the small businesses and startups as well as the well-established brand names.”
US Nonwovens has the buying power and the agility to help its customers.
“Our customers give us a date and we hit it,” explained a company spokesman. “We’re aggressive and nimble like a gunship, but with the leverage of an aircraft carrier.”
That’s because US Nonwovens purchases hundreds of millions of dollars of material every year—all while working closely with its customers.
“We listen very carefully to them and decode what they’re saying to the minutest detail and get them what they need,” he explained. “No company offers more SKUs than us.”
With seven facilities, Kleen Test Products has several different product platforms, including liquid filling, wet wipes, die cutting, dryer sheets and specialized nonwovens conversion.
“Within each of those segments we are serving customers in OTC, personal care, home cleaning, laundry and I&I,” explained Arnold.
Kleen Test Products provides its customers with a highly-customized approach to their needs. In its simplest arrangements, Kleen Test just provides contract manufacturing services. In more complex relationships, customers bring their ideas to the company.
“We then design a finished product and develop a commercially feasible manufacturing process to make it,” advised Arnold. “From there, we can handle everything from raw material sourcing to finished product distribution.”
He noted that a single customer may have a different set of needs for each of its products, so Kleen Test tailors its approach to fit those needs.
“To ensure industry-leading quality, we believe in having all the necessary resources on-site including: validation team, formulation chemists, regulatory experts and separate analytical, micro and development labs,” said Arnold. “With our many years of product development experience, we are able to help customers launch products quickly.”
Throughout the year, Kleen Test receives many inquiries from would-be clients who may have a great idea, but for one reason or another aren’t quite ready to work with a contract manufacturer.
“Our business development team does a great job of helping these potential clients,” explained Arnold. “It may be in the form of providing referrals or just sharing advice. If it’s not a product that we can manufacture, we will do our best to help them find a way to make their idea come to life.”
At Unicep, it’s all in the delivery.
“Our customers are looking for a unique delivery system or applicator,” explained Horton. “They are also looking for packaging that makes them stand out in the market but stay true to the core principles of their brand. With our turnkey services, we can mix and package their product so it is ready for the retail shelf.”
The company specializes in working with specialized liquid and gel products (mixing and filling) and packaging them in unit dose packaging. Over the years, Unicep has acquired expertise with blow-fill-seal unit dose dispensers—where a blow molding process is used to create the shape of the dispenser.
CoValence Labs not only creates novel products, it helps clients think around their marketing and how they can best position the products for greater success.
“Our current clients tell us that we are different from other labs because of our creativity, flexibility, customer service and we think like brand developers,” explained Wochner. “In addition, people, not products, come first at our lab. When people come first it generates the best working relationship with our clients and in turn, we are grateful to be able to help them grow their businesses.”
Room to Grow
According to Vignone, today’s personal care consumer base is the largest it has ever been and shoppers are savvy, educated, and are always in search of the next best product. To service its clients, Verla International has a specialized division, a separate building dedicated to developing and creating lines and promotions.
“This department enables new customers to walk in and pick or design packaging components, formulas and shades concepts, and method of shipping and have a complete line developed without the responsibility of having an expensive infrastructure,” explained Vignone. “So whether you are a new company looking to ‘break-in’ to the beauty industry or an established brand looking to increase your profit margin, we have the resources to make it happen.”
There’s no doubt that getting a product to market and staying there is a journey that’s full of detours and danger. But those dark clouds come with a silver lining.
As Horton points out, “The great part about the beauty industry is that consumers are always up for trying new products.”
“Outsourcing has been growing and is projected to continue to grow at a 15% CAGR,” according to Lisa Shambro, executive director and founder of Foundation for Strategic Sourcing, Longmont, CO.
She expects the heady gains for contract manufacturers to continue for several reasons:
- Contractors can get branded marketing companies to market faster;
- Branded marketers are increasingly seeking innovation externally to bring new products to market and meet unique consumer needs;
- As marketers line extend into new products/technologies they need to source outside of internal capabilities; and
- Outsourcing generally saves 30% of fully loaded costs.
“Starting your own company is very appealing to a lot of people,” noted one industry veteran. “You can be making $80,000 to $120,000 by Year Two, and working from your own home at the same time.”
It should come as no surprise that contract manufacturers contacted by Happi agree with all of those advantages, and add a lot more of their own. Sure, they’re biased, but they’ve also been around the block a few times to know what makes one entrepreneur succeed and another one fail. It’s not only about the concept; it’s about the execution, too. And that’s where choosing the right contract-manufacturing partner is critical to a company’s initial and long-term success.
But it’s not all about getting products to market quickly. It’s about getting them there economically, too. For example, to help new customers keep the total cost of their project down, Gar Labs has published all the packaging suppliers that it once brokered. The move was made so that Gar customers could compete with the low cost products being manufactured in China and quickly know whom all the packaging companies are and buy from them directly, according to Tom Raffy, owner of Gar Labs.
“We make less on each order,” he acknowledged, “but since we started publishing the packaging suppliers, we have had a 300% increase in reorders because our customers now have competitive pricing.”
What They’re Buying
Few observers of the personal care and household space get the 30,000-feet view while working elbow-to-elbow in various segments like contract manufacturers. As a result, they’re often privy to the latest trends and fashions well before products appear in the popular press. When they spot a trend, it’s usually spot-on. At Gar Labs, for example, Raffy has seen a dramatic increase in men’s styling aids, particularly pomades.
“They have grown to the point that we installed a dedicated department for hot filling them,” he explained.
At the same time, there’s renewed interest in conditioning shampoos as well as more orders for body butters and BB creams, according to Raffy.
For more than 50 years, Lady Burd Cosmetics has specialized in putting people into the beauty business, explained Allan Burd, VP and director of product development, Lady Burd Cosmetics. The company manufactures and sells a full range of color cosmetics, powders, custom pressings, skin care, mineral makeup and cosmetics accessories to existing cosmetic companies, entrepreneurs and makeup artists—essentially anyone who wishes to sell their own line of beauty products.
“We have thousands of colors and formulas in our stock line, and also specialize in custom formulations and filling for many branded lines,” said Burd. “We also provide brand developing services including professional logo printing and custom labels.”
Right now, lips, bright colors and full coverage long wear lip formulas are trending. Demand for high-end skin care treatments is rising as well, because, as Burd notes, good skin never goes out of style.
At Kleen Test Products, some of the trends that are running across multiple categories include increased interest in antibacterial/disinfecting products, the need to blend and fill more complex formulations and continued interest in new forms of packaging that increase functionality and are more sustainable, explained Doug Arnold, senior vice president.
CoValence Labs develops and manufactures cosmeceuticals with a global fusion of elegant textures coupled with natural and science-driven actives, according to Melinda Wochner, chief operating officer and VP-marketing.
“In the past, it was either about the beautiful textures or the results generated by the actives; but now, the drive is to marry both modalities,” she explained.
But whatever they’re selling, a startup has to find the right manufacturing partner.
“They need to look for expertise, longevity and experience in the market,” explained Karla Horton of Unicep. “They should partner with someone that will treat their product like their own.”
Verla is a private label manufacturer specializing in turnkey services for luxury fragrances, high-end skin care, performance-driven color cosmetics, bath and body products (like creams, powders and scrubs) hair care and nail lacquer.
“We are ISO 22716, ISO 9001 and organic certified,” explained April Vignone, president, product and packaging development, Verla International. “We offer customized turnkey programs to meet the individualized needs of our clients, including marketing assistance, manufacturing, packaging, blister/shrink/cello wrapping, kits, pack-outs, EDI, and warehousing to shipment of finished product including drop shipping.”
Verla’s in-house mechanical engineering department builds all phases of its filling equipment from design concept to cutting the steel and constructing the equipment from the ground up.
“We are known for our ability to fill and seal all types of unique heat seal tubes, like tube within tube, side by side tubes, extremely large and very small tubes,” added Vignone. “Designing our own equipment has made a significant impact in our high speed filling equipment for fragrances and all loose and pressed powders.”
Verla’s R&D and innovations team also works directly with leading raw material companies to strategically create and manufacture new raw materials for state-of-the-art products. Finally, the company has a distribution warehouse onsite and ships to over 4000 stores weekly.
What They’re Facing
Half of all small businesses in the US fail within the first year, according to Small Business Trends, and 95% fail within the first five years. Despite those sobering statistics, dozens of startups make their debut in the rough-and-tumble world of personal care every year. And while they face some daunting obstacles, choosing the right manufacturing partner means that they don’t have to go it alone.
According to Raffy new, over-reaching regulations by the Food and Drug Administration and state agencies is one of the biggest problems facing startups and established players alike.
“These agencies started treating topical ‘non-dosage’ cosmetic products as though they were consumables or internal OTC products,” explained Raffy. “It made no practical sense from a consumer safety stand point but ended up raising our cost through increased staffing to meet regulatory compliance.”
But an over-reaching regulatory agency isn’t the sole province of the US.
“Industry regulations are constantly changing and it isn’t easy to keep up with them, particularly in the European Union (EU),” noted Burd. “That’s why we have a full regulatory department so we keep up on the changes. We are constantly reformulating and keeping our customers up to date, helping them every step of the way so they can register their products in different countries.”
Burd noted, too, that in uncertain economic times, some clients have had to include lower budget items in their product lines. Lady Burd Cosmetics was able to accommodate them by helping them modify their product lines to meet their budgets without sacrificing anything other than a slight change in style, he recalled.
If startups manage to overcome aggressive regulations and actually get their products made, they still have to contend with a lot of competition.
“There could be six companies introducing products into the same category,” explained a spokesman for US Nonwovens. “You have to be tenacious; work 16 hour days and be willing to travel around the country. If you don’t have it in you, don’t bother. You’ll run out of gas in two years.”
Vignone told Happi that young companies and entrepreneurs are an important aspect of what drives the industry to the next level. Often their ideas and concepts are new and cutting edge, but without the resources and infrastructure, it can leave them challenged with meeting cost objectives, time lines and marketing goals. In contrast, at larger corporations it is difficult to react quickly, especially to market trends, where a normal product launch is one to two years.
“We provide the platform to significantly reduce launch time to 12 weeks so they can capitalize on quick emerging trends as they arise,” explained Vignone. “For smaller companies the challenge is meeting the timelines in order to ship on time and having the financial freedom to move quickly and efficiently through the process. In this case, we are very pro-active in managing the time-consuming details to keep them ahead of deadlines and offer financial resources so they can focus on their marketing and retail objectives.”
If You Can Make It There…
And yet, just because a company has a product made, doesn’t mean that they’ve made it. Contract manufacturers told Happi that their customers are having trouble getting placement on retail shelves.
“The retail industry is focusing more and more on selling national bands to the exclusion of new and better local brands, so our customers resort to selling their products on the internet, typically on Amazon.com,” noted Raffy.
Marketing has become a huge hurdle for new cosmetic/skin care brands coming into the market, too, said Wochner, who noted that a new brand is far more successful if it already has distribution and clever marketing.
“We have seen a handful of brands have the most beautiful packaging and gorgeous products, but they couldn’t get the product in anyone’s hands,” she recalled. “On the flipside, we have seen brands that didn’t have the best packaging, however, they knew how to get the products in the end users’ hands, and continue to thrive.”
When CoValence first started out in the professional skin care market, it was all about what was inside of the bottle, recalled Wochner.
“But, now with the expansion of media, a company’s distribution and marketing plan is critical, which is why we help our clients think around the marketing, not just the creation, of a product,” she said.
Clutter, according to Burd, can be a real killer.
“There are many cosmetics brands out there. What will make yours different? What will make yours stand out?” he asked. “This is why color, packaging, formula, and image are so important.”
Lady Burd Cosmetics helps its clients with that by having so many different formulas, colors and packaging styles to choose from. In addition, the company launches new products more than four times a year to keep its customers on-trend.
According to Karla Horton of Unicep, new companies must differentiate their brand and bring “new” to the retail shelf.
“They need a great product, inviting brand, packaging that will stand out, and a sampling program,” she explained. “What we can provide is a turnkey service. We can mix, fill and package—so their product is ready to sell.”
Of course, getting started isn’t cheap. One contract manufacturer told Happi if a newcomer doesn’t have $250,000 to get going, they should keep their dreams to themselves.
“Everybody is making something, somewhere,” he cautioned. “The volume is there, but the margins are in the gutter.”
That’s why it is critical for companies to carefully evaluate their would-be manufacturing partners.
When selecting a contract manufacturing partner, it is very important to look behind the curtain to evaluate the depth and experience of the company that you will be trusting to manufacture your product and the quality of the facilities and equipment that will be used to produce your product, explained Arnold, who added that the contract manufacturer’s financial health should also be evaluated.
“These evaluations should take place at the start of a relationship and then on an ongoing basis,” he suggested. “Too often, the contract manufacturer selection process starts with a toll price bid and then moves quickly to the manufacturing stage without further evaluation of these important, non-price factors.”
CoValence Labs educates would-be clients on the process and the cost, too, by offering start-up cost worksheets.
“The last thing we would want to do is to start creating a product and then realize they cannot afford it before it even launches,” explained Wochner. “We are transparent with the costs.”
Depending on their distribution availability, the CoValence team will typically point them to its private label products in lieu of customizing.
“The private label products are fully developed for someone to take ‘as is’ and try their hand with the process, before jumping into the more complicated task of product customization,” advised Wochner.
For its larger clients, Unicep offers services that they may not have in house—especially with blow-fill-seal packaging. According to Horton, Unicep also acts as an extension of their business and can supplement their internal resources when it comes to manufacturing.
“With our formulation services, we can assist with creating new products, or improving those currently on the market. For newcomers, contract manufacturing is a way for them to enter the market. It’s difficult for startups to have all of the necessary resources. If they have a product that has a place in the market, along with a business plan and marketing strategy—we can typically help with the rest.”
Demand & Supply?
Of course, not every outside manufacturer has similar capabilities. Ava Anderson Non Toxic is a privately-held, direct sales company making personal care and household products. Non Toxic was working with eight different outside manufacturers but has moved some production in-house and is now down to just two outside vendors. Here’s what the company’s president had to say about why she stopped working with the other contract manufacturing firms.
“They weeded themselves out. They couldn’t keep up with demand,” said Kim Anderson founder and president, Ava Anderson Non Toxic. “We grew 300% in 2014, [and we thought it would have] inspired them to invest in new machinery or new people, but they weren’t interested in doing that.”
As a result, Ava Anderson Non Toxic decided to bring production in-house and is currently manufacturing about a third of its products at its new Rhode Island facility.
It can be even more difficult for fledgling startups. Adina Grigore has shifted the production of her brand, S.W. Basics of Brooklyn, from her kitchen sink to its own space in New York to contract manufacturers as her company has grown from selling on Etsy to independent retailers to, most recently, Target. This Spring, seven of S.W. Basics products will be offered in Target’s new Made To Matter Collection, a curated arrangement of natural, organic and sustainable products.
When Grigore was selling her skin care products—which include moisturizer, cleansers, lip balms and more—at local markets, she was able to manufacture products at home, and keep her day job. In 2011, when she decided to take the plunge and focus on S.W. Basics, she quit her job as a personal trainer, hired a designer and moved production to a new space in New York. But she soon realized a contract manufacturer would make more sense—only it wasn’t so easy to find one.
“I called manufacturers from 2011 to 2013,” Grigore told Happi. “People didn’t want to work with our formulas.”
Today, S.W. Basics works with three CMs, including the very first that took on her lip balm in 2013. “I knew I could meet their minimums,” said Grigore, adding that that she’s sure more companies would take her calls these days now that’s she working with Target.
While every new player should look for price, service and quality from their contract manufacturing partner, Raffy insists that service is the most important of the three.
“New customers constantly tell me about companies not taking their calls or not offering them any technical help or advice; they are desperate for information, and we are happy to share it,” he told Happi.
Lady Burd Cosmetics advises newcomers to work within their means.
“If they have a small budget, then we can start small with them,” insisted Burd. “This way they can make sure that their idea has a foundation before they invest a lot of hard work and money into their dream. Nothing is impossible!”
Why Me?
Every contract manufacturer has a specialty of some sort. Lady Burd Cosmetics, for example, provides a one-stop shop for entrepreneurs seeking to create an entire line of products, according to Burd.
“Our customers are assigned a personal sales representative that will show them our entire line, giving them the option of what formulas, colors and packaging they want for their company,” explained Burd. “We can also assist them with logo design and package printing to help them create the image they are looking for. We will service the small businesses and startups as well as the well-established brand names.”
US Nonwovens has the buying power and the agility to help its customers.
“Our customers give us a date and we hit it,” explained a company spokesman. “We’re aggressive and nimble like a gunship, but with the leverage of an aircraft carrier.”
That’s because US Nonwovens purchases hundreds of millions of dollars of material every year—all while working closely with its customers.
“We listen very carefully to them and decode what they’re saying to the minutest detail and get them what they need,” he explained. “No company offers more SKUs than us.”
With seven facilities, Kleen Test Products has several different product platforms, including liquid filling, wet wipes, die cutting, dryer sheets and specialized nonwovens conversion.
“Within each of those segments we are serving customers in OTC, personal care, home cleaning, laundry and I&I,” explained Arnold.
Kleen Test Products provides its customers with a highly-customized approach to their needs. In its simplest arrangements, Kleen Test just provides contract manufacturing services. In more complex relationships, customers bring their ideas to the company.
“We then design a finished product and develop a commercially feasible manufacturing process to make it,” advised Arnold. “From there, we can handle everything from raw material sourcing to finished product distribution.”
He noted that a single customer may have a different set of needs for each of its products, so Kleen Test tailors its approach to fit those needs.
“To ensure industry-leading quality, we believe in having all the necessary resources on-site including: validation team, formulation chemists, regulatory experts and separate analytical, micro and development labs,” said Arnold. “With our many years of product development experience, we are able to help customers launch products quickly.”
Throughout the year, Kleen Test receives many inquiries from would-be clients who may have a great idea, but for one reason or another aren’t quite ready to work with a contract manufacturer.
“Our business development team does a great job of helping these potential clients,” explained Arnold. “It may be in the form of providing referrals or just sharing advice. If it’s not a product that we can manufacture, we will do our best to help them find a way to make their idea come to life.”
At Unicep, it’s all in the delivery.
“Our customers are looking for a unique delivery system or applicator,” explained Horton. “They are also looking for packaging that makes them stand out in the market but stay true to the core principles of their brand. With our turnkey services, we can mix and package their product so it is ready for the retail shelf.”
The company specializes in working with specialized liquid and gel products (mixing and filling) and packaging them in unit dose packaging. Over the years, Unicep has acquired expertise with blow-fill-seal unit dose dispensers—where a blow molding process is used to create the shape of the dispenser.
CoValence Labs not only creates novel products, it helps clients think around their marketing and how they can best position the products for greater success.
“Our current clients tell us that we are different from other labs because of our creativity, flexibility, customer service and we think like brand developers,” explained Wochner. “In addition, people, not products, come first at our lab. When people come first it generates the best working relationship with our clients and in turn, we are grateful to be able to help them grow their businesses.”
Room to Grow
According to Vignone, today’s personal care consumer base is the largest it has ever been and shoppers are savvy, educated, and are always in search of the next best product. To service its clients, Verla International has a specialized division, a separate building dedicated to developing and creating lines and promotions.
“This department enables new customers to walk in and pick or design packaging components, formulas and shades concepts, and method of shipping and have a complete line developed without the responsibility of having an expensive infrastructure,” explained Vignone. “So whether you are a new company looking to ‘break-in’ to the beauty industry or an established brand looking to increase your profit margin, we have the resources to make it happen.”
There’s no doubt that getting a product to market and staying there is a journey that’s full of detours and danger. But those dark clouds come with a silver lining.
As Horton points out, “The great part about the beauty industry is that consumers are always up for trying new products.”
