Special edition: Outsourcing

The challenge of choosing the right contract manufacturer

By Jess Halliday

- Last updated on GMT

Related tags Economics

Brand owners may be obliged to work with contract manufacturers, but finding the right one can be no easy task. In the first part of our outsourcing special edition, Jules Birch of Works with Water Nutraceuticals explains the challenges – and the implications of getting it wrong.

In 2011 Works with Water is planning to introduce a new delivery format for its range of nutraceutical line, and also return to its roots in ready-to-drink beverages.

But Birch could not reveal any more details of the new format for the simple reason that she has yet to nail the all important question of who will manufacture it.

“We are ready, we know it works,”​ she said. “But once it is scaled up it will be a different beast.”

“I have been in frog-kissing mode,”​ she told NutraIngredients, explaining that several contract manufacturers she has held meetings with have suggested processes that would destroy the ingredients. She also prefers a UK-based contractor, to support the national economy and for cost reasons.

No nine lives

While she may now have found her prince and is “quietly confident”​ about​the mystery new product’s market potential, she has learned the hard way that the contract manufacturer can make the difference between success and failure.

Works with Water’s first spring water beverage range was launched in May 2006 and stocked in UK supermarkets Tesco and Waitrose. Twelve months later, however, the contract manufacturer experienced big problem that led to product recalls – and although Works with Water products were not directly affected it could no longer manufacture to the standard and volume required.

The supermarkets were supportive, Birch said, especially as some of their own label products were produced by the same contractor, which she preferred not to mention by name.

“But they won’t keep space open forever,”​ she said – and eventually the line lost all its outlets.

“We were a year old,” ​she said. “The bottom fell out of my world.”

While other fledgling companies would have folded in this situation, committed investors enabled Works With Water to switch to the sachet format, whereby consumers add the ingredients into the beverage of their choice. A number of retailers have embraced the brand once again, and at the end of this month (following a packaging revamp to take into account ASA objections over health claims as well as retailer positioning) it will start appearing in Boots, the UK’s biggest pharmacy chain.

The lesson for Birch, however, was to be very cautious to whom she hands over production – and where possible she does not place all her eggs in one basket.

“We are wiser this time,”​ she said. “If something goes wrong this time we are not going to get a third chance. I am not like a cat with nine lives”.

The experience has also led Works with Water to be cautious about international expansion. Although she receives many enquires from overseas, Birch has decided to “get the UK market base right, then we can start looking beyond”.

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