Co-packing services are most frequently used in food, cosmetics, medical and pharmaceutical industries. Co-packers are companies that manufacture and package products that are sold by another company who has ownership over their own product formula.
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Co-packing services are most frequently used in food, cosmetics, medical and pharmaceutical industries. Co-packers are companies that manufacture and package products that are sold by another company who has ownership over their own product formula. Normally, these services come with non-disclosure agreements between the clients and manufacturing companies. Non-disclosure agreement ensures that the manufacturing and co-packing company, which the client contracted, are obliged not to, or are forbidden to further produce, share or market that product and its formula on their own merits. That agreement holds until the client who is holding the rights to the formula approves otherwise.
As co-packing and private labeling are often confused and misunderstood, it is important to differentiate them properly. Although both services lead to a finished product, there are major differences in terms of formulation ownership, processes of production and service pricing. Co-packing refers to a client's proprietary formulation, which is then produced under a contractual non-disclosure agreement. The client retains all rights and ownership of the product formula. Manufacturing company will sign non-disclosure agreement for bidding them to produce or share the client's formulation without prior approval. Private labeling is when private label manufacturing company makes a product of its own formulation, and then packaging it under the client's private label brand. Manufacturing companies offer developing a private label formula exclusively for a customer or adjust a current formula to suit the clients' needs. Never mind the case, under a private label agreement, manufacturing company retains ownership on the formula, sources and procures the ingredients and then manufactures the product.
The focus of any contract packaging business is to offer packaging services that fulfill the requirements of each and every product they take care of. Their staff members, training programs, packaging equipment, and software are all customized to handle product packaging solutions. This will make their processes quicker, more specialized, as well as cost-effective. Generally, these companies provide a range of value-added services, such as thermoforming, contract sewing, bar coding as well as fulfillment services. Making use of these services relieves clients of many obligations, and it is fantastic opportunity for them to concentrate on developing new formulas for their brand.
Once partnership with a co-packer is signed, a co-packing agreement ensures clients are protected from negligence on the part of the co-packing company. It also includes a non-disclosure agreement, so clients can be assured their intellectual property and unique product formulations will not be shared with competitors.