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Entrepreneurs and their contract manufacturing partners have always been comfortable with the unknowns. After all, for the business owner, it takes courage to take the plunge and start a business. For the contract manufacturer, it takes guts to roll the dice on a new customer or a new product line. So, while both groups are comfortable taking chances, no executive in the household and personal products industry was prepared for what’s taken place during the past two years.

First, came the pandemic and the economic shutdown. Many traditional retailers and their suppliers successfully pivoted online. As covid-19 winds down, supply chain issues are keeping some entrepreneurs up at night. Still, contract manufacturers note they’ve weathered the storms of the past two years and are well-positioned to do it again.

“It was an interesting 2021,” said John Stanek, director of marketing and product development, CoValence Labs. “We dealt with significant disturbances due to the pandemic, but 2021 was fantastic! We saw a 170% increase in sales.”

CEO Tom Raffy noted that GAR Lab’s sales dropped 30% when spas and salons were shut down due to covid-19 in 2020.

“But, due to online purchases, sales picked back up to pre-covid levels within six months,” he recalled.

Federal Package’s business accelerated in the second half of 2021, recalled Melissa Niebes, chief commercial officer.

“Some categories rebounded more quickly than others. Thankfully our current specialties in hot pour blending and filling, for deodorants, lip balms and sunscreens were all areas that had growth. We expect this trend to continue in 2022.”

According to Paras Shah, director, technical/R&D, Tri-Pac, there is plenty of market lag due to covid.

“But customers actively seek CDMOs like Tri-Pac who are able to offer a turnkey solution to contract development and manufacturing,” said Shah. “As customer team members are coming back to office after almost two years, there is added push to manufacture, develop, launch, build and ensure supply chains are fully stocked.”

Customers appreciate what a CM can do for them. Maryann Okoro, founder of skin care startup Kambiio, realized early on that she needed to work with a contract manufacturer.

“I wanted to set the foundation right, and for me, partnering with a contract manufacturer was an essential part of having a firm foundation,” she said.

Okoro said she has big dreams for Kambiio and required the opportunity to scale up with consistent, reproducible products with the latest innovative manufacturing processes once she drafted her final product formula.

“I also knew the ability to scale up is a big issue for a lot of indie brands especially if they don’t have the technical know-how,” she noted. “For example, taking your process from 500ml per batch to 5000L per batch too quickly without considering certain critical parameters like the right scales. Change in mixing time and heating time creates a recipe for poor product reproducibility and stability issues.”

Not every new business owner is as savvy as Okoro, who began her career in the pharmaceutical industry.


What’s Hot, What’s Not

While everyone is eager to get back to business as usual, post-pandemic, not every product category is equal in terms of popularity. At GAR, demand for skin care formulations rose due to the dry Fall season; but at the same time, demand for shampoos declined as more customers sought hair treatments.

Stanek said there is greater interest in the microbiome and skin microflora health. And while demand for vitamin A-based formulas is down, there is robust development of retinaldehyde-based products. Like other retinoids, retinaldehyde has anti-aging benefits, like increased cell turnover and collagen production. But retinaldehyde is also an antibacterial and has shown to be effective in reducing acne related to p. acnes.

“A younger demographic is discovering retinaldehyde,” explained Stanek. “The market isn’t saturated yet, so brands can capture that growth.”

At Federal Package, customers are focused on clean beauty and sustainable container options. Federal’s customers have global commitments they need to meet by 2025 and are asking for help to get there. Niebes noted that legislation is heating up around Extended Producer Responsibility (EPR) policies adding pressure for companies to move quickly as well.

“Our Eco Smart sustainability platform offers PCR, PIR and Bio-Resin options, as well as an organic additive that allows the plastic polymer to degrade when placed in a landfill or ocean environment,” she explained. “The products maintain the same form, fit and functionality as our regular containers with the ability to color match to any Pantone color.”

On the formulation side, there’s been an increase in requests for SPF products, including lip balms, lotions and sticks.

“Year-round sun protection has continued to grow this category and we anticipate that to continue. For this reason, we’ve expanded our formulation capabilities to a wider variety of skin, hand and body products with and without SPF,” she said.

Niebes reports greater interest in natural ingredients, including natural retinol alternatives and plant-derived squalene.

“This is coming from the clean beauty push, plant based, renewable sourcing requirements from end consumers,” she said. “These are quickly becoming table stakes for brands.”


Kinks in Supply Chains

But no matter what consumers are buying, everyone must be patient. Supply chains have been stretched to never-before-seen lengths.

“Our lead times on the delivery of ingredients went from 2-3 weeks to 2-3 months,” asserted Raffy of GAR, noting that silicones are in the shortest supply these days.

“Materials that are readily available include fatty alcohols, fatty acids and fragrance—go figure!” he added.

Shah of Tri-Pac explained that some key aerosol components have moved from six weeks to 35 weeks for delivery. At the same time, freight doubled in cost and in delivery times. Meanwhile, petroleum-based raw materials are going through 14-40% price increases on a monthly basis.

“Just-in-time ordering has moved to a more auto-stocking Kanban order system,” he explained. “Securing supply chain is the name of the game and customer forecasts have been vital to tackle this supply chain volatility. We have customer orders and forecasts going out to 2023 and beyond and this helps us provide visibility and mutually work toward on time deliveries and deliverables.

“Due to severe supply chain constraints, talent shortages and consumer behavior, a lot of our customers are trusting us to navigate supply chain and work very hard to supply customer with product on-time-in-full,” he added.

Like Raffy, Shah noted heavy shortages of silicones are putting a drag on production. Couple that with benzene-related recalls, and he predicted that sunscreens and antiperspirants will have some supply chain issues.

Federal Package increased its raw material inventories on different types of glycerin, emulsifiers and oils to ensure an ample supply on hand for production. The increase has also helped offset longer overseas shipping and port constraints.

Personalized Cosmetics from… BASF? Think of it as contract manufacturing…on a very, very small scale. B2B Cosmetics and BASF have developed Emuage, a system which delivers freshly-made, personalized cosmetics. Emuage allows users to create individualized products by simply choosing capsules, placing them into the machine and receiving the final formulas. Users select three pods: one fragrance, one texture and one active. With these three components, and water, users can create their own skin, hair and sun care products. Emuage is a good fit for spas, hotels, dermatologists or any company that wants to offer unique personal care formulas, according to BASF. “Personalization in skin and hair care is a trend,” noted Marcelo Lu, SVP-care chemicals, North America. “Dermatologists tell us that one size does not fit all.” According to Lu, BASF has distribution in place in Europe, Asia and the Americas. The company is also discussing Emuage technology with established beauty companies. “Emuage is complementary, not competitive,” insisted Lu. “Personalization is a new niche that allows formulators to adapt product to people. It enables companies to become even more creative.”

“Glycerin, emulsifiers, and oils as well as different starches to make natural deodorants seemed to be the most recurring issues,” Niebes explained. “The growth of this category also has added to the complexity of sourcing in this area.”

Stanek told Happi that, “all-in-all, our customers aren’t concerned; our customers don’t have their fingers on pulse for supply chain. In my opinion, they are unaware of disruptions because of the way we manage the business.”

That management includes an ERP system that CoValence put in place to look at needs and forecasts.

“We are well positioned to support our customers,” he asserted.

Besides improving backroom functions, CoValence recently unveiled a new website with more features and better functionality, too. The primary goal during the redesign process of CoValence.com was to create a more valuable, user-centric and responsive resource across all platforms and devices.

“With our new website, it will be easier than ever for customers to find information about our products and services so they can maintain an advantage ahead of their competition,” said Stanek.

The navigation was revamped to make it more intuitive and engaging, while maintaining a focus on the company’s mission to provide the best possible experience for its customers.


Manufacturers with Benefits

Okoro of Kambiio said finding a contract manufacturer took 18 months; she told Happi, “It was quite difficult to find a manufacturer that ticked all the boxes for me.”
She listed all the qualities and factors she wanted in a contract manufacturer. But after making a few calls and getting few responses or no responses to emails, Okoro had to fine-tune her list and circle her non-negotiables.

“It was important for me that the contract manufacturer operates in Canada with facility accreditations such as GMP compliance and ISO certification. The lead lab scientist also must have the necessary academic credentials and expertise,” she explained. “As a new business, I wanted a manufacturer that offered a low MOQ, works with my own formula which includes organic and natural botanical ingredients, fills and packs, believes in my vision for Kambiio, and is excited to be on this journey with me!”

She also sought a firm open to using ingredients she sourced.

“Clear communication, good documentation, cosmetic regulatory insight, and integrity were also some of the factors I considered,” said Okoro.

Tri-Pac has more than 51 years of contract manufacturing expertise and recognition and is synonymous with quality and customer service, said Shah.

“We don’t have our own brands so we don’t compete with our customers,” he added.

The company’s 150,000-sq.-ft. facility houses multiple GMP lines (aerosol, liquids, tubes, jars) and filling and blending cleanroom suites; innovation, development and analytical labs; sourcing and procurement including supplier qualification, method development and validation and microbial (USP 61/62).

“(It’s) all powered by our next generation ERP, WMS, LIMS and QMS software’s and state-of-the-art manufacturing equipment,” said Shah. “We’re customer focused, quality driven.”

Focus is one of the benefits of working with CoValence, explained Stanek. The company is dedicated to anti-aging facial care. At the same time, CoValence is ISO- and FDA-certified.

“We offer low MOQ for bulk and filling,” he added. “Our minimums and levels of service set us apart from the competition.”

Niebes noted that all Federal Package capabilities are at a single location, which invariably leads to the question of “what else can we do?” she told Happi.

“Having one location provides direct oversight over the entire manufacturing process to ensure quality and efficiency, which cuts down on costs and lead times,” said Niebes. “Our engineering teams continuously implement new processes which drive quality at every step.”

She described Federal Package as a full turnkey manufacturer with expertise in hot pour blending, compounding and filling.

“This has made us one of the top deodorant, lip balm and sunscreen stick manufacturers in the US,” she asserted. “We also have our own stock formulas for hand, body and sunscreen lotions and creams which make launching these products to market much faster than starting from scratch.”

Raffy said GAR Labs is ISO 9001 certified and highly computerized. “So, we can quickly create new formulas with the ingredient listing and the pricing at the same time, customers love it,” he said.

With inflation surging and war raging in Europe, contract manufacturers have plenty of opportunities to try to mitigate risk. But there are plenty of opportunities for rewards, as well.

“We anticipate a very strong 2022,” said Stanek. “We are making capacity improvements in filling and compounding and expect sales to be up 30% this year.”