Signed, Sealed and Delivered

Topline Products employed a back injecting filling technology for Almay’s intense i-color smoky-i kit eye shadow.

In its report, “Beauty and Personal Care in the U.S.,” market researcher Euromonitor International attributes forecasted growth to an increase in consumer spending as the economy recovers, as well as manufacturers launching “new value-added features.”

Whether due to changing tastes, an increased stronghold of social media influences or some other cultural norm permeating the American mindset, U.S. customers are increasingly fascinated by new products. An emphasis on “new” products is one of the main impetuses for growth in contract and turnkey manufacturing services, say experts.

“Consumer loyalty is being increasingly shared with consumer discovery, as there is a willingness to try new brands or products if there is a perceived attraction or benefit. Brands are continuously strategizing to create new product offerings [that provide] both unique user experience and added benefits, which likely require complex bulk, fill and assembly requirements,” says John Pyrzenski, sales director for HCT Packaging.

Fragrance filling at Fareva’s Cosmopar factory in France.

“Today’s consumer is different and expects “new” constantly,” agrees Sandra Hutson, sales and marketing director for Topline Products. “Product life cycles and the refresh rate required is much shorter—a vicious circle with more competition in the beauty world and new brands entering all the time, taking up market share. Brands must be in a position to offer the products that are in demand and respond quickly to change.”

Offering a constant stream of “new” places financial, time and process management burdens on today’s beauty brands. In addition to this phenomenon, explosive growth in the skin care market has blurred lines between cosmetics and pharmaceutical, often requiring additional regulatory expertise and testing that brands may or may not have the capability to complete. For these reasons, as well as the sheer number of benefits that contract manufacturing brings, contract manufacturers are currently experiencing increased popularity.

Benefits

Small, mid-sized and large global brands are enjoying the benefits of contract manufacturing, but oftentimes for different reasons.

For small brands, partnering with a contract manufacturer enables capabilities and potential they wouldn’t have otherwise. “Companies like Topline Products are a great one-stop shopping solution for smaller brands that do not have their own factories, engineering or formulation development teams. Manufacturing runs are typically shorter and contract manufacturers offer flexibility on shade ranges and product mixes,” says Hutson.

“Small brands tend to run a lean organization and resources are limited to dedicate to new product development and supply chain management, and some may not have any manufacturing capabilities,” explains Pyrzenski.

A lean staff is why small brands benefit from partnership with a trusted contract manufacturer. “We partner with our customers and aid in their business development, and allow them to focus on the big picture while we do all the sourcing and manufacturing,” says Betti Ann Catino, director of product development for World Wide Packaging.

Partnering with a contract manufacturer can also offer cost savings and tried-and-true solutions. Many contract manufacturers are equipped to offer stock formulas and/or packages that, although suitable for any sized brand, may be especially appealing to small brands for economic reasons. “Small brands don’t typically have the infrastructure to execute their products, and tend to rely heavily on the support of contract manufacturers, who can offer up stock solutions that can then be customized to their needs,” says Jack Rodriguez, president of JMR Development.

The beauty industry has seen a ramp-up of small start-up companies entering the marketplace, says John Schofield, vice president of sales and marketing for Screentech/Spraytech. His company, whose chief specialty is glass decoration and spraying, has entered into the contract manufacturing space by matter of circumstance.

“Our smaller customers just didn’t have the contacts or resources to manage it all. They’d come to us for concepts they had for decoration. Then they’d ask for recommendations. We used to recommend, but now we realize we can provide it for them. This helps us because we can better manage the flow of our business,” says Schofield. Although the company doesn’t offer full turnkey solutions, when requested, it will purchase components and ship the package to the filler, in addition to decorating.

Although large brands come from a completely different place, they also frequently partner with contract manufacturers for a variety of other reasons. Rodriguez says that for large companies, “partnering with full service companies and contract manufacturers allows for their internal development teams to focus on the execution of core in-line products while the contract manufacturers can assist them with specialty programs like holiday or promotional programs.”

Similarly, “Large brands utilizing turnkey contract manufacturing services afford them the opportunity to diversify their portfolio or launch a promotional item without significant capital equipment and process investment. Turnkey services also alleviate the threat of bottlenecking core product production, offering the ability to launch multiple products in tandem,” says Pyrzenski.

There are also benefits that touch a range of brand owners, no matter what the size of production. For example, Pyrzenski notes that “Ten years ago, skin care was not nearly the industry focus it is today, and the cosmeceutical approach was just beginning to take shape. The integration of these categories has added considerable growth and diversity in the color cosmetics market.”

An assortment of components from World Wide Packaging.

Brand owners can benefit from the knowledge that contract manufacturers bring to the table. For instance, Fareva USA is FDA certified with a strong understanding of quality control. “There are different tests when something becomes Rx. We understand what’s involved with FDA/OTC product [because we also work with pharmaceutical clients]. We can segue that knowledge into the cosmetic market,” says Jeff Funk, head of beauty sales North America for Fareva USA.

Catino of World Wide Packaging points to a contract manufacturer’s connections as another benefit. “Sourcing options are also key. WWP has the ability to provide sourcing opportunities from areas they may not be familiar with,” she says.

In addition to know-how, all brands benefit from the flexibility offered by a contract manufacturer. “For CoValence, our clients tell us that we offer flexibility as they grow,” says Melinda Wochner, COO, vice president of sales and marketing for CoValence. For established brands, “we offer flexibility for the large brands as well as give them an environment to create and test pilot and launch batches, without crippling marketing and distribution efforts.”

Defining Contract Manufacturing

The term “contract manufacturing” can cause a lot of confusion for even seasoned industry veterans. It’s because the definition varies from company to company. While some contract manufacturing companies can offer services that span from initial product conceptualization all the way through distribution, others focus their expertise on a smaller range of services provided to their customers. Some may work with a number of different beauty segments; others specialize.

HCT, for example, “can provide everything the customer requires of HCT,” says Pyrzenski. It can include anything from brand development through product manufacturing, packaging, brushes and applicators, filling and distribution.” One company that successfully utilized HCT’s services is Kevyn Aucoin Cosmetics, which called on the company for full-service manufacturing and sourcing of product.

World Wide Packaging performs brand development and marketing, packaging design and development, filling and secondary packaging services.

Similarly, Topline services begin with package development and design, and also include package fulfillment, product conception, development and filling of color formulations. Although some of its clients fill their own products, Topline can provide assembly and contract filling in its Mexico-based facility as desired.

Topline has worked with a number of brands, including Revlon, Ulta and Almay. The work the company did for Almay’s intense i-color smoky-i kit eye shadow, for example, used a back injecting filling technology and garnered awards. “At Topline, we like to be proactive and propose ideas for products that we believe will work well for a brand rather than just executing a brief. This provides marketing teams with ‘out-of-the-box’ options that they may not necessarily have thought of,” says Hutson.

Recently opened in the U.S., Fareva USA is a subsidiary of France-based Fareva Global. Its brand ideal is “to accelerate value creation through effective partnership,” says Laurent Mialhe, CEO of Fareva USA. Although in growth mode with plans to expand services and capabilities, the company currently offers expertise in lip balm manufacturing and bag-on-valve aerosol technology.

“We are growing in the U.S. We have a large global company now coming to us, which is enabling us to expand and bring on nine machines,” adds Fareva’s Funk.

Much like the contract manufacturer label, the term “turnkey” cannot be defined any one way.“The term turnkey seems to take on different forms, depending on the company,” recognizes Wochner. For example, “We work with boutique, professional and international brands who require all that we offer, yet they take care of their design and distribution.”

Among its services, CoValence offers more than 3,000 formulas, including the original Pumpkin Peel, Spin Trap, Liquid Crystal, Peptide-99 and IconicA formulas. In addition to its formulas, CoValence offers research and development, custom and private label manufacturing and filling, product testing, international regulatory assistance and packaging options.

Aside from contract manufacturers, there are also development companies that guide the entire product development and packaging process to produce a “turnkey” product. JMR Development is one such company. “At JMR, I focused on assembling a core team with skill sets ranging from design, to engineering, to product development, to packaging and then finally, logistics. We are in essence a management team that will lay out the program initiative and then assemble and manage all required vendors to execute the job on behalf of our clients. We would not be classified as a contract manufacturer. We have multiple strategic partnerships with contract manufacturers who do not want to delve too deeply into turnkey development,” explains Rodriguez.

Great Expectations

Considering all of the known advantages of contract manufacturing, experts say that sometimes clients come with expectations that are unrealistic. While contract manufacturing can increase time to market and enhance efficiencies in the product development process, there are still reasonable limits and challenges.

“Smaller brand owners, or more specifically, start-ups, tend to have the most unrealistic expectations when it comes to product execution,” says Rodriguez. As examples, he cites makeup artists and other start-ups, who are more focused on the brand and formula development. “At the onset, the makeup artists will have a very clear vision and comprehensive understanding of the products and formulas that they use on their clients. However, upon starting a new brand or beauty company, it’s rare that they have had the time or opportunity to get involved in the entire development process, which also includes packaging, compatibility testing, regulatory global compliance, fill and assembly, and delivery logistics. It’s a daunting task, and it’s our job to ensure that the client fully understands all the challenges, timelines and cost implications,” he adds.

The most notable expectations revolve around lead times and the decision-making procedures of the brand. “With the pressures to increase speed-to-market, some brands expect unrealistic lead times or do not realize the impact that mid-development changes to the brief, or late decision-making, can have on the delivery date and budget,” explains Hutson. “To avoid these issues, Topline places an emphasis on working with customers and agreeing to expectations from the outset of a project to develop a clear, critical path schedule and the parameters in which changes can be made with minimal impact to the final prices,” she adds.

“Decision making is key in getting a product to market in a timely fashion,” adds Catino. “It’s best to have a small team on the client side ‘manage’ the contract manufacturer. This makes the process more efficient and consistent.”

As a relationship with a contract manufacturer should be viewed as a trusted partnership, it’s important that brands choose wisely. Wochner offers the following piece of advice: “I would suggest that since contract manufacturing services are different for each manufacturer, the brand owners must specifically lay out what they need from a manufacturer, and go with the manufacturer that best fulfills those needs.”

New Vision Packaging has partnered with brand Lee Stafford on various projects since 2006. Hair Care Brand Benefits from Contract Manufacturing Services Packaging design and sourcing specialist New Vision Packaging has completed the latest full-service offering for QBC, owner of hair care expert, Lee Stafford. The new range features four products sold exclusively at Boots stores across the UK: Argon Oil, Poker Straight, Mini Poker Straight and My Big Fat Healthy Hair gift sets. Lee Stafford’s partnership with the contract manufacturer has evolved throughout the relationship. Having worked for Lee Stafford since 2006, New Vision Packaging has adapted its approach to packaging in recent years, offering more services within the packaging process to enable centralization into one team. Lee Stafford takes full advantage of the services provided by New Vision Packaging, utilizing its structural design, graphic design, packaging sourcing, transit, product testing and final distribution services. “Having one company look after the majority of the process was hugely beneficial to QBC,” says Stephen Shortland, managing director of New Vision Packaging. “Managing the project was easier as they had one primary contact for information.”