In the past, much of the contract packaging outsourced by cosmetic companies was done so for tactical, rather than strategic reasons, as companies preferred to have the flexibility of using a contract manufacturer (CMO) to ramp up manufacturing capacity when required, while still keeping the bulk of the manufacturing in their control.
The downsides of this short-term approach include less predictable production forecasts and little opportunity for process optimisation, and ultimately higher prices.
More and more cosmetic companies are turning to outsourcing almost every aspect of cosmetic production, leaving big names such as P&G, L'Oreal and Univlever free to concentrate on the development of brands.
In particular packaging has been one area where contract manufacturing has really started to develop in recent years, as brand owners increasingly realize that they can save time, costs and increase manufacturing stability by focusing on higher-end aspects of the business to ensure the business runs smoothly.
One company that would agree with this is California-based Basic Solutions, which claims that growth in this sector is starting to fuel significant opportunities.
It has recently appointed Timothy Crawford as technical director for drugs and cosmetics. He says that the future is looking very bright for the company in both private label and contract packaging, leading him to beleive that there will be significant business developments in the near future.
And to keep in tune with those developments, Basic Solutions says that it is investing to further develop its research and development facilities as companies look for turnkey packaging solutions.
Although Basic Solutions is a relatively small player in this growing business, expansion of contract manufacturing is expected to feed a thriving global industry in coming years.
So much so that the contract packaging market is tipped to grow to $6.8bn by 2013, indicating significant opportunities for those CMOs who can partner with cosmetics companies and in turn help them to balance regulatory pressures as well as bringing added flexibility to costs.