The Nutritional Outlook Podcast Episode 33: Keeping up with contract manufacturing

Nutritional Outlook talks to Lauren Samot, commercial innovation leader, and Blayney McEneaney, sales executive at Vitaquest International, about trends within the contract manufacturing space, and the ways in which contract manufacturers like Vitaquest keep up with the market and differentiate themselves from the competition.

Here's is a transcribed excerpt of the conversation:

Nutritional Outlook (NO):

What are some of the ways you've seen contract manufacturing change? Are you seeing the customers have different expectations, do they need more personalized attention, stuff like that?

Blayney McEneaney, sales executive, Vitaquest International LLC:

Blayney McEneaney, sales executive, Vitaquest International LLC.

Yeah, you know, I personally have been in the industry for about 17 years, specifically in a sales role, helping new businesses getting to the industry. So, a lot has changed over that period of time and to really just try to approach that from a high level, I'd say the first thing is quality expectations. Sitting in a sales seat, one thing you'll never hear a salesperson say is that they don't have the best quality in the industry. So, for brands that can be challenging if you don't know the right questions to ask because quality just becomes a word at that point. So, the quality expectations from brands have certainly evolved where I see a lot more great questions being asked, questionnaires being provided from brands, really diving into those questions that can help set apart a contract manufacturer that puts quality first and will meet and exceed the expectations that a brand needs.

As well as also encouraging those brands to visit and come on site, that's something I've seen a lot more of than in prior years where you see a lot of either new and emerging brands or established brands will come to the facility, tour the facility and really get a really good comprehensive understanding of what's being done in that facility to make their product the right way and also give a comparison between manufacturing facilities because we are certainly not all created equal. So that's been great. Along with transparency. There's a few different layers of transparency, one being sourcing. You see a lot of new brands and a lot of established brands, they will volunteer information about their formulations and where the ingredients came from on their website, so they can only be as informative and transparent as their manufacturer will allow them to be because the manufacturer is the one that's sourcing those raw materials, has data on the material, their certificates of origin, various different descriptions of that material, so that really can help a brand to market and advertise and really show and educate their consumers based off of what the manufacturer is willing to show them. And Vitaquest really has a great reputation for transparency

That's also something that comes up from e-tailers like Amazon. You know, if you see the dynamic of how Amazon has changed the industry and how products are sold, where they're sold, and the challenge for a brand to be so reliant on what feels like dealing with almost like AI with Amazon's infrastructure, they can remove listings, add listings, ask for documentation, and it can send a brand scrambling if they don't have the right manufacturer that can support that question or that request that comes from Amazon to get that supporting document back so their products can get relisted and you know that's something we've had a lot of success with at Vitaquest.

Planning ahead for inventory. I think one change that is somewhat of the elephant in the room: COVID has really had a disrupting effect on our industry in terms of supply chain. And you look at contract manufacturing has always had challenges. There's always been challenges with sourcing materials, sourcing packaging, staying ahead of demand planning and the lead time associated with that creates a lot of challenges to make sure that you're meeting those deadlines to get inventory as fast as you possibly can when you're in that growth period for your brand. So, dealing through those challenges through COVID, thankfully post-COVID things have gotten much better than they were for those first two years. But it has created somewhat of a proactive approach towards how do we manage this as a as a better scenario of demand planning and being proactive about the solutions necessary to get components in house to stay stocked, and that has been something that I think that the industry has done a really good job of evolving around and just making sure that we keep those brands stocked and we put a plan in place unique to what that brand's needs are so that we're not in an out of stock situation.

Additional services as well. If you look back and look at a traditional manufacturer, what they offered for contract manufacturing, it used to be very one-dimensional. A brand would come to a contract manufacturer, they would have maybe a list of ingredients, a supplement fact panel and some general specifications of what they wanted made, and that manufacturer would do that one component, rely on the brand to send the labels, rely on the brand to do their own 3PL storage, fulfillment and distribution. Now, some manufacturers are offering that in-house, Vitaquest being one of them. We have a sister company called VQ Solutions. We offer printing services and that is not only just something that is convenient for brands, but it does take some of the risk management out of scenario, especially if you're a new and emerging brand getting into the industry. There are things that we are used to seeing and used to asking to make sure that we're not in a situation where you don't have that uniformity that you're expecting. An example of that could be if you're printing labels and you're printing packets and you're printing sachets and you might also even have T-shirts; you want to make sure that all of your colors line up. And if you have a variation in colors especially on a brand launch, it's hard for that brand to really feel as if they have that professional experience with their consumer, if things aren't aligned properly.

And then another example with VQ Solutions offering storage and fulfillment services; what's unique and great about having fulfillment services on site is that the inventory does not have to exchange hands. One of the challenges with inventory is maintaining freshness, maintaining exploration, the stability of the product, and those things are threatened by environmental conditions like heat, moisture, light. So, by having your product not leave the manufacturing facility and stay in an NSF certified warehouse facility is a great advantage for your brand where your inventory is controlled by the very manufacturer that created it. So, we're both vested in protecting that inventory until it reaches the consumer. You also save on some shipping costs there as well.

Also, education and understanding. I think looking at...starting from the consumers, consumers have had a higher demand for understanding what is in their products as well as what's not in their products. There's been a rise in allergen related demand of making sure things are free and clear of allergens. So, that's a question we see a lot as well as free of and clean label, the other ingredients that are included in the product; that certainly creates some challenges to make sure that you can meet and exceed the goal at the same time make a very quality product using the ingredients that are allowed. Certifications is also a big one. Some certifications are kind of a standard like an NSF, but going a little bit further than that with cleaning certifications and having organic certifications can just go a really long way as brands evolve and also attracting more different brands to Vitaquest as well.

Trademarked raw materials are another great science-based, evidence-based ingredients that really tell a story about what a product does with having actual studies and substantiation behind making claims about those products. Years ago, you didn't really see as many of those trademark materials where I personally love working with new brands and incorporating trademark materials into the product because rather than just kind of grab claims out of a hat, which is certainly something you don't want to do, you can be a little more evidence-based, science-based responsible about creating something that has data behind it that not only can Vitaquest share that with our customers, but those brands can now share that with those consumers as well. And again, it goes right back to that transparency of showing why the product was formulated the way it was and why it included those ingredients.

Lauren Samot, RD, commercial innovation leader, Vitaquest International LLC: 

Lauren Samot, RD, commercial innovation leader, Vitaquest International LLC

And just to add on to what Blaney said so eloquently, it's been exciting to see these changes in contract manufacturing even in the past, you know, 5 or 10 years. It's just evolved so much. The biggest changes that we've observed has been in this transparency. The veil has truly been lifted on the whole process, you know, from sourcing to packaging, customers know who the players are, they're well informed, they establish relationships with them.

Even independently of their contract manufacturer and the art and science of being a contract manufacturer like Vitaquest, we just try to bring all the key players together. The ideas, the vendors, the scientific backing, the validation, and ultimately you wind up with an exceptional finished product and then testing has been huge too. Testing for activity and potency; it's become a huge responsibility on our part, on the part of the contract manufacturer ensuring consistency from batch to batch, helping the customer really establish brand loyalty, that aesthetic consistency, and just having their signature flavor system and the certification stuff like you mentioned really go along with it. The NSF, the USP certifications, the food safety and GMP certifications, they subject the contract manufacturer to regular audits and accountability, and this has reinvigorated the industry, actually because there's a lot more, more trust and we've set the bar high when it comes to traceability, accountability and validation, but this is really where the industry is heading.