The decision of partnership with which contract manufacturer to work with can be a tough one. In fact it can play the key role of success or failure. So what you should know before choosing your beverage contract manufacturer?
I always advise not to start analysis of contract manufacturers without not know what type of product you want to produce. When you know your technological requirements and financial capabilities then you are capable to move forward.
Lets’ start…There are three main elements which you have to analyze: technology and company policy.
First and the most important thing is to find out what’s the field of the expertise of this new contract manufacturer. Are they working with water based products (energy drinks, sports drinks, soft drinks), dairy drinks or maybe alcohol drinks? You need to understand where they are good at and whether they can help you.
What type of filling technology do they use (hot fill, cold fill or others..)? At this point you should already know the requirements of filling for your product. It’s no use to proceed further in case manufacturer is not able to offer you a right filling technology.
What type of packaging are they offering? Is it PET, glass or maybe tetra-packs? How flexible they are to use your packaging? Some manufacturers are offering only few types of packaging solutions and they are not willing to offer anything else. Your main task is to analyze their possibilities.
As soon as you will get the confirmation that manufacturer meets your technological requirements you have to start analyzing their policies.
It’s very important to understand whether manufacturer is interested to work with you. You have to know whether they are working with entrepreneurs or SMEs. Their requirements of minimum order quantities will show their flexibility. Sometimes negotiations can be successful, so you have to be patient and seek for the opportunities.
Pricing structure and payment terms. Some manufacturers are showing only final price. Personally, I avoid working with such manufacturers as it shows their lack of transparency which is a bad sign. You need to know your packaging cost, filling cost, label cost and last but not least ingredient cost. Moreover, you have to know their payment terms.
Production planning and queues. Some contract manufacturer have queues 3-6 months in advance. I even know few who have 1-2 years. So you have to find out when your order can be fulfilled.
Product return policy. It’s a tricky question. You have to be prepared for a product spoilage. In these type of situation you will see how transparent and how reliable your partner is.
Certificates. Last but not least. Before starting the production you have to know your requirements for the certificates. Sometimes retailers are asking for specific certificates, so you have to know what you need.
Raw material. Sometimes contract manufacturers are not willing to work with other raw material suppliers. So you have to understand whether you will be able to supply them your raw materials for the production.
Communication. It’s important to understand their quality of communication. There are some factories where is impossible to communicate in English. So language barrier becomes a crucial issue. Moreover, the speed of communication is very important as well.
Current clients and product. Sometimes contract manufacturers decline to fill the products due to the fact that you intend to fill a product which a direct competitor for their current client. The list of current clients will show you how reliable this factory is.
International exhibitions. Are they attending exhibitions? It’s very useful to meet your partner in exhibitions and to discuss next steps.
Last but not least. You have to go and check the factory by yourself. We are always making visits and checking factories with whom we are working with. It’s very important to see the quality of their facilities, to meet their staff and to understand them.
To sum up, we always advise to work only with reliable factories. A decision to choose a wrong contract manufacturer can be your last one. Don’t do this mistake!