Thinking Like a Contract Manufacturer

While brands and ingredient manufacturers may get the credit for innovations in the dietary supplement industry, contract manufacturers are the backbone that ensure products are available at retail at the scale consumers demand. As noted in a report from Columbia West Investment Bank, the dietary supplement industry’s “proliferation has introduced its own complexity. As VMS brands scale and fragment simultaneously, the operational burden continues to shift away from internal manufacturing toward outsourced contract manufacturing that can delivery formulation credibility, regulatory assurance, and speed-to-market.” This dynamic, the report states, has allowing contract manufacturers to evolve “from tactical vendors into core strategic partners enabling scale and growth to both the established incumbents and emerging challenger brands.”

Because of this, contract manufacturers not only have to keep up with the marketplace, but try to stay one step ahead to respond to its demands, while also contending with supply chain challenges and logistics. For brand owners, finding the right contract manufacturing partner can therefore take most of the guess work out of formulation, production, and distribution.

Growth Markets and Opportunities in Contract Manufacturing

Sensitive to the needs of their customers, contract manufacturers often have to make investments into new or expanded capabilities. For example, Vitaquest (West Caldwell, NJ) recently announced the completion of a probiotic manufacturing suite. The company was already working with probiotics for decades, but saw an opportunity for investment.

“Demand for microbiome-support products has grown rapidly, and our customers increasingly want more sophisticated formulations—multi-strain probiotics, synbiotic systems that incorporate prebiotics and other functional ingredients, and more complex delivery formats,” says Terry Coyle, chief innovation officer at Vitaquest. “Our previous capabilities allowed us to produce probiotic products successfully, but as demand increased and formulations became more advanced, we saw an opportunity to invest in infrastructure specifically designed to optimize probiotic manufacturing.”

Synbiotics, Coyle explains, combine probiotics and prebiotics as well postbiotics, enzymes, fibers, and other ingredients to support the microbiome in multiple ways. “From a manufacturing perspective, that trend actually increases the complexity of formulation and processing,” he adds. “Each ingredient brings its own characteristics, so the challenge becomes ensuring compatibility, stability, and efficacy across the entire system.”

Environmental control is the key advantage of Vitaquest’s new probiotics suite. This includes controlling temperature, humidity and air handling, allowing htem to process a broader range of strains, improving their consistency across products and protecting the potency of the probiotics through manufacturing and shelf life.

Complexity in formulation is something Coyle observes beyond probiotics, due to the demand for multibenefit products and novel dosage formats. “For brands, that can be challenging to execute,” he explains. “Combining multiple functional ingredients, whether it’s probiotics with prebiotics, adaptogens with nootropics, or hydration with performance support, requires careful formulation work to ensure compatibility and stability.”

Dosage formats are particularly challenging, especially if one is working with something other than tablets or capsules, which requires a different kind of expertise. Coyle also points out that consumers expect benefits and an enjoyable experience from these products, making the stakes for success high.

How To Stay Ahead of Potential Bottlenecks

Often dealing with numerous commodities to accommodate a diverse portfolio of products, contract manufacturers need to plan for vulnerabilities in the supply chain that could cause shortages. Often, these are seasonal pressures since many supplement ingredients are agricultural commodities dependent on harvests and environmental conditions. For example, cacao is seeing a good deal of volatility says Coyle, due to harvest conditions, creating supply constraints and high prices.

However, industry trends are also driving demand and overextending resources. “Right now, we’re seeing strong demand for whey protein. Interest in high-protein products has been growing for years, but it has accelerated alongside the rise of GLP-1 medications, as consumers using them are often focused on increasing protein intake to help maintain muscle mass and support satiety,” says Coyle. “That additional demand can tighten supply across the protein category.”

Another ingredient experiencing pressure is inositol, which has seen prices increase by 25% at the factory level, according to Coyle. “This is partly driven by seasonal purchasing patterns in other industries that use the ingredient, as well as raw material challenges tied to corn production in key regions of China,” he explains.

Managing these challenges requires a proactive approach, says Coyle. This includes “qualifying multiple sources for key ingredients, maintaining strategic inventory where possible, and closely monitoring market conditions.” Brands owners also need to plan ahead if they intend to engage with a manufacturing partner. “Engaging with a manufacturing partner well in advance of a seasonal launch helps ensure ingredients, packaging, and production capacity are secured in time to support the opportunity,” he adds.

Collaborating with a contract manufacturer to navigate these various challenges can be a huge advantage for brands who do not have manufacturing capabilities or are entering a product space they are not equipped to or have the bandwidth to manufacture.

Reference

1. Columbia West Investment Banking. Q4 2025 health & wellness: VMS contract manufacturing. Accessed March 30, 2026. https://static1.squarespace.com/static/5c3dec99b27e3922f50e444b/t/697aa0978717b969f8bd63b6/1769644183367/2025+Q4+VMS+CMO+Report.pdf