Part I: Understanding Production Needs

Identify The Business Model And Distribution Channels

Founders should think about presenting a brand deck or business plan to manufacturers, including details about the cost of goods. According to Sara Turchetta, the Vice President of Private Label at Europelab, this information is crucial because it helps manufacturers decide what to do based on the brand’s fundamentals. Turchetta explains that factors like budget, investment preferences, and growth vision all come into play when determining the best operational and investment solution for the brand.

If a brand is focused on mass-market retail or direct-to-consumer distribution, Turchetta suggests skipping ready-to-market white-label solutions and opting for custom or semi-custom manufacturing, which are more common in the retail industry.

On the other hand, if founders have a med-spa focus and want to increase profit margins while competing with mainstream brands that undercut their business, white label is usually the best way to go. As Turchetta puts it, “In that case, they’re often just starting out catering to their own pool of clients. They seek out product solutions that are driven by efficacy to meet their clients’ needs.”

The manufacturing approach can differ depending on whether a brand is already established or just starting out. Turchetta estimates that Europelab’s clients are split pretty evenly between these two groups, but she points out that there has been a significant increase in startups in the last couple of years. Established brands usually reach out when they’re launching new products, improving existing ones, or scaling up their operations.

Europelab provides ongoing consultation to help founders decide on their next move. Their team includes project managers, researchers, formulators, dermatologists, and medical aestheticians who work closely with project managers at every stage of the brand’s journey. Turchetta says, “We essentially become very intimate partners with them. We’re part of that journey, and we’re part of their success.”

Set The Kind Of Products That Will Be Manufactured

It’s up to founders whether they go with ready-to-market solutions or develop new formulas and customized packaging. There’s a perception that custom formulations trump white-label ones, but Turchetta underscores that that’s not always the case.

“What really matters is who you work with and the expertise of the formulators, the chemists, the kind of technologies they use and the formulation capability that a lab has,” she says. “People may judge the white labeling when those formulas may outperform the one that you’re trying to custom make.”

Plus, for timeline and budget purposes, custom and semi-custom approaches take longer and cost exponentially more. With a ready-to-market solution, founders can commercialize their brand in four to six weeks. A custom approach takes closer to 12 months, if not more. In both cases, it’s important for founders to have realistic expectations. Turchetta says, “There will be surprises, and the timeline will be affected.”

Oftentimes, there are delays on the brand’s side during the approval process. Formula evaluation can influence timelines significantly. Each iteration done causes delays that can last months. Patience and effective communication are essential.

Brands can begin with ready-to-market solutions and shift to custom solutions down the line. A founder focused on med-spas, for example, may want to capitalize on demand and select a ready-to-market solution as a jumping-off point and in tandem develop a custom formula or introduce custom formulations as the brand grows.

“Oftentimes, we do work on projects that are in combination of having those two solution scopes, and they’re done in different times,” says Turchetta. “The timeline with custom is almost a year plus, so it allows for enough time to work on something before you’re even ready to place your PO [purchase order].” Brands can mix and match custom and white-label formulas within a collection. Serums and creams could be custom, for instance, and cleansers and toners could have ready-to-market formulas. Budgets and timelines will likely play a role in the mix brands settle on.

“Rinse-off products are a great way to capitalize on some ready-to-market formulation options,” says Turchetta, noting that packaging can be switched up to stand out when choosing a stock formula.

Establish The MOQ Threshold And Budget

Minimum order quantities often start at 5,000 to 10,000 units per stockkeeping unit, but they can rise to 30,000 units per SKU and above. Europelab’s is on the lower end of the spectrum. Its MOQs are 36 to 100 units per SKU for in-stock solutions and 1,500 units per SKU for semi-custom and custom. From an inventory risk and budgeting perspective, the lower MOQs are preferable. They also allow for testing and soft product launches that don’t break the bank.

Founders early in the history of their brands electing for low MOQs should weigh their businesses’ long-term trajectories. It’s advantageous to have a manufacturer that, on top of handling low MOQs, has significant production capabilities to account for growth of a brand. Europelab can produce around 30,000 units a day.

Think About Location

Founders might want to consider a manufacturer that’s local to them and easy to access. An accessible location can have an impact on lead times, logistics and cost. Turchetta recommends looking at neighboring countries as well. Sometimes, they can work in a brand’s favor. Europelab is based in Canada, but has a warehouse and logistics facility in the United States as well. Europelab works with Export Development Canada, which allows brands outside of Canada to get financing when partnering with Canadian businesses.

A contract manufacturer in a different country can be beneficial for brands interested in expanding to international markets—and it can be beneficial from an environmental angle, too. “Let’s say you’re a U.K. brand or you’re a brand in any European country, but if you’re penetrating the U.S. and Canadian market, you have to ship your products across the ocean,” says Turchetta. “Finding a local manufacturer to facilitate that can help reduce not only your carbon footprint but your transportation costs.”

Part II: Evaluating Manufacturers

Do Research Ahead Of Time

Founders can search for a manufacturer a number of ways. They can conduct Google searches, read trade publications and speak to seasoned founders. Once they’ve gotten a handle on the manufacturing field, they can reach out to manufacturers on their websites or cold call them to obtain information. Europelab invites founders to fill out a project brief form detailing the vision of their brand and requirements followed by a consultation.

Turchetta suggests doing desktop research about each facility and making a list of questions to ask them. “If I were to launch a brand, man would I do my homework before knocking on anybody’s door,” she says. “Part of that is the kickoff consultation, but having a high-level understanding of different manufacturers is part of vetting who you should partner with before that initial meeting.”

Consider Certifications And Quality Control Processes

Late last year, the Modernization of Cosmetics Regulation Act (MoCRA) passed in the U.S. It will mandate manufacturers and processors to register facilities with the U.S. Food and Drug Administration and renew that registration every two years. Select manufacturers will have to adhere to good manufacturing practices (GMP).

Quality control is a critical aspect of the manufacturing process and ensures products are safe to use. Many manufacturers today may be compliant with GMP standards but are not certified. Europelab is a GMP-certified facility through Health Canada. ISO 9001 and ISO 22716 are other international certifications that ensure a manufacturer has a quality management system in place to meet global standards.

Founders may want a manufacturer with other verifications or certifications validating their brands’ vegan, cruelty-free or organic stances. Europelab is certified COSMOS by EcoCert Greenlife for the last 15 years, to guarantee organic ingredients, responsible use of natural resources, green manufacturing processes and environmentally friendly packaging, among numerous stipulations.

Turchetta says, “What we do beyond providing manufacturing services sets the tone and the know-how in the way we can come in to help brands formulate products that are not only innovative but that fall within a certain category, if they wish.”

Look At The Markets Served And The Perks

In an initial consultation, Europelab and founders explore what markets their brands serve or are hoping to serve in the future. The markets can affect the ingredients Europelab recommends and being aware of them can put brands ahead of the game in terms of business strategy support and formulation innovation.

Turchetta says, “If the manufacturer works with brands in different types of markets, then not only do they have an insight as to what that market is looking for on a consumer level, but also on a regulatory level as well.”

Europelab offers brand consulting at the start of a partnership and on an ongoing basis. Consultation can encompass formulation, product development and regulatory guidance. Turchetta says, “Founders should seek out a partner that goes beyond providing them with manufacturing or formulation development services, but acts more as a strategic business partner that will consult and advise them through their journey to help scale their business.”

Other manufacturing perks can include in-stock packaging, marketing assistance, sampling, on-site stability and compatibility testing, and a team of researchers and chemists. They will likely carry further costs, but having them available from a single organization can streamline the launch process.

Partnership Dos And Don’ts

Europelab finds clients through consultations and inbound inquiries. It also has a team that seeks out prospective brands that match up with its mission and capabilities. “Everybody out there in terms of manufacturing has their strengths and the type of clients and brands they wish to work with,” says Turchetta. “We want to work with the brands that are aligned with what we represent on a manufacturing standpoint, whether it be the fact that we’re COSMOS-certified, our continuous and heavy investment on Research and Development or our approach to formulation.”

She continues, “ We really want to work with brands that we feel connected with and that we can help scale by offering our expertise at a higher level in terms of consultation and product development.”

A red flag for Turchetta is project briefs that aren’t clear or entirely filled out. “If you cannot fill it out, that means you’re still missing something on your side, whether it’s to do more research, whether it’s to go back to your business plan. If you don’t know your cost of goods already, that’s a major red flag to me because that means you didn’t even do your market research,” she says. “For us to see that there’s a seriousness and due diligence that’s been done, those are the kind of things we like to see to evaluate if they’re the type of brand we want to work with.” Founders should approach meetings with manufacturers with the same professionalism they would an investor pitch. Turchetta says, “We’re not financially investing in them, but we are investing on different levels. We’re investing our time, and we are investing our resources to help them.”

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Print off this list to have on hand when meeting with potential partners.