Some dairy plants can’t keep up with growing sales, while others find themselves with excess capacity. Contract manufacturing is proving to be a boon to both.
More than half of respondents to Dairy Foods’ 2017 Contract Manufacturing Survey (55%) said their companies are involved in contract manufacturing. A further breakdown shows that 20% of respondents are solely users of such services; 13% are solely providers; and 23% are both users and providers.
Although a third (33%) of user respondents cite capacity limitations as a reason for turning to contract manufacturers (co-packers), it’s not the only reason. For example, 34% of user respondents said they rely on co-packers because they lack the in-house expertise for specific product production.
Provider companies, meanwhile, are most likely to provide such services for brands that lack their own manufacturing capabilities. For example, more than half of provider respondents (52%) said their companies co-pack for supermarket store brands.
Looking ahead, contract manufacturing will continue to be important to many of the user and provider respondents’ companies. In fact, 35% of user respondents said they expected their companies to increase use of co-packing services in the next 24 months. Only 14% of user respondents said they expect usage to decrease.
On the provider side, many respondents expect business to remain brisk. In fact, more than half (55%) of provider respondents said their companies anticipate an increase in contract manufacturing volume during the next 24 months. Only 5% of provider respondents indicated that their companies expect volume to decrease.
The Market Research Division of BNP Media (publisher of Dairy Foods) surveyed Dairy Foods' magazine and newsletter subscribers between Aug. 10 and Sept. 1, 2017. The mean age for both users and providers was 52. Three-quarters (67%) of user respondents and 63% of provider respondents have more than 10 years of industry experience.
Additional information will be published in the October 2017 issue of Dairy Foods.
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