I was talking to an aspiring food entrepreneur a few weeks ago when she repeated an often-heard complaint to me:
“I can’t get any co-packers to call me back. I tried to talk to over ten co-packing companies, and I am getting nowhere. What am I doing wrong?”
There has never been more innovation in the food and drink space than we’re experiencing right now, which creates more demand for co-packers.
Many food entrepreneurs produce first prototypes in their home kitchen, then move on to a commercially certified kitchen or food incubator to commercialize their products and build early sales.
Once they outgrow these, a co-packer, or contract manufacturer, is often the next step to scale production.
What’s a co-packer and why would you want to work with one?
Co-packers will manufacture your product for you, sparing you the expense of having to build your own production facilities and allowing for rapid scaling. Many of them have both provincial and federal certifications in place, a must-have when trying to sell to national retailers.
In addition, some co-packers offer warehousing services; others will have the capacity to develop formulations or offer shipping services.
For these reasons, working with co-packers is a popular option for many food entrepreneurs. We work with a co-packer in Ottawa for my own company, Auralis Botanical. Our partnership is very close, going as far as having our own canning line and brewing equipment housed in their facilities.
Why is it so hard to get a co-packer to call me back?
Co-packers I work with are telling me that they receive well over a dozen inquiries per month from budding food entrepreneurs. Unfortunately, most of these are poorly prepared and expect the co-packer to educate them.
But co-packers are not in the business of educating food entrepreneurs; they are in the business of running their facilities.
Before you start talking to a co-packer, it is essential that you do your homework.
Co-packers are looking for partners with proven growth potential that can blossom into long-term and profitable relationships, not projects that may or may not take off.
Here are the basics that co-packers expect you to have figured out:
- What’s your formulation? Is it food safe? How has this been tested?
- What’s the cost of your ingredients? Who will be purchasing them, you or the co-packer? How will they be delivered?
- What is your expected volume on your first run?
- How many different SKUs are you launching with? (Tip: Try not to launch with fewer than three SKUs.)
- Where will you be selling your product? What are your existing sales? Have you secured any listings with retailers and/or distribution agreements?
- What does your scale-up model look like? Where do you predict you’ll be in a year’s time?
- Is your packaging compatible with their machinery?
- How are you paying for this?
Have answers to these questions before you begin discussions with your potential co-packer. The more specific you are, the better your chance for a favourable response.
Here’s an example of the kind of email that I sent out to contract brewers when I launched my own startup, Auralis Botanical:
“We are looking for a contract brewer to help us grow our brand of alcohol-free botanical tonics brewed with medicinal mushroom extracts, a hot current consumer trend. We are looking to launch with three SKUs, with two more to follow after 12 to 18 months.
The brewing process does not require any specialist machinery and we’re canning into standard 355ml slim cans. We are looking to pasteurize in the canning line, we are also looking for an in-line labeller as we’ll be using paper labels rather than plastic shrinks.
We have secured distribution across Eastern Canada with (name of distributor) and Western Canada with (name of distributor) and are expecting to secure 350 retail points of presence within 6 months. Our initial order will be for xx units, and we expect to brew xx units per month going forward.
We have secured all ingredients for the projected first year of production and are ready to deliver them to your warehouse when required. While the formulation of our drinks has been finalized, we are inviting input on scaling it for production.”
The email clearly communicated:
- What are we producing and why
- The number of SKUs and our product plans for the future, with a timeline
- Reassurance that only standard brewing equipment will be needed, together with a check-in on packaging equipment requirements like in-line labellers
- Our distribution and sales planning
- Volume requirements and ingredient assurance
- Forward planning and where their expertise would be helpful to us
We contacted three contract brewers; all three expressed an interest in working with us, which allowed us to build a strong relationship with the ideal manufacturing partner.
Match yourself for size
Ideally, your co-packer will be matched in size to your own business. Discuss their production capacity and how you will fit into their production workflow.
If they are too small, you may outgrow them too quickly, but if they are too large, you may be a small fish in a large pond, which can lead to a bad experience for both partners.
Remember that co-packers have MOQs, Minimum Order Quantities, that vary in size. Larger companies will have larger MOQs; smaller companies tend to be able to accommodate smaller orders.
What about equipment?
Before you speak to co-packers, you need to understand what kind of equipment will be required to manufacture and package your products – remember, co-packers aren’t in the business of educating you.
If this presents you with a problem, you may want to hire a consultant for a few hours to get a production workflow set up for you. This will allow you to make more informed decisions and even make changes in your setup or recipe before deciding on a manufacturing partner.
The importance of certifications
Ensure you know what certifications are necessary for you and choose your production partner accordingly. Gluten-free, organic, HACCP, GFSI, SQF, the list goes on. Know which of these are needed to run your business before reaching out.
How much will this cost?
Working with a co-packer solves many problems, but it adds a layer of cost. Make sure this is included in your own business planning and your COGS (cost of goods sold).
Make sure you know:
- Who will source raw materials, you or the co-packer?
- Is warehousing included in the cost?
- Just for your raw materials and packaging or for the finished product as well?
Sweat the details here to avoid unpleasant and costly surprises later on.
And finally, share your excitement
It’s essential that your co-packer believes in your product. So make sure to share successes and wins with them whenever you can. Building a strong and trusting relationship will go a long way towards securing success.