Our client is a branded contract manufacturer of jams, jellies, spreads, foods, snacks, juice, cocktails, and mocktails primarily focused on the US and Canadian markets. Jams and jellies are popular bread spreads in the US and Canada. Both markets show a growing preference for ready-to-eat foods, which has also been driving the consumption of jams, jellies, and the like. Everything went smoothly until a few years ago when the market began to show signs of distress. Since then, growth worries have kept this sector under pressure. Essentially, there was a steady downtick in market shares for jam and jelly businesses, driven by consumer concerns about high sugar content, artificial preservatives, and fat content. Understanding what is healthy for consumers and delivering those outputs is key to the market participants in this sector. Furthermore, they need to be able to find reliable contract manufacturers capable of delivering the goods and improving their procurement supply chain, overall. This calls for current and highly relevant procurement market intelligence, actionable insights, and industry best practices.
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What consumer behavior trends and patterns we can watch out for while choosing contract manufacturers!
Consuming “clean-label” products is a growing trend in the US, though there is no agreed definition. This increased consumer focus on health, based on facts or perceptions about packaged ready-to-eat products, is quite understandable since 34.2% of adults over the age of 20 in the US are overweight. 33.8 percent of adults are obese, while 11.3% of the country’s population has diabetes. Besides, consumer and public opinion is weighing more heavily, unlike any time in the past, in favor of ethical/green labels (e.g., organic, green, vegan, fair-trade, non-GMO). Alongside, the market is demonstrating increasing appetite for new flavors of jams, jellies, and spreads processed from non-traditional fruits, such as avocado, chironja, and guanabana.
Faced with a raft of business issues, including intense competition, the client turned to procurement experts at SpendEdge for assistance in improving profit margins and reducing operating costs with best-fit contract manufacturers. Migrating several of the cost-intensive operations to low-cost destinations was the main plank. At stake for our client was an addressable market of over USD 930 million in the US and more than USD 146 million in Canada!
Our procurement specialists identified key contract manufacturers for the client’s ready-to-eat product line comprising jams, jellies, and spreads. There were many factors to weigh, such as plant locations, equipment type, and quality certifications, to arrive at various contract manufacturers’ relative operational and functional capabilities. Applying our market research methodology, brought to perfection over the last 18 years, our team evaluated the client’s business requirements and identified key contract manufacturers. Furthermore, our specialists validated and tabulated research findings to narrow down to a shortlist of five contractor manufacturers. The timing was important for the client, and our team quickly wrapped up the entire exercise. The client has started working with one of the contract manufacturers on our shortlist and the early results are very encouraging.
It is essential for any large global company to set up a clear and strategic sourcing plan to stay ahead from their peers and tackle all challenges in the industry fueled by economic slowdown and pandemic.