In the wake of the COVID-19 crisis, the consumer goods industry has witnessed unprecedented shifts in consumer behavior and market dynamics, prompting leaders within the global consumer packaged goods (CPG) industry to reassess their strategies and adapt to emerging trends. As consumer preferences continue to evolve, both established brands and small-scale innovators are compelled to navigate disruptive trends while ensuring their portfolio priorities align with growing markets and channels.
- Recognizing the imperative to stay agile in a rapidly evolving landscape, a leading CPG company has collaborated with SpendEdge to meticulously identify best-fit contract manufacturers. This strategic alliance aims to optimize resource allocation while capitalizing on emerging opportunities, thereby enhancing the company’s success model amidst industry growth and competitive pressures.
- In the realm of mergers, acquisitions, and divestitures (M&A&D), the company is poised to leverage its robust marketing expertise and digital commercial capabilities to bolster consumer relevance and engagement across various subcategories. The company is poised to forge partnerships with contract manufacturers that align with its portfolio priorities and strategic vision by harnessing insights derived from consumer behavior data and market intelligence.
- Through this proactive approach, the company aims to fortify its position in the market, catering to the evolving needs of consumers while leveraging disruptive trends to drive growth and innovation. With a keen focus on optimizing manufacturing processes and enhancing operational efficiency, this collaboration underscores the company’s commitment to delivering value and quality across its product offerings.
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 are weighing more heavily, unlike at 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 an increasing appetite for new flavors of jams, jellies, and spreads processed from non-traditional fruits, such as avocado, chironja, and guanabana.
Key parameters for choosing a contract manufacturer
Check quality and dependability:
When selecting a contract manufacturer, prioritizing their reputation for quality and dependability is paramount. Ensuring alignment with your brand’s standards and timely delivery is crucial. Seek out manufacturers with robust quality control systems, like ISO certifications, tailored to your industry. Request references or testimonials from previous clients to assess reliability. A proven track record in delivering consistent quality products within deadlines is key to forging a successful partnership.
Production capacity and expertise:
Assessing the production capacity and expertise of a contract manufacturer is vital. Determine if they possess the required resources, equipment, and capabilities tailored to your manufacturing requirements. Consider aspects such as production volume capacity, lead times, and scalability. Prioritize manufacturers with experience in handling similar products or industries to ensure efficient fulfillment of your needs. Choosing a manufacturer equipped to meet your specific production demands is essential for a successful partnership.
Balancing cost and value:
Price is always a pivotal factor in business choices, including the selection of a contract manufacturer. Yet, it’s imperative not to hinge the decision solely on cost. While competitive pricing is desirable, it’s equally crucial to weigh the value proposition. Beyond the initial quotation, evaluate aspects like product quality, customer service, and partnership advantages. A comprehensive assessment ensures that the chosen manufacturer aligns with your long-term goals and provides optimal returns on investment.
About the Client
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 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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Client problem
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!
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SpendEdge Solutions
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.
Any large global company needs to set up a clear and strategic sourcing plan to stay ahead of their peers and tackle all challenges in the industry fueled by the economic slowdown and pandemic. To know more
