Thinking about entering the dietary supplement industry and launching your brand? You’re not alone—and for good reason. The global dietary supplements market was valued at $192.65 billion in 2024 and is projected to reach $414.52 billion by 2033, growing at a compound annual growth rate (CAGR) of 8.9%.1Dietary Supplements Market Size, Share & Trends Analysis Report By Ingredients (Vitamin, Botanicals, Minerals), By Type, By Form (Tablets, Capsules, Powder), By Application, By End User, By Distribution Channel, By Region, And Segment Forecasts, 2025 – 2033. Grand View Research. Retrieved July 15, 2025 from https://www.grandviewresearch.com/industry-analysis/dietary-supplements-market-report.
That said, starting a supplement brand involves more than just a great product idea; it requires a series of critical decisions, the most important of which is choosing the right partner for contract manufacturing. But not all “contract manufacturers” are the same.
Before signing an agreement, it’s essential to understand the differences between a true contract manufacturer (CM), an original design manufacturer (ODM), and an original equipment manufacturer (OEM). Just as important, you need to verify whether your partner specializes in full-service contract manufacturing or is merely providing contract packaging services. The distinction matters, and it can significantly impact the quality, compliance, and scalability of your supplement brand.
Choosing the wrong type of manufacturing company can limit your product’s potential, delay your time to market, and compromise quality. That’s why understanding the capabilities of your supplement contract manufacturer, beyond just contract packaging, is a crucial first step toward building a successful supplement brand.
What is Contract Manufacturing?
What is contract manufacturing? In the dietary supplement industry, contract manufacturing—or working with a CDMO (contract development and manufacturing organization)—refers to working with a company that guides you through the entire product lifecycle. This includes formulation, raw material sourcing, manufacturing, packaging, and shipping of the finished goods. Among all manufacturing models, this one offers the most control to the brand owner. For example, you retain full authority over the bill of materials (BOM), meaning you can choose your preferred ingredient sources. Most importantly, you own the product design and intellectual property (IP).
By contrast, an ODM (Original Design Manufacturer) supplies a ready-made formula that has been developed and owned by the manufacturer. The brand owner simply rebrands the finished product for sale, with no control over the BOM or IP.
An OEM (original equipment manufacturer) produces finished goods based on your specifications but relies on its technology and processes. While you may retain ownership of the final product’s IP, the OEM retains rights to any proprietary manufacturing techniques used.
Understanding these distinctions is key to finding the right supplement manufacturer for your business.
| TYPE OF CONTRACT MANUFACTURING/CRITERIA | CM | ODM | OEM |
| Product Design | Fully owned by the customer | Owned by the supplier | External design is usually owned by the customer |
| Product Modification | The customer defines specifications | The customer can usually request only basic changes | The customer gives input on specifications |
| Tooling and Other IP | Belongs to the buyer | Belongs to the supplier | Usually, only the external design is owned by the buyer |
| BOM | Fully controlled by the customer | The customer has little to no control | The customer has limited control or input |
| Category Specialization | Wide range of product categories | Specialized in a certain category | Specialized in a certain category |
Advantages of Contract Manufacturing
Working with a CM or CDMO gives you greater control over your product’s quality and formulation design. You can decide which nutraceuticals to include and whether to use branded ingredients or more cost-effective generic alternatives.
In addition to control, you gain access to experienced personnel with deep knowledge of supplement manufacturing, ingredient functionality, regulatory compliance, and product market trends. A qualified partner can also help you explore innovative ingredients and delivery systems that empower you to develop unique products that set your brand apart.
Another key advantage is manufacturing flexibility. A CM can scale production up or down in response to market demand, ensuring you’re positioned to seize growth opportunities or adjust inventory levels as needed. This adaptability can be critical to your brand’s long-term success.
Disadvantages of Contract Manufacturing
One potential drawback of working with a CM is the higher upfront investment, particularly when sourcing unique raw materials tied specifically to your brand. Minimum order quantities (MOQs) for custom ingredients can increase initial costs, especially if you’re starting out.
Additionally, developing a new formula from scratch may require more time during the R&D phase, as your supplement contract manufacturer needs to source materials, conduct trial runs, and ensure compliance with quality standards. However, once the initial batch is successfully produced, future production cycles typically move much faster and more efficiently.
What is Contract Packaging?
What is contract packaging? Contract packaging, often referred to as co-packing, is a service where a third-party company handles the packaging of finished products on behalf of a brand owner. These services may include packaging design, filling, sealing, labeling, batch coding, and even distribution, depending on the scope of the agreement.
Contract packaging is especially valuable when a brand owner is sourcing a premade formulation from an ODM that doesn’t provide packaging services. In these cases, outsourcing to a packaging specialist can streamline logistics and ensure compliance with labeling and shelf-ready packaging standards.
However, contract packaging is only relevant once the product itself (be it a capsule, tablet, or powder) has already been manufactured. Since contract packagers do not produce supplements, their role is limited to the post-manufacturing stage. It’s also worth noting that most reputable contract manufacturers and CDMOs offer full-service packaging capabilities, which eliminates the need for a separate co-packer, streamlines the production process, and helps brands bring products to market more efficiently.
Types of Contract Packaging
Contract packaging services can be broadly categorized into three main types: primary, secondary, and tertiary packaging. Each serves a distinct role in the protection, presentation, and transportation of dietary supplement products.
- Primary packaging or sales packaging: This is the first layer of packaging that comes into direct contact with the product itself. Common examples include bottles, blister packs, sachets, and pouches. Its main function is to protect the product and preserve its integrity.
- Secondary packaging or grouped packaging: This involves bundling multiple primary packages for easier handling and display. Examples include cartons, shrink-wrapping, multipacks, and display boxes. Secondary packaging may also incorporate labeling and assembly services.
- Tertiary packaging or transport packaging: Used primarily for bulk shipping and distribution, this layer includes palletizing, large cartons, and protective wrapping to safeguard products during transit.
Difference Between Contract Packaging and Contract Manufacturing
Understanding the difference between contract manufacturing and packaging is critical for brand owners entering the dietary supplement space.
Contract manufacturing refers to outsourcing the full production process, from sourcing raw materials to producing the finished supplement. A contract manufacturer is responsible for formulating, blending, encapsulating, tableting, or filling powders, depending on the delivery format.
Contract packaging, by contrast, focuses solely on the manufacturing and packaging stage that follows production. A contract packager handles packaging-related tasks such as filling, labeling, sealing, boxing, and preparing already-manufactured products for distribution and retail.
The key distinction is this: contract manufacturers make the product, while contract packagers prepare it for sale. However, many full-service providers offer contract manufacturing and packaging under one roof, streamlining the supply chain and accelerating time to market.
Choosing the Right Manufacturing Model for Your Supplement Brand
Which manufacturing model aligns best with your brand goals—CM, ODM, or OEM? You’ll notice contract packagers aren’t listed here, and that’s intentional. Contract packagers don’t manufacture products. Be aware, though, that some packagers misrepresent themselves as full-scale manufacturers. A quick tour of their facility will usually reveal the truth when it becomes clear that no actual manufacturing equipment is present.
The CM (Contract Manufacturer) model offers the greatest flexibility, the opportunity to fully differentiate your product, and the ability to retain ownership of your intellectual property. A reputable contract manufacturing company will also ensure product quality and regulatory compliance. For brand owners committed to long-term success in the dietary supplement industry, this model offers the most strategic and sustainable foundation for growth.
The ODM (Original Design Manufacturer) model allows for rapid market entry by private labeling pre-existing formulas. While it offers convenience, it limits innovation and yields generic, “me-too” products. This may be suitable for those testing the market without making a long-term commitment.
The OEM (Original Equipment Manufacturer) model is best suited for products requiring specialized delivery systems. It allows some IP ownership but may not be ideal for supporting an entire supplement line.
Are you searching for a reputable and experienced contract supplement manufacturer to help start or elevate your brand? If so, call 800-526-9095 to speak with one of Vitaquest’s knowledgeable production specialists or request a nutraceutical manufacturing price quote if you’ve already finalized your project requirements!
Frequently Asked Questions About Contract Manufacturing vs. Contract Packaging
What is contract manufacturing?
A contract manufacturer (CM) of dietary supplements is an organization that will walk a brand owner through the entire process of having a supplement manufactured. This process starts with, moves onto manufacturing, and ultimately to packaging and shipping the finished goods.
What is contract packaging?
A contract packager is an organization that handles packaging products for a brand owner. This can include various services like packaging design, assembly, labeling, and even distribution. However, a contract packager does not manufacture the dietary supplement.
What is the difference between CM and OEM?
Both a CM (Contract Manufacturer) and an OEM (Original Equipment Manufacturer) will manufacture dietary supplements for a brand owner. However, with a CM, the brand owner fully owns the product design and intellectual property (IP), including having the final say over the ingredient sources. With an OEM, the brand owner will have limited input into the ingredient sources, and the OEM owns the IP related to the manufacturing process.
What is the difference between private label and custom contract manufacturing?
Private label manufacturers offer a choice of specific pre-formulated products. The brand owner won’t have the option to change the formula or differentiate the product from the many other brands selling the same dietary supplement. In contrast, a custom contract manufacturer will manufacture a product according to the brand owner’s specifications, making it entirely possible to create a unique supplement that is differentiated in the marketplace.
