Before finalizing new beverage product concepts, beverage-makers need to consider the capabilities of the contract manufacturers and packagers (co-packers) with which they work, according to experts. Laurie Troiani, division manager of product development for Livermore, Calif.-based The National Food Lab, noted in Beverage Industry’s Sept. 18 webinar, “The Path to New Product Success,” that beverage-makers have to ensure that co-packers exist in the market that can produce a given new product. “If you have a certain process and a certain package and a certain distribution that you need to adhere to, [you need to find out] do those co-packers exist out there or are you going to be shut out of the market?” she says.
According to Chicago-based Mintel’s Global New Products Database, more than 4,300 new beverage products launched in the United States in the last year across eight major beverage categories — alcohol, hot beverages, juice drinks, carbonated soft drinks (CSDs), water, ready-to-drink beverages, sports and energy drinks, and “other” beverages.
Among these new products, Bill Foley, chief executive officer of Tampa Bay CoPack, Dade City, Fla., says he has noticed more requests for creative and innovative new products as opposed to “me-too” products. “Two years ago and older, every other phone call was, ‘Can you make me a 5-Hour Energy knockoff?’” he explains. Now, the company receives calls from both new startup companies and mature companies wanting to bring new ideas to the market and move away from the mentality of “me-too” products, he says.
“This year, we will do work for 25 brand-new customers, and 20 of them are new product introductions, and none of them are what I would consider a knockoff of something that is in the marketplace,” Foley says. “So that really is a trend that’s new compared to people just looking at an existing product and wanting simply to make a version of it.”
In terms of packaging, Brian Dworkin, president of Castle Co-Packers LLC, New Kensington, Pa., says he has noticed more beverage-makers wanting to use differentiated packaging and in-cap delivery systems for ingredients. “Right now, the labeling of odd-shaped bottles is becoming more prevalent, and specialty caps for delivering ingredients into water are changing the beverage landscape,” he says. “I believe getting the consumer to grab something different off the shelf is fueling these products. Let’s face it, there are a zillion choices these days, and what makes you stand out of the crowd gets you your crack at the consumer. If you can get them to try it once, if they like it and feel that it is worth the money, they will come back for more.”
To keep up with new products and packaging variations, co-packers have to offer multiple capabilities, says Eric Miller, chief executive officer of Brooklyn Bottling Group Inc., Milton, N.Y. In terms of requests, he says his company receives many inquiries about its capacities and capabilities in terms of production and labeling. “It’s a whole myriad of, ‘Can you do 12-packs, 15-packs, 18-packs; can you do tray shrink-wraps; can you do pads?’” he says. “It’s all types of ‘can you’ scenarios.”
Brooklyn Bottling can utilize hot- or cold-fill capabilities for 8-, 12-, 16- and 24-ounce cans for energy drinks, carbonated beverages, juices and teas. It also can produce single-serve and multi-serve hot-fill beverages in polyethylene terephthalate (PET) bottles and glass bottles in 12-24-ounce sizes, fill PET containers ranging in size from 8 ounces to 3 liters as well as custom bottles, and hot-fill 64-ounce containers with juice.
Beyond these capabilities, Miller notes that Brooklyn Bottling is willing to make advancements in order to accommodate the requests of larger customers. “We blow our own bottles, so if a customer is large enough — has a large enough business portion for us for a [packaging] agreement — then we can customize a bottle for them,” he explains. In the last year, the company also added reverse osmosis capabilities for water treatment combined with ultraviolet filtration and charcoal filters at the request of a prominent customer. “It made sense to give the customer the product quality they wanted, and it made sense for us to make an investment.”
Mountain Valley Spring Co., a natural spring bottled water company based in Hot Springs, Ark., recently expanded its capabilities into the private label PET bottled water co-packing business in response to market trends as well. According to data from Chicago-based Information Resources Inc. (IRI), private label bottled water was the top seller in the convenience/PET still bottled water market in the 52 weeks ending Sept. 8 in supermarkets, drug stores, mass-market retailers, gas stations and convenience stores, military commissaries, and select club and dollar retail chains. In fact, private label bottled water controls 19.4 percent of the market share, an increase of 2.2 percent compared with the same time period last year, IRI reports.
Last year, Mountain Valley Spring Co. added a new PET line, bringing its operations capabilities to a total of two PET lines, several bottling lines dedicated to bulk packages in 2.5-gallon and 5-gallon glass bottles, and co-packing capabilities for natural spring water, flavored water, enhanced water, sparkling water and still water in 1-liter glass bottles with high-end pressure-sensitive labels, says Speed Stodghill, director of sales for the company.
It also manufactures PET bottles onsite through its container division, Veriplas. Its undecorated stock glass bottles are supplied by Owens-Illinois Inc. (O-I), Perrysburg, Ohio. Mountain Valley Spring Co. then uses its pressure-sensitive labelers to label the bottles.
“We see a tremendous opportunity to provide a domestic alternative for store brand and private label 1-liter glass water programs,” Stodghill says. “It is our intent to grow the private label glass family to include one-third-liter and half-liter bottles.”
But it takes more than beverage-making capabilities to nurture a successful co-packer relationship with a brand. Customers also look for quality, reliability, agility and fair pricing, Brooklyn Bottling’s Miller says. For added quality control, the company invested in a high-performance liquid chromatography tester for caffeine testing as well as new equipment to test air and carbonation levels in cans to give its customers peace of mind through its new in-house testing capabilities, he says. In addition, the company recently added a nighttime quality control manager to ensure that the company produces at consistent quality 24 hours a day.
“We’re not milking our business; we’re investing heavily as we increase our business, and that’s what your customers want to hear,” Miller says. “They want to close their eyes and know you’re going to produce their products timely and the way it’s intended to be produced with the proper quality and care.”
Castle Co-Packers’ Dworkin notes that technology, especially testing equipment, has helped make it easier for co-packers to uphold quality. “We can take pictures of bottles with cameras or X-rays on our lines as the bottles are running and discard anything that is defective,” he explains. “This is great because it takes human error out of things.”
Even with quality controls in place, co-packers still need to build a relationship of understanding with their customers. “Communication and trust are two of the most important keys to a successful partnership,” says Darold Sauber, director of business development for Dairy Farmers of America (DFA), Kansas City, Mo. “Only when we are able to fully understand our customers’ needs can we formulate a packaging partnership that best meets their needs.”
Castle Co-Packers designed its new plant in Latrobe, Pa., to keep the conversation flowing and develop an atmosphere of trust with its customers. Along with 12 different lines for handling labeling and processing of hot-fill glass and plastic bottles as well as cold-fill non-carbonated beverages, carbonated beverages with or without preservatives, water, brewed tea, and hot- and cold-fill bag-in-box beverages, the company also set up its offices so that there are six conference rooms in which brands can “hang out, have meetings, and just have a very comfortable atmosphere,” Dworkin says.
Helping the new guys
Tampa Bay CoPack found a way to strengthen its customer relations by helping smaller companies feel comfortable in the market. The company offers a pilot-run program that allows new companies or even mature companies with new products to hire Tampa Bay CoPack to produce small-quantity runs for market testing, sampling or product validation.
“We can present a small-quantity opportunity to run for a marketer where the per-bottle cost is, of course, expensive, but his cash outlay is really minimized because he doesn’t have to run large minimums of 50,000 or 100,000 bottles,” Foley explains. “We’ve actually started putting this program out, and it’s really become one of our strongest suits in terms of allowing that entrepreneur marketer and even mature companies to [test out] product but not make that heavy financial commitment until they can validate that it’s got some ability to sell. It’s really worked very well.”
As part of this, the company tries to be very flexible and offer a variety of capabilities, Foley says. The company operates two filling lines capable of hot-filling or cold-filling beverages into plastic bottles that range in size from 2 ounces to 1 liter at speeds of 80 to 200 bottles a minute, he says. It also added a carbonation line in January in response to the high number of carbonation requests it received, he notes. Also in response to customer requests, the company plans to add shrink-film wrapping capabilities for multi-packs to its portfolio of services in 2014. The company also offers services in filling, capping, labeling and product configurations for sales displays for various bottle shapes and sizes to offer a variety of options to its customers.
Furthermore, the company caters to new beverage brands entering the market by offering assistance with sourcing ingredients, bottles and caps, Foley says.
“My experience is, if there’s 100 [new products], maybe two to five will make it, but I’d like to be the guy that catered to that two to five and enjoy the opportunity because [they] have a successful product,” Foley says.
Co-packers in general serve as a foundation for new beverage products. “Most companies are willing to gamble on an idea, but generally not on equipment, so there will always be a need for contract manufacturing,” DFA’s Sauber says. “The key is anticipating trends and ensuring we are well-positioned to serve our partners’ needs with the right equipment and formats at the right times.”