Contract Manufacturing: A Growth Strategy for Beverage Brands

The beverage industry is more competitive than ever, with the U.S. market projected to expand by 9.23% between 2025 and 2029, reaching a volume of $187.20 billion by 2029 (Statista). This expansion is accompanied by increased competition among brands striving to capture market share.

Contract manufacturing has become a strategic approach for beverage companies aiming to scale efficiently and meet rising consumer demand. By partnering with specialized manufacturers, brands can quickly increase production capacity without the substantial capital investment required for in-house facilities (Aptean).

Contract manufacturing is one of the most effective strategies to achieve these goals – whether you’re a brand looking to increase production without heavy investment or a facility with excess capacity looking to maximize utilization.

What is Contract Manufacturing?

Contract manufacturing is when a company outsources some or all its production to another facility with the necessary equipment and expertise. This allows brands to scale efficiently, test new markets, and reduce operational costs without expanding their own footprint.

Who Benefits from Contract Manufacturing?

Beverage Brands Looking to Expand Production For growing beverage brands facing capacity constraints, contract manufacturing provides a cost-effective way to scale. Instead of investing in expensive equipment or facility expansion, brands can use an established partner to produce additional volume.

Startups and Small Beverage Companies New beverage brands can enter the market without the heavy capital investment required for production equipment. This lowers the barrier to entry and allows entrepreneurs to focus on building their brand and distribution network.

Facilities with Excess Capacity Conversely, beverage production facilities with underutilized equipment can create a new revenue stream by offering contract manufacturing services. With major players like Nestlé S.A., PepsiCo, Inc., Anheuser-Busch InBev, Heineken N.V., and The Coca-Cola Company continually innovating to cater to evolving consumer preferences (Mordor Intelligence),

staying competitive requires efficient and strategic production planning. This helps offset overhead costs and maximizes the efficiency of their operations.

Key Considerations in Contract Manufacturing

While contract manufacturing presents significant opportunities, there are important considerations to address for a successful partnership. Key factors to consider include:

• Ensuring consistency and meeting industry standards can be challenging when production is outsourced. Implementing strict quality assurance protocols is crucial.
• Contract manufacturing involves additional costs, making it important to structure agreements that keep margins sustainable
• Managing the movement of raw materials, packaging, and finished products between multiple entities requires efficient planning.

How We Can Help

With experience in working with contract manufacturing partners and negotiating favorable terms, we can help beverage companies navigate the complexities of contract manufacturing.

For beverage brands looking to contract manufacture, we can:

• Identify contract manufacturers that align with your quality standards and production needs.
• Help secure pricing structures, production timelines, and exclusivity clauses that work in your favor.
• Ensure contract manufacturing makes financial sense for your business model.
• Evaluate potential risks related to quality control, delays, and volume commitments.

For facilities with excess capacity we can:

• Help you price your services profitably while remaining attractive to potential partners.
• Ensure integration of contract manufacturing into your existing production schedule.

Is Contract Manufacturing Right for You?

Whether you’re looking to expand your production capabilities or optimize unused capacity, contract manufacturing can be a game-changer. The key is finding the right partners and structuring agreements that maximize profitability while maintaining quality.

We can help beverage companies navigate these opportunities, ensuring they make informed, strategic decisions that support their growth. For a quick overview of the key benefits and considerations, download our one-pager here.

Interested in exploring contract manufacturing for your business? Let’s talk!