Contract Manufacturing: The Key to Unlocking Branded Growth
We’ve seen it many times – you have a successful brand, you’ve built up a loyal customer base, you have secured some steady mainstream retail listings – but something is missing. Your sales have stagnated, and those heady days of double-digit growth seem to be long behind you. You’ve tried some new flavour variations to mixed results. But what can you do now to really revitalise sales?
The answer in many of these situations lies in diversification. Why restrict your brand to its original category when it has clearly established a customer base? Looking towards other adjacent ‘shoulder categories’ is an ideal way of building sales by appealing to new customers and usage occasions while building on your brand awareness. Would Heinz have ever become a household name if they’d just stuck to Horseradish? Where would Quorn be if it hadn’t chosen to expand its reach into chilled meat alternatives and ready meals?
If you know your customers as well as your core competencies and are passionate about the value of your brand, exploring diversification should be an obvious next step. However, despite the significant growth opportunities category diversification affords, many brands are reluctant to consider it. Common hesitancies include:
- There are so many product areas our brand could work in – how do I choose the best area to focus on?
- We don’t have the internal bandwidth to give diversification as much attention as it would need
- Working in a new category would detract attention from the core brand
- We don’t have the expertise in the product areas we’d be looking at
- We wouldn’t know where to start with choosing a reliable manufacturer in this area
- How do we keep our brand image consistent?
- Won’t we put off some of our existing customers?
- We don’t know the buyers in these categories – can we guarantee we will secure listings?
Ultimately, many brands see diversification as a risk, though in reality, failing to diversify and evolve is often the bigger risk. The brand lifecycle is inevitable, and no brand will survive without continuous development. The attraction of co-packing is that it is a relatively low-risk strategy compared to investing significant capital in production capacity in-house. So, if the product is not as successful as hoped, you can end the contract, rather than being stuck with an empty factory with significant overheads.
Brands making use of spare production capacity in other factories are also able to move quickly, offering ‘First to Market’ products which target fast-growing consumer trends. This keeps both consumers and retailers engaged with your brand and helps it stand out against competition.
Most concerns around venturing into another category centre around a lack of expertise – from choosing the right category, to selecting the right contract manufacturer, to approaching the right buyers with the finished product. Ultimately, this can be rectified with gaining knowledge through a combination of research and networking, though of course this takes time. That is why many brands choose to get help with at least part of the process. With our broad experience in the HRA team, you can guarantee that someone in the team will have experience in the category you are considering.
We can advise on all elements of the diversification process – from compiling a comprehensive report on all the categories of interest and recommending the ‘best bets’, to finding a contract manufacturer which suits your specific requirements, right through to testing out your NPD concepts with consumers. We can handle the whole process, meaning you don’t need to take your attention away from the core business.