What is Contract Packaging?

Is the process of outsourcing your packaging and labeling needs to a third party company known as a Contract Packager or Co-packer that provides packaging services to their clients. This process is common in the Industrial, Food & Beverage, Consumer Goods and Pharmaceutical industries.

“Consumers on average form an impression of a brand within seven seconds of seeing the product. Therefore, custom packaging can be instrumental in creating a good first impression.”

The benefits of hiring a Co-packer:

  1. Avoid Purchasing Specialized Equipment and additional space: some of your packaging needs might require additional equipment which costs more money and takes up more space. Utilizing a Contract Packager or Co-packer, you will not have to invest the capital into addition equipment and space.
  2. Reducing Labor Expenses: The packaging demands might be labor intensive and require more labor force. Your contract packager will be staffed and ready to take on your project or will hire, train and manage the labor to take on your packaging needs.
  3. Short Term Projects: You might not need the packaging services long term, so it is best to outsource these needs so you can focus on your core competencies.
  4. Low Volume Runs: You might only run your product every once in a while which would not makes sense to invest in the specialized equipment and short term labor.

When to use a Contract Packager or Co-Packer

  1. Short Term – The packaging requirements are designed for a short run and it is not worth investing in the packaging equipment. This could be promotional products, short production runs or test-runs
  2. Downsizing – Your company is in the process of downsizing and does not have the labor force to handle the project
  3. Regulatory Requirements – The packaging has specific regulatory requirements that your facility does not meet such as being FDA approved for food & beverage packaging or medical
  4. At Capacity – Your current packaging lines or operations are at capacity and you cannot take on more work.

“Research shows businesses see a 30% increase in consumers if they focus on product packaging.”

What to look for when choosing a Contract Packager

  1. Location – Location helps when hiring a co-packer to cut down on transportation costs and keeping your supply chain simple. It is ideal to hire a Co-packer that is near you, your suppliers, your customers or your distribution center.
  • Cost – Cost always plays a huge factor when choosing a vendor or supplier.  Be sure to concentrate on the vendor with the most experience in your industry and has the right equipment and capacity to handle your project

“Roughly $150 billion is spent annually on product packaging globally.”

  • Communication – Choose a contract packager who is willing to sit down with you in person to discuss the different options for your project and communicate any issues that arise along the way and during the process.
  • Services – Does the Co-packer provide additional services such as Packaging Design and Engineering, Packaging Testing, Product Packaging and Supply Chain such as shipping to its final destination, warehousing or fulfillment? Does the Co-packer offer Bar Coding or RFID tagging?
  • Equipment and facilities – Is the Co-packers facility and equipment capable of handling FDA regulated products or military and government products?