One of the most critical steps while setting up your potable business is to ensure that you choose the right manufacturer. The steps you take while evaluating and approaching potential manufacturing partners are critical. There are quite a few variables and project details that impact the way you choose your manufacturer. Read on to find out all the information on how to go through this process.
- Commercial Formula
In the previous sections, I have already discussed how to manage and develop your commercial formula. You need to clearly articulate your vision about the intended drink, including crucial information such as your target audience, how your product fits in the market, how it will look, what it will taste like, etc. Understand the basic requirements of your drink, such as its preservation method and shelf life. Your commercial formula should be able to provide the contract manufacturer all the details to scale, batch, and produce your drink in a consistent, efficient, safe manner.
You also have to provide details about the certifications you want for your beverage (e.g., organic, halal, non-GMO, kosher, gluten-free, etc.). These certifications are vital, especially when you are targeting a particular niche of audience. In such cases, these certifications can be an added advantage for your beverage.
- Packaging Possibilities
As you are aware, your product’s packaging is one way to stand out in the market. Hence, it is crucial to lay out your packaging strategy before negotiating with the contract manufacturer. It is not easy to find a production facility with different packaging options under one roof. Most of the facilities will have just one or two packaging options. Even in mega factories, you may not find all the different packaging types such as glass bottles, aluminum cans in various sizes, PET bottles, etc.
The type of packaging you choose will have an impact on your overall cost, the number of qualified facilities, and how your product can be shipped and stored. It is crucial to understand the options available for your primary, secondary, and tertiary packaging along with the pros, cons, and costs associated with each of them. Remember to choose your packaging type wisely, and if possible, opt for recyclable ones. Trying to do your bit for the environment always works in your favour. Creating a flexible packaging strategy with a few packaging options will help locate and negotiate with the contract manufacturer.
- Minimum Order Quantity (MOQ)
One of the very first questions your manufacturer will ask you is what is your MOQ and whether you are thinking of a yearly production plan or something on a long-term basis. An accurate market projection will help you determine when and how much quantity of the product is required.
Your MOQ varies from one manufacturer to another and of course, it also depends upon your packaging. For example, opt for customized aluminum cans with specific colour and design. You will hardly find any facility who will allow less than 250,000 cans to be manufactured in each production run since it is not profitable for them to do it if the quantity is lesser than 250,000 cans. It would also be best if you evaluated the MOQ’s required at each facility and the ability to store your product and the cost it will incur.
I understand that most start-ups will follow the MOQ but remember that more production in terms of quantity means getting a lower price on the production cost. However, you might have to shell out more on the warehouse charges. Hence, I recommend that you check your business plan and yearly estimation of sales thoroughly to decide how much MOQ fits your project as well as your budget.
- Manufacturing Options
It is best to check out a couple of manufacturers and compare their MOQ prices, requirements, terms and conditions, etc. Please make a list and compare all of them. The more manufacturers you compare, the higher the chances of you finding your best match.
Sometimes, a quote that looks high may end up being the best because of the additional services, options, or flexibility offered. Use the information you have from co-packers to project different scenarios and possibilities for logistics, labelling, and storage. You may find that a production path that looks a little different than expected also brings unanticipated advantages.
So, are you ready?
The final step is to organize all the information you have gathered and reach out to the contract manufacturer who suits your requirements the best. Outline your goals and strategy and be transparent and ready for partnership. Remember, your manufacturer is an extension of your business – when you are successful, they are also successful, and when you are in trouble, they are also in danger. Armed with the information outlined above, I am sure you are now well aware of choosing the best contract manufacturer and setting up your partnership with them.
In addition to completing all the preparation, remember to follow the best practices for a successful negotiation. Try to make the first move, know when to be quiet and listen, and always work towards a compromise rather than giving in to a concession. So, let’s get ready and start the negotiations!
To show you how our production process looks in real life, I’m sharing two videos below. One is of our functional relaxation drink in aluminum cans, and the other is of our premium tonic water in glass bottles.
&T Tonics – Production of Hungarian premium tonic water brand
Herbal Natural Drink Production
It’s important to keep in mind that these pages and chapters will be updated on a monthly basis, with new data and information added regularly. This way, we can make sure that the information we’re providing is accurate and up-to-date.
