Choosing the right co-packer is a hugely difficult task and one that gives you sleepless nights. Questions I hear all the time are :-
Why is the co-packer not hugely excited about my product like I am?
Surely these costs are unreasonable when I know some of the other big brands must be getting it cheaper?
Communication is very limited and I never hear from them
As a previous director of a large Co-packer, brand owner and someone who dealt with many enquiries on a daily basis I would like to share these experiences to help you gain some insights into the life on the other side.
Co-packers typically would have 100’s of enquiries on a monthly basis so making yours stand out is important. Having a commercially viable product and recipe is critical to ensuring your co-packer is confident they can produce the product consistently with minimum fuss
A simple business plan detailing how you are going to launch and manage your business is also a must
Remember your brand and product is your whole life but the co-packer sees many of these daily, are they going to get as excited as you about your product…. probably not but this is life
As a startup the dreaded question of “what is your sales forecast” is always a worry however some simple steps to overcome this are:
- Understand your market
- What percentage of that market is realistic in the first 18 months
- What is your sales strategy, where, how, and estimated store distribution
- Shelf life dependent, how many production runs will this be
In the beginning, making huge demands around contracts and terms is a big turn off. Develop a relationship with your co-packer first, gain the trust and know your product. When you have built the trust on both sides then this is the time to start formalising your terms not before. Too many contractual demands at the beginning can stop you in your tracks even before you get going. Yes there is a need for this but keep it sensible. When you start out your volumes are low so return for the co-packer is small. Be mindful about the costs associated with your requests
Typically co-packers have many customers and unfortunately there is limited resource to communicate with you so refer to my previous statement. It’s about relationships. Ask yourself – Are you the customer that the co-packer is happy to pick the phone up or are you the dreaded customer that is over demanding and unrealistic?
Like any business, co-packers have to make money. Sounds sensible doesn’t it?. If your volumes are start-up volumes then the cost price will be more. This is a fact. As you grow and your volume grows then having an agreement that the cost price comes down with volume is something to negotiate with your co-packer. These costs should be in your business plan to ensure you manage cash effectively. Don’t compare your pricing strategy to a large brand in the supermarkets at the beginning, they have economies of scale which you simply can’t compete with at the early stages so understanding your USP and brand is critical at this point