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A growing number of food and beverage brands, both large and small, are outsourcing the production and packaging of selected product lines to manufacturing, packaging, and logistics partners. These include industry giants like Unilever and other household names, as well as smaller companies and startups. For smaller businesses, the benefits of outsourcing not only offer cost and labor solutions but also free up much-needed resources to focus on sales and marketing.

The co-packaging sector expanded significantly in 2020 amid the crisis, with some industry experts suggesting the sector saw as much growth in 2020 as it had in the previous four years. Brand owners are seeking flexibility and adaptability and are establishing new direct-to-consumer (DTC) channels. Growth in the sector is projected to be between 6% and 8% over the next five years, down from the encouraging forecast of 10% to 15% by 2022.

Writing in Food Navigator Europe, Chris Green, co-founder of Young Foodies, said: “Small brands are ‘pushing the boundaries of manufacturing.’” These sentiments are echoed by Theadora Alexander, also of Young Foodies, who, in her excellent blog, describes the importance of outsourced manufacturers as “the heart of your business.” She goes on to say: “They’re the ones who actually make the products you promise the world – products on which your entire brand reputation depends. That’s why it’s so, so, so important to understand how they work and build a relationship with them from the outset.”

As Europe’s largest kosher certification body, demanding the highest standards of safe food practices, it’s important for KLBD to work with many leading contract packagers in the UK and continental Europe. One such company is Cambridgeshire-based March Foods, a leader in co-packaging and co-manufacturing in the UK, specializing in a wide range of powder and liquid packaging solutions.

Independent, family-owned company WePack Ltd is another company that provides packaging solutions for bottling, pouch and sachet filling, and hand assembly projects.

The specialized trade association BCMPA (Contract Manufacturing, Packaging, Fulfillment and Logistics Association) is celebrating its 25th anniversary with the launch of an exciting #outsourcingIs campaign. The association strongly advocates for brands to invest in outsourcing, which CEO Emma Verhaik describes as a crucial strategy for brands of all sizes to scale more efficiently, manage costs, and focus on their core competencies. This is particularly crucial during peak events like Black Friday, when third-party outsourcing partners can provide the necessary flexibility to scale up production, packaging, and logistics at the rapid pace required.

Another KLBD customer and BCMPA member is Express Contract Drying. They are the UK's largest provider of toll-free spray drying and contract powder blending services for food and food supplements. Established in 1991, ECD is a leading specialist in spray drying processes, offering unparalleled professionalism.

Another respected organization, the CPA, or Contract Packaging and Manufacturers Association, puts it most succinctly when it describes selecting a contract packager as the beginning of a partnership. The CPA supports member companies by increasing awareness and value of outsourcing packaging and manufacturing services in a rapidly evolving consumer economy.

The European equivalent is the European Co-packers Association (ECPA), which represents the specialized contract packaging industry in Europe. ECPA and its member companies provide a valuable resource for brand owners, manufacturers, and retailers seeking to outsource. ECPA members include over 1,000 co-packers and approximately 100,000 employees working in the sector, with facilities for grinding, milling, and sieving bulk powders, as well as contract filling liquids into PET bottles.

Take the United States, for example. It’s no secret that finding a good outsourcing solution can be a real problem for both local and European brands looking to set up shop there. Katlin Smith, founder and CEO of Simple Mills, puts it this way: “Contract manufacturers are often hard to find. The one you end up working with is usually ranked 12th on Google.”^indivualpage, you have to call each of them. Fortunately, companies like Partner Slate are able to connect food and beverage manufacturers with high-quality production partners across the board.

According to ePac Custom Flexible Packaging, the benefits of outsourcing food production apply to companies of all sizes. These advantages include reduced upfront investment, faster turnaround times, reduced storage and warehousing requirements, and fewer required certifications. When it comes to advanced technology in 3PL packaging services, the fulfillment systems offered by Granby Marketing offer a range of innovative solutions.

While third-party toll manufacturing (co-manufacturing and co-packing) offers flexibility and cost advantages, it also carries significant risks associated with quality control (QC), particularly with regard to allergen management and kosher compliance.

Risks Involved in Outsourcing Production

Key risks of QC and Kosher compliance for outsourced manufacturers:

• Different quality control standards: Different manufacturers may use different QC programs, which can lead to inconsistent product safety and quality.

• Limited transparency: Brand owners often have low visibility into toll manufacturers’ production processes, which limits their ability to verify compliance with kosher standards and allergen control.

• Cross-contamination risk: Sharing equipment and facilities increases the chance of cross-contamination of allergens or non-kosher foods if cleanliness and segregation are not strictly maintained.

• Labeling and traceability issues: Ingredient declaration or labeling errors often occur, especially when production is outsourced, which increases the risk of undeclared allergens or violations of kosher status.

Accountability is even more difficult to enforce in a co-production relationship when issues such as allergen cross-contamination occur. Documentation gaps, weak allergen controls, and varying cleaning protocols across different customers make contract manufacturers a known risk point in the food safety chain, especially when allergen-free or kosher is expected.

Kosher compliance in third-party contract manufacturing can be particularly vulnerable due to weak contractual controls, limited rabbinic oversight, inadequate employee training, inconsistent communication, insufficient process knowledge, and geographic or cultural disconnects.

• There is no contract between the certification body and the fee-charging producer, which limits the authority

• Infrequent or poorly coordinated kosher inspections

• Toll producers lack understanding of kosher requirements

• Kosher production without notifying the certification body

• Inadequate separation of Jewish and non-Jewish materials

• Using non-kosher approved or substituted ingredients

• Improper or unauthorized use of kosher labeling

• Incomplete or missing kosher documentation

• Communication breakdown between customers, billing providers, and certifiers

The potential advantages of third-party manufacturing from a kosher perspective

Sharing audit costs: If several kosher-certified clients use the same fee-based manufacturer, the cost of the kosher audit/inspection can be shared, reducing the burden on each company.

Existing Kosher Infrastructure: Some toll manufacturers may already operate under kosher oversight, with trained staff, approved suppliers, and appropriate equipment, making it easier and faster to bring new kosher products online.

Get a dedicated kosher run: Facilities experienced in kosher production (especially for Passover, grapes, dairy, or meat) may offer capabilities that smaller manufacturers or in-house facilities cannot financially support.

Reduced need for in-house expertise: Clients can leverage Toll House’s existing compliance systems and their relationships with Jewish institutions, reducing the client’s need for in-depth, in-house Jewish knowledge.

Flexibility: Toll production allows brands to produce kosher products without having to convert their entire operation or invest in segregated production lines.

Choosing the right manufacturing partner is crucial for expansion plans for companies of all sizes. Each operation is unique, and the outsourced process must fit within the existing business model and demonstrate that all production, lab testing, and packaging requirements can be adequately met. The cost of implementing the transition and the future management of key personnel are key budgetary considerations.

pictureNestléGlobal success stories like these epitomize the advantages of outsourcing, with significant investments in production facilities across different continents. Maintaining brand reputation is a crucial factor when choosing the ideal manufacturing partner, regardless of size.