The Risks of Contract Juice Manufacturing
Synergy Food Group Operations Director, Adrian Hall explains the risks of Contract Juice Manufacturing so that you can understand and find the ideal Contract Juice Manufacturing or Private Label Beverage Manufacturing partner for your company.
In one of our previous articles, we spoke a little bit about the limitations. The risks are slightly different. So we’re going to touch on a few really important points that you need to consider before making those choices.
The first one is going to the potential loss of IP or intellectual property.
If you’ve got a great idea or a great concept, and you’re making this product, you start having some conversations with contract manufacturers. Now, if you haven’t signed any documents or contracts or nondisclosure agreements, before you really delve too far into talking about the technicalities of how your product’s made, there’s nothing really stopping that company, taking that idea and then running with it themselves.
And unfortunately, in this industry, I’ve seen it happen far too many times and seeing great concepts taken by a big corporation and then released as if they made them their own.
So make sure you’re covering yourself, get a lawyer to help if you need to, but have a contract in place that they’re not going to compete with what you’re doing.
The second thing that we need to be aware of is just making sure you choose the right company to work with.
And there are a lot of people in this space who will promise you the world but really get a good understanding of if this company is the right company to work with for you at the point that you’re at now and the point that you want to be at as well.
Choosing the wrong one can become a really, really complicated mess the further into a business relationship you go. So getting it right early is going to save you a lot of time, money and effort down the line.
Now there’s going to be very different stages of growth that you encounter as a business. There’s your startup phase, there’s your growth phase and then there’s your mass-produce stage.
A contract manufacturer that you choose may not be perfect for all of those stages.
It’s important to really understand what their limitations are because for you as a company, the risks for you are you might have a window of time where they might not be able to make product for you because you’re simply growing too fast. So make sure you’re aware of what they can and can’t do.
One of the major risks to a brand is what happens if there’s been a breach in food safety or food traceability.
When you’re not making the product yourself, you’re relying on somebody else to make sure that they’re following the steps that you need laid out to get your product perfect. That might be sanitizing your fruit and vegetables before they go into a production room, it could be making sure that there’s a proper hygiene plan in place from the people who are making it for you as well. Any good contract manufacturer should have a very thorough food safety plan.
Ask to see their food safety certificates.
Ask them what score they got with the food authority.
That’ll really help you in being able to make a really informed decision about whether they’re for you or not.
You also really want to be aware that their payment terms line up with your ability to pay the bills.
If your contract manufacturer wants payment for product within a week, but your customers aren’t paying you for a month, you’re going to find very, very quickly that there’s a huge lag in your cash flow, which can leave you not being able to afford to pay them, to make product for you.
Try and get alignment with the terms that your customers are paying you in and the terms that you’re paying your contract manufacturing customer with. A lot of times, they’ll be very flexible, but just make sure that communication is had upfront.
What happens if there’s issues with consistency along the way?
Again, having been in this business for a long time, I’ve seen a lot of customers come to us and they’ve left their previous contract manufacturers because they’ve had issues with consistency.
So for you, you need to understand what the risks are with potentially having someone make your product and have the batches be different all the time.
Make sure you’ve got a very clear plan in place for how you want your product made and when, and under what conditions. That’ll alleviate a lot of risks going forward, ensuring that the products made the same way every single time.
And the final risk is really about flexibility.
When you’re making product yourself, you can make something with very, very short notice, if you get a late order from a customer.
If you get a late order from a customer and you’re dealing with a contract manufacturer, there’s a risk there that they’re not going to be able to turn it around in the timeframe that you need, the stock by.
Make sure you’ve got a very clear plan to hold enough stock, to be able to get you through in the times when a contract manufacturer might be physically too busy to be able to turn something around quickly enough for you.
In summary, yes, contract manufacturing does come with some risks, but the rewards far, far outweigh them.
We’ve talked about some of those benefits in previous videos, which we definitely recommend you have a look at.
At Synergy Food Group, we’re really committed to working with companies to help them, bring these incredible products to market.
If you’d love to have a chat with us, to see how we could work together, we’d love to hear from you, reach us at Synergy Food Group
Synergy Food Group contract manufacture for Australia’s leading juice & specialty beverage brands.
We were the first Australian company to innovate fruit and vegetable based Cold Pressed Juice, utilising High Pressure Process (HPP) technology, plus we produce a variety of specialty beverages such as Nut Milks, Protein Waters, Functional Beverages, Superfood Smoothies & Coconut Waters.
Some of our clients also use our juice as a premium ingredient to enhance other products such as Ice Cream, Cider & Beer.
Situated in central Sydney has allowed us to build a strong network of Farmers and Producers to source the freshest ingredients.
Synergy Food Group is licensed to produce both raw unpasteurised juice & juice utilising HPP technology and we are SQF certified, ensuring the highest food safety standards.
Our clients range from large retail chains, to boutique juice & specialty beverage brands who have a passion for providing high quality, innovative products to their loyal, health-conscious customers.
Whether it’s for the markets, cafes, restaurants, retail outlets, supermarkets, or international distribution we’ll tailor a cold pressed juice brand or specialty beverage that you can be proud of.