Contract manufacturer, private label and white label of nutritional supplements: which model is the right one for your business?

Nutritional supplements are bioactive substances designed to address specific nutritional deficiencies or to support overall health and wellbeing. Nutritional supplements encompass a range of products, including vitamins, minerals, amino acids, plant extracts, probiotics and other bioactive ingredients.

The manufacture of food additives is a complex process that must be enabled by the following steps:

• needs identification;
• research and development;
• establishing terms of reference;
• preparation of cost estimates;
• contract negotiation;
• prototyping and testing;
• production start-up;
• quality control (for contract manufacturing);
• delivery and logistics;
• analysis and feedback.

It is not feasible for every company to have all stages of production in place. Consequently, nutritional supplement manufacturers provide customers with a variety of business models. The most common models are contract manufacturing, private label and white label.

It is not uncommon for people to be unclear as to the precise meaning of these types of manufacturing. These terms may initially appear to be similar. However, upon closer examination, it becomes evident that these terms describe distinct levels of control and involvement in the production process. This article will examine the key distinctions between production models, enabling informed decision-making regarding business strategy.

Contract food supplement manufacturer

A contract manufacturer is a company that develops and manufactures bespoke products for other customers or brands. Contract manufacturing companies have their own production facilities, teams of specialists with relevant experience and expertise in nutritional supplement manufacturing, and are able to provide an end to end product development cycle.

The contract manufacturer operates according to its own specifications and formulas, or develops them individually at the customer’s request. The manufacturer provides the final product in a variety of forms, including liquids, powders, capsules, tablets, creams, ointments, gels and serums. Contract manufacturers package nutritional supplements in a variety of containers, including cans, doy-packs, vials and sachets, depending on the product’s intended release form. The company is accountable for meeting all customer requirements.

In the case of nutritional supplements manufactured by a contract manufacturer, the client company exercises control over all production processes. This is the most expensive business model, which requires bespoke adaptation to meet the specific requirements of a given brand, including a unique recipe or exclusive packaging. Furthermore, additional costs are incurred for adapting production lines and raw materials. This enables the company to provide its customers with quality nutritional supplements that meet their specific requirements.

Private-label food supplement manufacturer

Another production model in the nutritional supplements industry is private label production. This is a collaborative endeavour in which a manufacturer offers finished nutritional supplements. The company has the option of branding these products under its own name. The benefit of this model is that it relieves the client of the need to develop formulations or oversee the production procedures. The client need only select the standard formulas of nutritional supplements offered by the private label manufacturer.

The process is as follows: the client company selects a nutritional supplement from the manufacturer’s range, which then adds the client’s brand to the packaging. This approach allows the client company to bring the nutritional supplements to market rapidly, avoiding significant upfront development costs.

A private label nutritional supplement manufacturer is engaged when the client does not possess the technology or resources to create products from scratch. This model enables the expedient availability of nutritional supplements on behalf of the client. It is important to note that the manufacturing company does not alter the formula for each client during the development process. Consequently, the product can be produced for other brands that have opted for the private label model.

White-label food supplement manufacturer

White label production is an analogue of private label production, but with one key differentiator: a white label product can be sold to several customers simultaneously, without any change in composition or formulation. In other words, the client company receives food additives from the manufacturer and then labels them under its own brand. Clients have the option of purchasing two products with identical formulas from different brands, as each company adds its own logo and packaging to the same product.

This model offers clients the advantage of accelerated brand development without the associated costs of manufacturing. The white labelling of nutritional supplements is made possible by the effective division of responsibilities between the relevant parties. The manufacturer is responsible for ensuring the quality of the product, while the seller is tasked with promoting the product and seeking customers.

White-label products are a popular choice among retailers today. The model offers businesses the chance to diversify their product range while also saving on development costs by sourcing a ready-made nutritional supplement formula from a manufacturer.

Key distinctions

There is often confusion between the three models due to the similarities in their production and customer interaction approaches. However, there is a significant distinction between contract manufacturers, private label providers, and white label suppliers, particularly in terms of the level of control and product uniqueness.

1. The contract manufacturer provides the customer with complete control over the product. The customer is responsible for developing the recipe, establishing the design and quality requirements. As the product is developed and customised by the customer for their own use, it is unique. The contract manufacturer’s role is to fulfil the technical aspects of production, ensuring that all client company requirements are met.
2. The private label offers customers the option of selecting their desired nutritional supplement formulas from a range of ready-made solutions. In contrast to the contract manufacturing model, the customer is unable to make changes to the product. The majority of the production procedures have already been established by the manufacturer. The customer has control over the brand under which the nutritional supplements are sold. Private labelling allows the final product to be differentiated from competitors through the application of branding and minor changes to the packaging.
3. A white label product is a standardised item that can be sold under a different brand name without any alterations to the formula. The client company retains control of the branding and marketing. All clients receive the same product from the white label manufacturer.

In light of the distinctions between the three models, it can be concluded that contract manufacturing offers the greatest degree of customer control and product uniqueness, while private label provides medium control and partial uniqueness through customisation. In contrast, white label affords the customer low control and minimal product uniqueness.

Advantages and disadvantages of each business model

If you decide to use the services of a Contract Food Supplement Manufacturer, you should first inquire about all the advantages and disadvantages of the model.

Advantages:

• Total control over formulation and production enabling the creation of targeted nutritional supplements for the customer base.
• A unique product, designed and manufactured to meet the customer’s exact specifications. In a contract manufacturing arrangement, the customer has complete access to the production process, from formulation to packaging. The customer is able to make any changes to the product, resulting in the desired nutritional supplement.
• The chance to establish a distinctive brand that will stand out in the market and differentiate it from competitors. This enables you to reach other segments of the target audience and foster the growth of a loyal customer base.

Disadvantages:

• Geater development and production costs. In the event that a customer requests alterations to a pre-existing formula, the contract manufacturer is required to allocate additional time for the creation of a new formulation, its subsequent testing, and the production of food additives based on this new formulation.
• The process of creating and bringing a product to market is longer. However, over time, the contract manufacturing model enables brands to reach a broader audience by offering targeted nutritional supplements to customers.
• Requires in-depth involvement in the development process as well as relevant expertise to implement changes to the entire nutritional supplement manufacturing procedure.

By selecting a Private Label Food Supplement Manufacturer, the client company can sell its own branded products without being involved in the manufacturing process. Here are further advantages and disadvantages that are associated with this model:

Advantages:

• Swift time to market as the product is already available. In addition, companies can introduce new products more quickly in response to changes in demand and trends by utilising the capacity of a private manufacturer.
• The initial investment is relatively low. The manufacturer provides ready-made formulas and product compositions, which require significantly less time and budget to launch than developing a formula from scratch.
• The opportunity to establish your own brand identity without the need to develop a product. While private label nutritional supplements are manufactured using standardised formulas, the customer receives a product that is tailored to their specific business. This fosters customer loyalty and brand identity.

Disadvantages:

• There is a restricted scope for influencing the formulation and composition. It is not always possible for customers to exercise complete control over the production process, which can restrict their ability to build a strong brand.
• The products are not unique in that they can be offered to other customers. This diminishes the competitive advantage of nutritional supplements from different brands, given the limited distinctiveness of the products.
• Difficulties in scaling. The client company is constrained in its selection of formulas from the private manufacturer. This can result in a shortage of a specific brand on the shelves and an inability to meet the increasing demand for nutritional supplements.

White Label Food Supplement Manufacturer is a quick and cost-effective way to enter the market with a ready-made product. However, this model has certain advantages and nuances.

Advantages:

• A quick way to launch sales with minimal costs. It is not necessary to develop nutritional supplement formulas from scratch. The client company can simply take a ready-made product, label it under its brand and then make it available to its audience.
• Simplicity of branding. The customer receives ready-made food additives from the white-label manufacturer, to which they only apply their own labelling. This significantly speeds up the market launch of goods under their brand.
• A company that purchases white label goods is able to reduce expenditure on the development, research, testing and licensing of nutritional supplements, as the product has already been developed by the manufacturer.

Disadvantages:

• White brand nutritional supplements are not exclusive because the manufacturer collaborates with other brands.
• Lack of ability to modify the composition or customise the product to meet one’s own requirements. This limits the competitive advantage of the brand.
• Quality risk of additives. A white brand customer depends on the manufacturer for quality. For example, if the manufacturer lowers standards or encounters problems in production, the situation has a detrimental effect on the brand’s reputation.

Which model to choose?

It is not uncommon for brands to be uncertain about which business model is the most suitable for their company goals and priorities. When making your choice, it is important to consider the following:

• brand strategy;
• budget;
• required time-to-market;
• control of nutritional supplements;
• flexibility and customisation;
• scalability;
• competitiveness.

Contract manufacturing is an ideal solution for companies seeking to develop distinctive nutritional supplements for their target audience. In this business model, manufacturers offer clients full control over product performance, quality and design. It should be noted that contract manufacturing is a financially and time-consuming process, which may not be suitable for start-ups or those seeking to enter the market in a timely manner.

Private label is the preferred option for those seeking to launch a product in a shorter timeframe while retaining a degree of brand recognition. Private label is an appropriate option for companies that do not have the resources to invest in the development of a product from scratch.

White label is the optimal solution for those seeking to launch a business with minimal expenditure and a focus on mass production. However, this approach may restrict the potential for developing an exclusive product. Consequently, some companies may lack the capacity to navigate the highly competitive nutritional supplement market.