Is Co-Packing Right for You?
So you’ve worked hard on perfecting the recipe and creating a brand for yourself. Your custom sauce, dressing, drink, or dip tastes absolutely perfect and you’ve built up a bit of an audience. Orders are flying in, and although you’re happy for the booming business, you’re wondering – can I still handle this all on my own? When you’ve gotten to a point where you’re having trouble fulfilling all of your orders on your own, it’s possible that it is time for you to think about enlisting the help of a co-packer. However, before you go run out and partner up with the first co-packing company you find, it is important to know if you are REALLY ready.
What is Co-Packing?
First of all, what even is co-packing? Co-packing is the outsourcing of manufacturing and packaging to a contract packer. A co-packer will create the product (with your guidelines, of course), package it, and can even ship it for you. Co-packers have the facilities, tools, and equipment to make larger batches of product more efficiently. This can save food businesses time – and even money. Without having to invest in their own large industrial setting, or buying expensive equipment, a small food business can invest their money in other ways.
By allowing a co-packer to do the manufacturing and packaging of your product, you free up time to focus on marketing and growing sales for your small business.
Is Your Business READY for a Co-Packer?
Outsourcing your production can be a real game-changer for your businesses. It can allow you to increase your sales, increase your productivity, increase your time to work on other areas of business (i.e. advertising or creating new recipes.) However, deciding to work with a co-packer is a big decision. You need to make sure that your business is ready. Here are a few things you should consider:
Is your recipe scalable?
You need to make sure that your recipes are ready for large batches and precise enough that they will come out perfect, every time. A good practice is to measure your ingredients by weight. Measuring in cups or teaspoons leaves too much room for error. Is the cup packed? Is the teaspoon rounded, or flat? While these things might not make a huge difference when you are creating your product at home, the margin for error grows significantly as your batch volume does. You also need to make sure that your cooking times and temperatures are precise. Often, a co-packer won’t be checking on your cookies “between 10-12 minutes.” You need to make sure there is a concrete set of instructions to make your product, and make it correctly, every time.
Is your product projecting enough demand?
Knowing how much demand you have for your product plays a huge role in whether or not you are ready to work with a co-packer. Most co-packing facilities have a minimum volume requirement to begin a production run. Make sure that your current demand matches or exceeds the volume you want your co-packer to produce. Keep in mind that demand often fluctuates. It is better to base your projection on an average than your most recent rush.
If your current demand isn’t high enough to meet the minimum production requirements, you may still want to work with a co-packer if your product has a long enough shelf life. If your product doesn’t expire for a year, that gives you almost a year to sell all of the product that you’ve produced. However, keep in mind that this strategy may also have a storage fee associated with it.
Is this the right time, financially?
Plain and simple, co-packing does cost money. It’s going to cost money up front, that you will make back by selling your product. Make sure that you know all of the up-front costs and you can take this hit up front. As long as the product demand is high enough, and you are priced right, you will still make a profit. But you need to make sure that you run all of the numbers first.
Have you done your research?
Once you’ve decided that you want to work with a co-packer, you’re going to need to be able to answer some questions about your business and your product. Having this information readily available will make things much smoother for everyone involved.
- What are your projected monthly sales?
- What are your projected annual sales?
- Do you have different products with different SKUs? If so, how many and what are their individual projected sales?
- What type of packaging will the product be in?
- Will you provide ingredients, or have the co-packer to source them?
- Does your product require any special equipment?
- What are your current sales channels?
- Is your product complete from start to finish? Or do you need help figuring out the packaging, labeling, and branding?
It is okay if you don’t have all the answers, but having at least an estimate will help you and your potential co-packer. It will also help you find what co-packing company is best for you. Some co-packers only work with large volumes, and may not be able to help you if you are looking for something smaller. Some co-packers offer research and development, whereas some just package the products. In order to decide which co-packer you want to work with, you must first know what you need from a co-packer. Every co-packer is different, so figuring out your needs can help you decide if you are a good match for each other.
If you’ve decided that co-packing is right for you, it’s time to get in contact with a co-packer! To learn more about how Ashlynn’s Gourmet can help you in the next step of growing your food business, contact us today!
Call 727-687-3267 or email [email protected] to get started!