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Third Party Manufacturing: A Strategic Move for Cosmetic Brands in India

There are no gender restrictions on beauty. Everyone has the right to a respectable and attractive appearance. In India, these days, people, irrespective of gender, focus on beautifying themselves. People are showing interest in buying cosmetics items even in the smallest villages in India.

Body care, Face care, Hand care, Sun care, and other products like Cosmetics and Hair care products are the five predominant categories in the Indian skincare market. Many cosmetics companies in India have decided to invest a significant portion of their finances in marketing and advertising due to the neck-to-neck competition.

For a Startup or a company with limited resources to sustain and thrive in the cut-throat competition requires strategic planning of manufacturing process which requires expensive infrastructure. It is in these times cosmetics brands can rely on third party cosmetic manufacturer.

Who are these third-party cosmetic manufacturers? What benefits they can offer? How to choose one? Continue reading to get answers for these questions:

 

Increasing Requirement for Cosmetics in India

At a Compound Annual Growth Rate (CAGR) of 25%, India’s 1.4 billion people market share is predicted to reach US$ 20 billion by 2025 in Cosmetics sector. On comparison, the worldwide cosmetics market is expected to increase at a 4.3% annual rate and reach US$ 450 billion by 2025. Supporting this rise, India is projected to account for 5% of the global cosmetics market by 2025 and rank among the top five global markets in terms of revenue.

There are many reasons for surging demands for cosmetics products in India. Most important among them is that more women are entering workforce and men’s grooming is normalized through social media. The pandemic has also had a significant effect on consumer behavior. Other factors include:

  • Rising disposable income
  • Social media trends
  • Demand for chemical-free and organic cosmetics

According to the report, cosmetics valued at over $4.4 billion are sold only in online through e-commerce and social media platforms. Also, research from a few independent groups indicates that there are other considerations beyond price when customers purchase cosmetics.

 

What is Third Party Cosmetic Manufacturing?

Contract manufacturing, also known as cosmetic third party manufacturing, is a business strategy whereby a company hires specialist manufacturers to produce cosmetic and personal care products. These third party cosmetic manufacturer serve as the main production sites for a wide range of cosmetic items.

Manufacturing starts when a company or brand contacts a third party cosmetic manufacturing company with a particular product need. However, they can also include makeup and personal care items, as well as skincare and haircare items. Then, according to the client’s requirements, the contract manufacturer formulates, produces, and packages these products.

 

What are the factors contributing to the growth of cosmetic manufacturing companies in India?

 

Various factors that forms Indian cosmetics sector can be credited with the expansion of cosmetic manufacturing companies.

  • Growing Consumer Awareness: One important factor has been Indian consumers’ growing awareness of beauty and personal care products.
  • Evolving Beauty Trends: The dynamic nature of beauty trends and the urge to stay up to date with global standards have led to a growing demand for a wide range of inventive and creative cosmetic products.
  • Middle-Class Growth: With rising disposable income, India’s middle class is becoming more and more common, which has resulted in a growing demand for cosmetics.
  • Talented Labor: The cosmetics business has grown because of India’s large pool of talented workers and researchers who specialize in cosmetic development.
  • Worldwide Exposure: A change in consumer preferences has resulted from exposure to international beauty trends through the media and the internet.

All of these factors work together to create an atmosphere that is conducive to the success of third party cosmetic manufacturers in India.

 

Important Phases in the Third-Party Manufacturing Process for Cosmetics

 

Manufacturing process followed by third party cosmetic manufacturer:

  • Product Formulation: The cosmetic product is formulated by the contract manufacturer, who makes sure all the ingredients and qualities are met.
  • Production: The process of really making the product, which involves using advanced machinery and technology to make cosmetics in large quantities.
  • Quality Control: To guarantee product efficacy and safety, thorough quality inspections are carried out at every stage of manufacturing.
  • Packaging: The finished products are packaged using the customer’s branding and design preferences.
  • Private Labeling: This option is chosen by many manufacturers because it allows you to sell the goods under your own brand.

 

Benefits of Third-Party Manufacturing

Partnering with a third party cosmetic manufacturer comes with lots of benefits, and that includes:

 

1. Ensuring Quality

You can be confident that the products will live up to your strict standards of quality, which is one of the biggest benefits of working with a third party. To make sure that every product is up to the standard, the manufacturer will have a team of professionals to look after.

 

2. Increased Adaptability

You have more freedom to choose the products you wish to make when you work alongside a third-party manufacturer. This is because a variety of requirements, including large orders and unique formulae, will be accommodated by the manufacturer. This adaptability can prove beneficial in case you choose to try out new formulations or expand your product range.

 

3. Faster Turnaround Times

You can expect quicker product turnaround times if you choose to work with a third-party manufacturer. This is because the manufacturer will already have the resources and infrastructure needed to produce your cosmetics products quickly and effectively. If you want to get your products on the market as soon as possible, this would be of big benefit.

 

4. Cheaper Costs

Partnering with a third-party manufacturer could also help to reduce your costs. The production expenses could be lowered because the manufacturer often enjoys economies of scale. As the manufacturer will be in charge of making all required materials, you can save money on marketing and branding costs.

 

5. Access to Niche Internal Product Knowledge

Celebrities and businesspeople without a background in chemistry, biology, or manufacturing launch a lot of cosmetic brands. Though they lack the necessary skills to properly develop and promote their own product, celebrities, and business owners have a vision for a product.

That gap is filled by working with an experienced manufacturer. Third-party manufacturing can be beneficial for big companies as well, provided that the company can find a cost-effective way to fill the niche it wants.

 

6. Greater Expertise

When it comes to making cosmetics, third-party manufacturers are quite knowledgeable and experienced. This means that you can rely on them to support you in all areas, including formulation and packaging. Also, they can give you insightful information on the cosmetics sector that will help you expand your company.

 

7. Improved Efficiency

You can witness increased business efficiency when you collaborate with a third-party manufacturer. This is because the manufacturer will be in charge of managing every step of the production process, from formulation to packing. This can help you save a significant amount of money and time, which will benefit your business.

 

8. Qualitative Standards & Certifications

Reputable third-party producers follow strict quality control protocols and hold industry certifications like ISO and Good Manufacturing Practices (GMP). These accreditations provide reassurance that your items meet the highest quality requirements.

 

9. Adaptability and Scalability

You may need to increase production or launch additional products as your business gains more market. The manufacturers of third-party cosmetics are prepared to take these modifications into account and adjust to your changing requirements.

 

Factors to Consider While Choosing a Third-Party Manufacturer

Are you convinced of choosing a third party cosmetic manufacturer for your cosmetics products? If yes, then consider the following factors to choose the best manufacturer:

 

1. Quality Assurance

Ensuring the quality of your products is one of the most important factors when selecting a third-party cosmetics manufacturer in India. Take into consideration the following:

  • Inquire about the origins of ingredients and raw materials for ingredient sourcing. To ensure the quality of the final product, sourcing must be transparent.
  • Verify the manufacturer’s certification status, ensuring that it corresponds with relevant standards like ISO and Good Manufacturing Practices (GMP).
  • Discuss the manufacturer’s testing practices for both final products and raw materials.

 

2. Product Rangе and Expеrtisе

Select a producer who specializes in the particular product categories you want to offer. Cosmetics manufactured by a third party should have relevant experience, whether they are skin care, hair care, makeup, or other beauty items. Check out the following:

  • Know the manufacturer’s portfolio to assess whether they have effectively created comparable items for other brands.
  • Consider the manufacturer’s specialization in relation to the products you plan to introduce.
  • Ensure that the manufacturer can accommodate custom formulas if you have a unique formula or ingredients in mind.

 

3. Manufacturing Capacity

Evaluate prospective partners’ production capability. The third-party cosmetic manufacturers you select should be able to meet your growing brand’s production needs. Think about the following:

  • Evaluate the manufacturer’s capacity to meet your demands for manufacturing volume in terms of production scale.
  • Find out the estimated lead times for production, and make sure they match your plans for inventory management and product launch.
  • Evaluate the manufacturer’s equipment and technological capabilities to make sure they can produce goods with the appropriate level of efficiency and quality.

 

4. Cost and Pricing

For your company to be profitable, quality is important, but so are cost considerations. When comparing pricing structures amongst possible third-party manufacturers, take the following into account:

  • Ensure that terms and schedules are clear and in line with your financial plans.
  • Look for a clear breakdown of expenses, including production, packing, and any additional charges.
  • For larger production runs, ask about volume discounts to maximize cost-efficiency as your brand expands.

 

5. Cooperation and Communication

Successful partnerships need effective communication and teamwork. Consider the following aspects:

  • Find out the preferred communication channels and responsiveness of the manufacturer. One way to prevent misunderstandings is through clear communication.
  • Discuss with your team about the manufacturer’s project management procedures and how they organize product development and production.
  • Find out how the manufacturer handles issues and solves problems that can come up during manufacturing.

 

6. Rеgulatory Compliancе

To ensure consumer safety and prevent legal problems, compliance with cosmetic regulations is essential. The third-party manufacturer of your choice needs to be knowledgeable about the necessary regulations. Consider the following:

  • Verify if the manufacturer can provide labels and packaging that adhere to the legal requirements in your target markets.
  • Make sure that the producer holds the licenses and registrations needed to manufacture cosmetics.
  • Check that all items have the necessary safety information to ensure that they adhere to the regulations set forth by the relevant authorities in India.

 

7. Ecological and Moral Approaches

Customers value brands that prioritize sustainability and ethical activities in today’s environmentally sensitive market. Consider the manufacturer’s dedication to sustainability through the following methods:

  • Find out what the manufacturer does to reduce waste, use sustainable packaging, and lessen its environmental effects.
  • Verify about certifications that are associated with sustainability and ethical practices.
  • Fair labor procedures and responsible sourcing are examples of ethical sourcing practices that the manufacturer should adhere to.

 

8. Intеllеctual Propеrty and Confidеntiality

When working with a third-party manufacturer, it’s important to preserve your brand’s intellectual property and confidentiality. Think about the following:

  • Make sure the manufacturer is prepared to sign a non-disclosure agreement (NDA) to safeguard your proprietary data and formulas.
  • Go through data security precautions to safeguard private information about your company and products.
  • Be sure to assert your ownership of any intellectual property rights, including product formulations and branding materials.

 

9. Location and Logistics

Logistics efficiency, import/export laws, and shipping costs can be impacted by the manufacturer’s location. Evaluate these logistical factors:

  • Take into account the manufacturer’s proximity to your target markets.
  • If you decide to export goods, make sure the producer has experience exporting cosmetics from India
  • Be familiar with important specifications in your target markets to guarantee an easy distribution process.

 

Conclusion

Overall, contract manufacturing in cosmetics sector refers to the process of hiring a third-party manufacturing company to carry out tasks that cannot be completed internally. Partnering with a third party cosmetic manufacturer offers several advantages, particularly for new or small businesses.

Cost and time savings, access to technical talents outside of a company’s area of competence, and other advantages like producing products of GMP quality are some of its benefits. Make sure the signed master services agreement addresses all of your needs related to intellectual property, quality, promptness, formulation development, and packaging when choosing to work with a third-party cosmetics manufacturing company in India.

 

Best Third Party Cosmetic Manufacturer For YOUR BRAND Products  👇

Orchid Lifesciences

Address:

Plot No. 68-72, Tribhuvan Industrial Estate, Road No.11, Nr. Kathwada GIDC, Kathwada, Ahmedabad, Gujarat-382430

Contact: 

+91-8980815444
+91-9898026828
+91-9922840985

Email – marketing@orchidlifesciences.com

Website: 

https://orchidlifesciences.com/

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