The Differences Between Private Label and Contract Manufacturing

According to, retail sales of packaged goods sold under private labels go up and up every year. In 2021, these sales amounted to $199 billion, which is an increase from the year before. Private labels, often known as store brands, are a low-cost and good-quality alternative to national brands. Store brands often result in a higher profit than national brands, benefiting retailers in more ways than one.

With private labeling providing retailers the chance to earn a greater profit margin over selling national brands, you may be wondering if private label branding has the potential to increase your own bottom line. Two popular choices for third-party candy manufacturing are contract manufacturing, often referred to as co-manufacturing and private label candy manufacturing. While the end goal of both processes is the same, to produce candy and snack foods consumers will love and buy often, private label branding differs from candy contract manufacturing in various ways.

To determine which direction is right for you, you should become familiar with each term. This includes learning the similarities and differences that exist between private label and contract manufacturing (or co-manufacturing).

contract candy manufacturing

Candy Contract Manufacturing Vs. Private Label Candy Manufacturing

Candy contract manufacturing and private label manufacturing are similar in some ways but different in other significant ones. They’re alike in that the purpose of both processes is to make an end product that will be sold to consumers, regardless of whether the end buyer is an individual person or another business. They both involve a third-party manufacturer to make your candy and snack foods on your behalf.

The two processes are different in several ways. First, we start with why a company would pick either contract manufacturing or private label manufacturing.

Private Label Manufacturing

Private label candy manufacturing is ideal for both large and small retailers wanting to create a house brand and add related products that are different from their current products. Grocery chains often use private label manufacturing to create their own label or house brand of comparable value to the national brands they carry.

A house brand or private label can provide many benefits to retailers, with increased profit being number one. Because retailers like a grocery store are in the business of selling food rather than making it, a business may not be prepared to manufacture the foodstuff it’s going to sell under the brand it created. That’s an instance in which entering into a private label manufacturing arrangement can be beneficial. These manufacturing companies can create and produce the products a retailer needs to develop their own lines and brands.

Even if you don’t already have an established brand you’re trying to keep separate from a new one, private label manufacturing may still be the right choice for your business. By entering into a private label manufacturing agreement, you will avoid having to pay the often steep upfront fees associated with buying or leasing a production facility and equipment and hiring staff members. By dodging these costs, you will have money to promote your new candies and snack foods, making it more likely they’ll succeed.

private label manufacturing

Candy Contract Manufacturing

Candy contract manufacturing is useful for those who already produce food products on their own and have an established brand. Businesses may decide to enter into a contract manufacturing arrangement for a variety of reasons, including the following:

  • Capacity: Depending on the physical size of the company, the business may simply not have the space to manufacture another product or accommodate increased demand for a specific food item.
  • Equipment: The business may not have the capital equipment needed to produce the new snack food, and the entity may lack the funds to purchase the necessary equipment. Even if a business does have the money, the company might be unwilling to make a large investment in equipment until the new snack food proves to be a success in the marketplace — especially if the new item varies greatly from the company’s existing candy and snack food product line.
  • Ingredients: If the new food item requires ingredients a company doesn’t normally have on hand, or contains an allergen, it may be more affordable to use a contract manufacturer that already orders the necessary ingredients to make food products for other clients. In general, the more of an ingredient a manufacturer gets in a single order, the less expensive the per unit cost will be.

Important Differences Between Private Label and Contract Manufacturing

While some of the differences between contract manufacturing and private label branding may seem subtle, the two most obvious ones are also the biggest differences:

  • Current or potential recipe: When you hire a contract manufacturing company, you already have a recipe for the food item you want the company to produce. A business that hires a private label manufacturer may not already have a recipe for the candy and snack foods it intends to sell.
  • Established or new brand: A business that is interested in forming a relationship with a private label manufacturer is typically a new business trying to establish a brand to create a product line that will be sold under a brand name that’s different than the one the national brand is currently marketing. Contract manufacturers work with companies that plan to sell the item under their own established brand.

If you don’t have recipes for your candy and snack foods yet, be sure you choose to work with a private label manufacturer that has the capabilities to develop your food products for you or already makes the products that you want to sell.

View Our Private Label Manufacturing Process

Benefits Of Private Brand Manufacturing

The biggest similarity between private label and candy contract manufacturing is that they both involve outsourcing the work necessary to make your candy and snack food items to another company. Outsourcing offers many benefits to companies looking for help in creating and producing their own brands. Private label candy making includes the following specific benefits:

similarity between private label and contract candy manufacturing


Cost Savings

Outsourcing gives you the opportunity to save money in several ways:

  • Save money on facility and equipment needs: By outsourcing the production of your candy and snack foods, you won’t have to buy or rent a production facility or the equipment needed to manufacture your food items, saving you tens or possibly hundreds of thousands of dollars.
  • Lower operating costs: Your ongoing operating costs will also be lower than they would be if you manufactured your own products. This is because you won’t have to hire additional staff, train new employees or provide more benefits to have your food items produced.
  • Spend less on goods: If your private label candy manufacturer makes food products for others that require some of the same ingredients used in your recipes, your cost of goods sold will be lower due to the economies of scale. The more units of the same product that are included in one shipment, the cheaper the price per unit will be.

benefits of private label candy making

Quality Control

When it comes to food production, a manufacturer must abide by strict current federal and local regulations. By outsourcing your candy manufacturing, your manufacturer assumes responsibility for adhering to these mandated standards, taking that burden off you. In addition to following these guidelines, food manufacturers have their own internal quality controls that will enable them to maintain the integrity of your packaging and the quality of your candy and snack foods.


Benefits of Contract Candy Manufacturing

benefits of contract candy manufacturing

Contract manufacturing shares many of the same benefits as private label branding when a company decides to outsource the production of candy and snack foods. It also offers a few other benefits, including:

  • Larger Available Skillset: When you work with a contract manufacturing company, the skillset that’s available to you is larger. For instance, if you’re interested in expanding your line of candy and snack foods and Warrell Creations produces your food items, you can work with our in-house, experienced food scientists to create tasty new treats.
  • Greater Focus: Even if you have years of hands-on experience with candy manufacturing, actually making the final product can distract you from the other tasks that are necessary for your business to be successful. By hiring another company to produce your candy and snack foods, you can stay focused on the things that are just as important as candy manufacturing, such as marketing and establishing relationships with new retailers willing to sell your products.
  • Supporting other businesses: The company you choose to work with will also benefit from having an ongoing working relationship with you. Your manufacturer will know it will have a steady flow of business from you for at least the length of the contract you signed, which can help that company with its budget forecasts, for example.

View Our Contract Candy Manufacturing Process

Mitigate the Risks of Candy Contract Manufacturing

Even though candy contract manufacturing provides mutual benefits to both your business and the company you hire, it has some potential risks to be aware of and take precautions for to ensure a smooth production process.

Loss of Control

When you hire another company to handle your candy contract manufacturing, you hand over some control over how your candy and snack foods are produced. Although you can still make suggestions about how you’d like your food products to be made, the company you entered into a contract with will ultimately decide how your food items will be manufactured.

By hiring another company to manufacture your products, you run the risk that the quality of the food items that bear your brand’s name may not be the same as it was when you made your own candy and snack goods.

To alleviate this risk, you should carefully review a manufacturer’s production methods and examine the quality of the ingredients the company’s suppliers provide. Ensure the manufacturer matches your standards before you enter into a contract with them.

We at Warrell Creations understand the risks you take when trusting a manufacturing company. We use several advanced production methods to manufacture our clients’ food items to ensure safe production and quality products. We will work with you to determine which production method is best suited for your candy and snack foods because your input is important to us. Our constant goal is to produce high-quality goods every time we manufacture a product.

We invite you to review our production methods and the supplies we’ll use to make your candy and snack foods so you’ll know what we already do — our production equipment and techniques are top-notch just like the ingredients we use. Warrell is FSSC 22000 and ISO certified! We are frequently audited by national CPG companies for quality standards.

risks of contract candy manufacturing

Manufacturing Limitations

Chances are very good that the company you’ve chosen to work with manufactures food products for other businesses in addition to yours. This means there’s a chance the company you’ve hired may prioritize the needs of higher volume clients over yours, diverting its resources into producing their food products before manufacturing your candy and snack items during peak production periods. This may result in you not having your products when you need them.

You can reduce the likelihood this will happen by maintaining a close working relationship with your manufacturer, while acknowledging that the company has other customers besides you. Rewarding your manufacturer with additional business as your sales volume increases and as you add new items to your product mix will also mitigate this risk.

With two spacious production facilities and the latest equipment, Warrell Creations is prepared to meet your manufacturing needs. We have been in the business of candy contract manufacturing since the 1980s, so we know how to balance and care for each client’s needs. All of our clients are equally important to us, whatever amount of product they need.

What matters to us is making sure you’re pleased with the candy and snack foods we make for you. You can trust we will treat you as a valued partner throughout our business interactions.

Common Challenges of Candy Contract Manufacturing & Private Label Candy Making

Private label candy manufacturing shares many benefits with contract candy making because they both involve outsourcing. The two candy manufacturing decisions also have some potential disadvantages in common, including the following:

Reduced Responsiveness

When you hand the production of your candy and snack foods off to another company, you lose some of your ability to respond to the changing needs of your customers. For instance, if you experience a surge in sales around Halloween or Christmas, your ability to increase your candy manufacturing rests entirely on the shoulders of the company producing your candy and snack foods. If there’s a problem with the supply chain necessary to manufacture your food goods, your ability to respond to and resolve it may be limited as well.

Warrell Creations has been making candy and snack foods under private labels for more than 30 years. Our list of private label clients continues to grow because the needs of our customers are always our top priority, which means when your production needs change, ours do too. We will work with you to ensure you’re always prepared to respond to your clients’ needs and resolve supply chain problems quickly. When you work with us, addressing your needs and the needs of your clients is our biggest priority.risk of handing your candy off to another company

Loss of Trade Secrets

By hiring another company to manufacture your candy and snack foods, you’re trusting them with your business’ proprietary recipes. This makes it possible for someone with nefarious intent to steal your trade secrets for their own gain. Given the sensitive nature of the information you have to share with your manufacturer, it’s critical to work with a company that has thoroughly vetted its employees to reduce and eliminate this risk.

proprietary recipesAs a family-owned and operated business, Warrell Creations has been helping other entrepreneurs achieve their business dreams for decades. We know that sometimes the biggest asset a business has is the knowledge its operators have that enable the company to stand apart from its competitors. That’s why we ensure your secrets and recipes remain just that — your private secrets and recipes. All of our customers sign non-disclosure agreements.

Benefits of Private Label And Candy Contract Manufacturing With Warrell Creations

When it comes to producing private label candy and candy contract manufacturing, Warrell Creations is your true partner. We produce and package candy and snack foods for major private labels, including grocery, drug and convenience stores as well as larger mass and club retail outlets. We also manufacture food goods for businesses that want items produced in accordance with their exact specifications under their own brand names.

warrell corporation is your true partner

We can help you:

Achieve Your Business Dreams

As your partner, manufacturing your candy and snack foods is more than “just” a business to us — it’s a personal undertaking to help you achieve your business dreams. Our own dream started in 1965 when we founded Pennsylvania Dutch Candies, which is still our most popular brand. In 1974, we had the opportunity to expand by acquiring Katharine Beecher Candies. We had a similar opportunity almost ten years later when we acquired Melster Candies.

Of course, our manufacturing space has grown along with our brands and services menu. Our family-owned and operated business has a 200,000-square-foot, state-of-the-art facility in Camp Hill, PA. We gained a second production facility when we purchased Classic Caramel in 2009. Our facility in York, PA gives us an additional 30,000 square feet of manufacturing space.

All of our facility spaces allow us to accommodate your specific production needs, letting you achieve your production goals and business dreams.

Complete Your Food Item Needs

As the number of our brands has increased, so has the number of our services. Over the years, we’ve expanded our menu of services to accommodate ingredient, mainstream retail, contract and private label clients. Since we are capable of using various manufacturing and packaging methods, our contract manufacturing is currently responsible for more than 70 percent of our company’s annual sales volume.

Our production capabilities include chocolate enrobing, chocolate panning, hot panning, brittle and nut crunches, dry roasting and packaging. Whatever your food item needs are, we have the services to meet them.

Create the Candy and Snack Foods You Want

We continually update our current advanced manufacturing processes, such as nitrogen flushing packaging and processes. We are constantly working to develop new, cutting-edge production techniques that will help our private label and candy contract manufacturing partners thrive. We invest in highly advanced machinery to produce our partners’ candy and snack foods the way they want them made.

We labor tirelessly to develop new products with our partners as well. We have two innovation labs where we conduct on-site product research. Our food scientists and lab technicians work to perfect formulas, develop new ones and push us and our partners forward by creating innovative, saleable treats every day.

Contact Us Today

Warrell Creations has evolved into one of the leading candy contract manufacturing companies in North America since our humble beginnings in Mount Holly Springs, PA, and we continue to evolve to this day. As our business continues to grow, our commitment to our partners grows even deeper.

Our high-capacity confectionery treatment gets the job done right every time, so turn to Warrell Creations for your private label or candy contract manufacturing needs. To learn how to become one of our valued partners, contact us online today.

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