When you contact a number of supplement manufacturers for a quote, you expect to end with a pretty clear winner.
The best price wins, right? Well, not necessarily.
If you look a little deeper into what goes into a quote for manufacturing nutritional supplements, you’ll find it’s not a simple numbers game. There are nuances that can make the difference in your product being competitive . . . or a flop.
In fact if you simply go by the numbers, you may miss out on one of the crucial factors for your product’s success – it’s effectiveness and quality. Furthermore, you may also miss out on production savings linked to timing and strategy.
So read on to find out exactly what you should be looking for behind the quotes you get from different manufacturers. By asking the right questions and getting the full answers, you can be sure you’re making the right choice for a manufacturing partner.
Deciphering Supplement Manufacturers’ Quotes Tip #1:
Know The Specifics Of The Ingredients Referred To In The Quote
The nutritional health supplement market is a relatively mature market. Years ago you could blithely offer a chondroitin sulfate supplement for joint pain and people would jump on it. Or launch a CoQ10 capsule and get an enthusiastic reception.
Not anymore. While many consumers are still choosing supplements based on price, more are going a step further to compare the quality of ingredients.
They want the ubiquinol form of CoQ10 instead of ubiquinone. They want vitamin D3 instead of any old vitamin D. And they’re going to look hard at what kind of fish you sourced your fish oil from.
Some consumers are even looking for specific branded ingredients. In a recent Nutrition Business Journal article, Mike Bush, VP of business development of probiotic ingredient manufacturer Ganeden Biotech noted that consumers have been requesting research specific to their branded probiotic strain.#
For this reason, as you start to plan how to manufacture your product, you need to take ingredient quality into account. And ingredient pricing can be one of the biggest factors in determining a quote. In fact the price of ingredients can be the sole reason one supplement manufacturer’s quote varies dramatically from another.
So when you receive a quote, find out
Find out if the ingredient is trademarked or not. An ingredient trademarked by a reputable ingredient supplier means that certain quality controls were used in the production, processing, storage and shipment of the ingredient. The ingredient supplier’s name on it means you get the company’s commitment to quality behind it.
Find out what form of the ingredient is being used. The trans form of resveratrol is considered more effective than the cis form. And you can get resveratrol at potencies varying from 5% to 98%. These distinctions make a big difference in the quality and pricing of the ingredient. For example, 50% resveratrol cost about $110 per kilo in early 2011 while 98% resveratrol cost $365 per kilo.
Find out if it is a branded proprietary ingredient. As Suzanne Shelton explains in an article published in NutraIngredients#, interest has resurged in branded ingredients because of the superior research behind them, the carefully developed production process, and their track history.
For example, for the landmark 5-year Age-Related Eye Disease Study (AREDS2), the National Eye Institute bypassed most lutein ingredients to use the branded product, FloraGLO®.# And they’re not the only one, many clinical trials used FloraGLO® because of the research behind it.
However, with these qualities comes increased cost. Sabinsa’s Bioperine® black pepper extract is a far cry from the black pepper you can buy in the supermarket. And it costs a lot more too.
The quality of the ingredients referred to in your quote can make an enormous difference in the final cost.
Ingredient pricing varies due to seasonality and other market changes as well.
“Many people do not realize how competitive the raw material market is,” explains Patrick Kelly, Vitakem purchasing manager. “Prices change day-to-day so we consistently have to check prices on different materials because a few cents per kilo can save someone hundreds of dollar on their product.”
If you get a quote from a manufacturer for a product that contains pomegranate extract, for example, the pricing may be different in January (the height of the middle eastern pomegranate harvest) than in August.
Many manufacturers try to buffer these price fluctuations by looking for price drops or sales and buying ingredients in bulk while the price is low. For example, Vitakem stocks $7-10 million in ingredients in order to mediate market changes.
The difference in a quote may be due to this kind of foresight on the part of the manufacturer.
This also means that if you request quotes from two different manufacturers at two different times, you may see a difference in the quotes simply based on the ingredient price changes over that period of time.
Similarly, when manufacturers provide you with a quote within 24 hours, they only have time to use pricing based on previous purchases. Again causing some variance in quotes.
Because of this, if you can wait an extra 2-3 days for a quote, the manufacturer can communicate with several raw material suppliers and lock you in at the lowest price currently possible.
So take into account the difference a day can make . . .
And make sure your quote contains the details about the ingredients referred to in it. It is your right as a customer to know from where your ingredient is being sourced exactly and the specifics about the ingredient.
Another ingredient pricing factor also comes into play with the formulation. Many customers approach us with a list of ingredients they want included in a formulation. They leave the proportions up to our formulation team.
The problem with a simple list is that the specific amount of the ingredients used is left out. And this can make all the difference in your quote.
When you receive the quote, you should also get the specifics of the final formulation. Be sure to require that the formulation doesn’t just list ingredients proportionally, starting with the ingredient with the highest concentration. Make sure it is specified milligram by milligram.
Only then can you compare quotes properly. Otherwise, in a sense, you’re comparing apples to oranges.
For example, you may have two different quotes for a formulation containing resveratrol. Both of them may list the resveratrol near the top of the list, indicating that it’s in the mix at a relatively high concentration.
Yet the actual milligrams used in the two different formulations may vary. Even though resveratrol is up high on both lists, one may have 60mg of resveratrol while another has only 20mg. And this doesn’t even account for potency. One could be resveratrol with 50% potency versus a 98% potency.
By just looking at the listing of ingredients, arranged according to concentration, you may not see any difference in milligrams between the two formulations.
The difference between using these two in a formulation can mean the difference of thousands of dollars.
But if you have the formulation broken down milligram by milligram you can see the difference clearly.
Some manufacturers may hedge, saying all they need to provide is the list of ingredients. Don’t agree to this. It is your right as a customer to get the specifics of the formulation you were quoted for – milligram by milligram.
You should always get more information in your quote than just an email with a price.
Use These Tips To Choose The Best Supplement Manufacturer For Your Company
Your company’s success hinges on creating the right product for your market. And to do so you need to choose your ingredients carefully – and your manufacturer.
But when you receive a quote from a manufacturer, it may be hard to interpret what the numbers really mean. These tips will help you get behind the quotes you receive from various candidates. They provide you with the framework for asking the right questions and getting the answers you need to make an informed decision.
Put these three tips to use. You’ll then have confidence that – of all the supplement manufacturers you looked at – the one you choose is working with you to make the best product for your business.