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The 6 Customer Demands Transforming Contract Manufacturing in 2019

As contract manufacturers of dietary supplements, we always try to put ourselves in the shoes of the end user. What problems are they trying to solve? How do we create formulations that can be a part of the solution?

Luckily, we have data to help guide us. With a high volume of production each day, our analytics help us understand the customer behavior that shapes our ever-evolving industry. We see the products that fluctuate in sales (both positively and negatively). We measure the increase in certain raw materials responsible for commercial success. And we utilize this data to look ahead to the future.

This year at Expo West, Paragon Laboratories is highlighting six of the customer demands that have transformed the industry as we (used to) know it:

  1. Nootropics
  2. Probiotics
  3. Collagen
  4. Mushroom
  5. Eco Friendly packaging
  6. Nutricosmetics

1- Nootropics

Nootropics

Nootropics, also known as “smart nutraceuticals” or cognitive enhancers, are compounds designed to enhance brain function. Nootropics have gained a buzz by improving executive functions, memory, creativity, and motivation in healthy individuals.

The term “nootropic” was coined by Dr. Corneliu E. Giurgea, who suggested a substance must meet these five criteria set to obtain this classification:

  1. Enhance memory and ability to learn.
  2. Help the brain function under disruptive conditions, such as hypoxia (low oxygen) and electroconvulsive shock.
  3. Protect the brain from chemical and physical assaults
  4. Increase the efficacy of neuronal firing control mechanisms in cortical and sub-cortical regions of the brain.
  5. Possess few or no side effects and be virtually non-toxic.

Raw materials considered to be nootropics, such as Huperzine A, Phosphatidylserine and Antioxidant Vitamins to name just a few, have been formulated in dietary supplements for decades. But a January 2019 report highlights that the US nootropics market was $1.3 billion in 2017, with the expectation of the market almost hitting $6 billion by 2024. With the uptick in customer demand, contract manufacturers and brand owners will need to keep up.

2- Probiotics and Prebiotics

Probiotics

Probiotics are the “good” bacteria and yeast that help with the digestive system. If the gut lacks balance because of an abundance of unhealthy bacteria, probiotics can assist in reinstating a balance. According to an National Health survey, in 2012, nearly 3.9 million adults used probiotics. Since then, the trend has risen even more.
Prebiotics are compounds in food that induce the growth or activity of beneficial microorganisms such as bacteria and fungi. The most common example is in the gastrointestinal tract, where prebiotics can alter the composition of organisms in the gut microbiome.

The increase in demand for probiotics and prebiotics in just the last five years has exploded,” says Paragon CEO Jay Kaufman. “When a product continually delivers on its promise, the word-of-mouth impact on sales is considerable.

Historically, the common conditions that probiotics and prebiotics treat were mainly attributed to gut health. But probiotics/prebiotics have proved to be beneficial in skincare and healthcare products as well. Skin-specific probiotics/prebiotics have been shown to help with dryness and signs of aging, In fact, a October 2018 report projects the global probiotics/prebiotic market to exceed $46 billion by 2022.

3- Collagen

Collagen Powder

If you read our recent article on Collagen, you know how we view this structural protein. Our post highlighted the benefits, the side effects, and the best sources of collagen before explaining why this has been a part of many of our formulations for decades:

As we get older, our ability to produce collagen slows down, while the pace of deterioration in our body increases. Adding a collagen supplement provides a safe, way to replenish and stimulate production of this important protein. At Paragon, collagen has been on our list of staff picks because it adds value as a functional ingredient for several recipes with added health benefits.

But this Paragon favorite is popular well beyond the walls of our laboratory. Nutritional Outlook highlighted the enormous increase in collagen product sales in 2018, noting that “sales of supplements touting [collagen] as a primary functional ingredient were up an astounding 33.8% in the U.S., hitting $46.6 million, in the 52 weeks ending February 25, 2018”.

4- Mushrooms

Mushrooms

The benefits of mushrooms are numerous and varied. For instance, the Champignon (agaricus bisporus) supports cardiovascular health, immune health, prostate health, and a normal inflammation response, while Reishi (ganoderma lucidum) is used in Chinese herbal medicine for supporting a calm state of mind, energy, and supporting normal cell function.

These two examples just scratch the surface of the range of mushroom species and benefits. Perhaps that’s why the medicinal mushroom market has seen such a swell. This January 2018 article in Fast Company highlights the economic impact of the ‘Shroom Boom:

The mushroom market is expected to exceed $50 billion in the next six years, reports Grand View Research. As consumers increasingly look to incorporate “functional foods” in their diets, the medicinal mushroom extract market is poised to grow 6.3%. Food Navigator found that year-on-year sales for food products incorporating medicinal mushrooms have risen between 200-800%, depending on the variety.

With the popularity of mushrooms growing and the abundance of mushroom species available to contract manufacturers, brands have a real opportunity to create original formulations to serve this thirsty market. But getting into the mushroom business is reliant on a good partner. There are many mushrooms that grow in polluted environments with ample use of pesticides. Sourcing these ingredients can be tough, which is why manufacturers that focus on quality and hold the proper certifications can navigate the formulation process to ensure the mushrooms are both safe and effective.

5- Eco-Friendly Packaging

Eco-Friendly Packaging

Shifting gears from supplement popularity, we need to recognize a different type of demand changing the market: eco-friendly packaging. This movement towards sustainability is global, and dietary supplement brands must take notice.

In Nielsen’s 2016 Move on Up survey, 42% of global participants expressed that they are willing to pay a premium for products made with organic/all-natural ingredients, 39% eco-friendly/sustainable attributes, and 31% that tout social responsibility claims.

In just the United States alone, purchasing habits are changing. The Hartman Group’s Sustainability 2017 report revealed that 8 out of 10 Americans said they consider sustainability when making a purchase decision at least some of the time.

As a turnkey operation, Paragon manufactures and packages thousands of finished packages daily. We have seen first-hand the positive impact many of our long-time customers have felt when considering more sustainable packaging.

6- Nutricosmetics

Nutri-Cosmetics

Nutricosmetics are products and supplements that are designed to treat the skin, hair, and nails. Also referred to as “Beauty Supplements”, nutricosmetics have been around in the Asian and European markets for years but have seen an increase in the US recently, with department stores, mass internet players, and specialty retailers frequently carrying these supplements. Popular nutricosmetics ingredients include collagen, pycnogenol, betin, and silica.

As of 2017, the nutricosmetics market was globally a $5.3 billion-dollar industry. The trend is a new form of the beauty-from-within movement we’ve seen in the supplement business for quite some time. Probiotics began helping customers improve their digestive health from the inside out, and ingestible beauty products are a natural extension, taking some of the market share from topical applications.

Conclusion

The six customer demands mentioned above have changed our industry the past few years. They represent changes that are past the point of being “trends”, but rather, the new direction created by what consumers want. With these increasing markets comes an opportunity for brands to formulate products that meet these new demands.

But getting there isn’t easy. Understanding the intricacies of the raw materials and sourcing them from trusted partners is a big component. Scalability must be considered. And given the competition out there, getting to market quickly can be an obstacle.

At Paragon, we understand these challenges and look to remove these barriers. With over 47 years of experience, we have been meeting the new customer demands for over four decades. Our commitment to quality has helped ensure the raw materials are of the highest quality. And our state-of-the-art, in-house laboratory allows us to move quickly and increase production when our customers need it.

We are so excited to share more information on the demands above and the evolving industry this March at Expo West. You can schedule a meeting at the show with one of our sales representatives, or stop by Booth #3821.

Natural Products Expo West 2019