Introduction
Suppose you’re planning to start a coconut business. If so, good for you! You won’t be limited to just coconut meat as there are multiple other kinds of coconut products, such as coconut oil, cream, sugar, shredded and toasted coconut, and the list goes on. It is a versatile product, as seen in its many uses in savory and sweet dishes as well as personal and skincare products.
However, as with any other enterprise, you will need to think about sourcing, packaging, and manufacturing. While you can invest in labor and equipment for these things, you may outsource them to a third-party company. This is known as contract manufacturing, and it is an excellent option for businesses that lack employees and equipment but need to produce large product quantities.
Red V Foods is a leading contract manufacturer of coconut products in the USA. We understand that many business owners may need to become more familiar with contract manufacturing. So, we came up with this guide to provide them with essential details about contract manufacturing, such as its types and the reasons why companies use it. We’ll also discuss helpful tips for finding a reliable contract manufacturer.
What Is Contract Manufacturing?
In a contract manufacturing arrangement, a business hires a third-party provider (known as the contract manufacturer) to create their products. This agreement involves design, manufacturing, shipping, and other stages in the production process, depending on the requirements of the business hiring the contract manufacturer.
Aside from the coconut industry, other industries that leverage this approach include the pharmaceutical, marketing, and manufacturing industries.
Reasons To Hire a Contract Manufacturer
Partnering with coconut product processing companies in the USA offers several advantages for businesses in the coconut industry. Below, you’ll find the top reasons why many turn to contract manufacturing:
Cost Savings
The essential components for product creation include labor, equipment, software, training, facilities, and so on. The thing is, many businesses do not have the funds to cover these costs. Fortunately, contract manufacturing offers them a cost-effective way to still produce high-quality products without having to invest in machinery, workers, and such.
Increased Production
Partnering with a contract manufacturer allows businesses to meet the demand for their products despite not having the manufacturing capability to produce large quantities. Third-party manufacturers have the equipment, systems, and expertise to generate huge quantities of goods while still meeting quality standards.
Better Product Quality
Sometimes, it is wiser to outsource a third-party manufacturer to ensure product quality. These companies have the tools, specialized knowledge, and experience to manufacture premium products, even in massive quantities. Better product quality translates to higher customer satisfaction and sales for the business.
More Time for Critical Business Functions
By hiring a contract manufacturer, business owners can redirect their time, energy, and focus on core business functions, such as product innovation, marketing, sales, customer analytics, and such. In doing so, the business is able to run more smoothly and efficiently.
Tips To Find a Reliable Coconut Product Contract Manufacturer
We’ve already discussed the advantages of partnering with a contract manufacturer. However, you may be wondering right now, “How do I find a reliable contract manufacturer for coconut products in the USA?” Check out the tips:
Determine What Services You Need
Before you go ahead and start your search, you must first identify your manufacturing requirements and the type of services you need. List down your product specifications, quality standards, product volume, budget, and other special requirements you may have. Doing this will help narrow your search to companies that fit your needs and non-negotiables.
Contact Multiple Companies
Don’t settle for the first third-party provider you meet. Even if they seem suitable for your business needs, you should still take the time to contact and get a quotation from other companies. By vetting several coconut product manufacturing companies, you can make a more informed decision on which manufacturer can give you the most value for your money.
Verify Certifications and Accreditations
Certifications will give you peace of mind that the company you’re partnering with has the right know-how and qualifications to operate as a manufacturer. Red V Foods is proud to say that its facility is a certified organic plant operating under strict GMP and HACCP programs. We are also audited yearly by the Safe Quality Food Institute (SQF), and we consistently receive certification for the SQF Food Safety Code for Manufacturing.
Check Industry Experience
Assess their experience in contract manufacturing coconut products, particularly in the type of products you wish to sell. Contract manufacturers with the right industry experience are experts in the coconut product manufacturing process. They have efficient systems in place and are more capable of producing quality products that meet your required specifications.
Learn How They Source Their Products
Are you looking for a contract manufacturer that will also be in charge of sourcing the raw materials for your coconut products? If so, you must inquire where and how they source their coconuts to ensure you’re getting high-quality ingredients for your goods. For instance, our parent company, Axelum Resources Corp., sources coconuts from farms in the Philippines, one of the world’s leading producers of top-notch coconut.
Consider Scalability Capabilities
Eventually, your coconut business will expand. Your production volume will most likely increase, and you might start offering other coconut products. There is also the possibility that you will need to lower your production depending on the market. Your contract manufacturer should have the capacity to keep up with your business’s growth, and they should be flexible enough to scale down their services as necessary.
Assess Customer Service
Your contract manufacturing partner will be a crucial part of your enterprise. For this reason, you must choose one that displays excellent customer service to ensure that any concerns that come up will be addressed promptly.
You can already assess the customer service of a contract manufacturer from the moment you try contacting them. Are they responsive to your queries? Do they follow through with what they say? Are they knowledgeable about their services?
Types of Contract Manufacturing
Contract manufacturing can be separated into different categories, depending on the agreement between a business and the contract manufacturer:
Outsourced Workforce
Some companies do not have enough employees to manufacture their goods. As such, instead of recruiting more employees, they outsource workers from another company to supplement their workforce. The number of outsourced staff will depend on the business hiring them.
Equipment Rental
From the name itself, this type of contract manufacturing involves renting another company’s equipment and facilities to produce goods. The business in need of the machines may either bring the equipment to its own facility or take its employees to the facility of the contract manufacturer.
Manufacturing Parts of Product
One of the great things about contract manufacturing is its flexibility. It is possible to hire a third-party provider to manufacture only selected parts of your product. This is an ideal setup for businesses that need help with machinery and labor but do not want another company to completely take over the production of their goods.
Private Label Manufacturing
In private label manufacturing, the product is produced by a contract manufacturer but is sold under the brand name of the business that hired it. Here, the business has control over various aspects of the product, including design, packaging, formulation, and other specifications.
End-to-End Manufacturing
With end-to-end manufacturing, the contract manufacturer becomes involved in creating the product. In other words, it also takes part in the design and specifications of the product along with the business selling the product.
FAQs About Contract Manufacturing for Coconut Products in the USA
Is It Profitable To Start a Business in the Coconut Industry?
Yes. The demand for coconut products is expected to increase, according to a report by Grand View Research. According to them, one of the factors influencing higher demand for coconut products is “increased awareness about the benefits of coconuts coupled with the growing demand for coconut-based products in major developed countries.”
Which Country Has the Best Coconut?
It is difficult to pinpoint which country offers the best coconut as the “best coconut” for many can be subjective. The Philippines, however, produces some of the world’s highest-quality coconuts because the country’s tropical climate greatly supports coconut farming.
From What Country Does the USA Import Coconuts?
According to the USDA, the USA’s “main sources of supply are Puerto Rico, Cuba, Central America, and the Pacific Islands.”
Red V Foods, in particular, sources its coconut products from coconut farms throughout South Asia and Southeast Asia. Through our parent company, Axelum Resources Corp., we source coconut directly from farms in the southern parts of the Philippines.
Conclusion
Hiring a contract manufacturer is an excellent way to cut manufacturing costs and boost production quantities while maintaining high-quality standards for your coconut products.
If you’re looking for a global coconut product manufacturer you can entrust with your brand, contact Red V Foods today! We are a leading supplier of premium coconut products in the USA and offer the following services: sourcing, manufacturing, private labeling, co-packing, and oil-filling.
With over 25 years in the coconut industry, we have extensive experience catering to various clients, be they manufacturers and distributors, retail and private label brands, food service establishments, or e-commerce stores. Let’s discuss how we can help you. Reach out to us today!
