There’s a bad rap out there for co-packers.
But there shouldn’t be.
Co-packers basically run the food industry in the United States. They help companies grow and expand without the added capital investment for equipment, buildings, land, and people. They’re integral, in fact. But, there’s still a stigma about them.
Some of the objections to co-packers are:
1. They’re expensive (if you compare to producing food products in your house)
2. They will never make the product better than me
3. I won’t get personal attention
While some of these concerns about co-packers are legitimate, there are co-packers who are more than willing to help you.
They make products — just like other manufacturers. It just so happens that the owner of the company doesn’t make their products. Not much different. Now, with that being said, co-packers are a great way to grow your business. You know, beyond super-tiny.
So, I thought I’d take some time to let you know why I have my product co-packed.
Here are 7 reasons I co-pack my food product:
1. It’s not my strength
When I started my company, the last thing I wanted to do was make a TON of mustard and sell it. I just wanted to do more sales, more management, and build a cool brand. Manufacturing is my weakness. But, it’s someone else’s strength. I try to focus on what I do best and hire for what I’m simply not good at.
2. It allows me to do more sales
As I hinted in #1, I can sell mustard to pretty much anyone. I’ve convinced people who don’t even like mustard to buy it. I’ll up-sell people to 2 or 3 jars in a matter of seconds. Sales is the growth engine of my company – and your company, too. That’s why I’m choosing to focus on it – and not manufacturing. When you manufacture every day, when are you going to do sales? No sales = no money to cover expenses. No money to cover expenses means you’re going out of business. No, thank you.
3. It lets me scale up
When you make product on your own, you can only produce so much product. In the first few “hobby years”, I was making 12 jars of mustard on my parent’s stovetop. Pain. in. the. butt. And if I kept going that way our mustard would have to be sold for $12. And we all know that’s pretty much impossible. To get our product cost down, I scaled up to a co-packer. I could buy ingredients, glass, and packaging in bulk — and my per unit cost of my food product plummeted – to a point where Green Mountain Mustard became a viable business.
4. My kitchen manager is my partner in crime
Doing everything as a solo founder is madness. I’ve written on the solo founder food business before. There’s a lot to do — in fact, your to-do list is never-ending. Mine often spans 2 pages of my notebook. But, now that I have a co-packer/kitchen manager, I’m able to eliminate a large chunk of my to-do list that would have gone towards producing my product. That ultimately makes me more productive. Don’t you want to be productive, too?
5. My co-packer (honestly) makes my product better
On multiple occasions, I’ve talked with my co-packer about how she makes my product. And every time she tells me a story about making it, I keep thinking, “I would never consider that!” Everything prep of ingredients, filling jars faster, and working with me to increase daily efficiency, it’s a welcome “expense” to pay when you know she can do it better than you.
6. It helps me meet other food entrepreneurs
My co-packer is pretty unique. She pretty much runs a shared kitchen with the option to co-pack (and most manufacturers do). People are in and out of the kitchen all of the time. And I’ve met almost all of them. The best people I’ve met? Other food producers. Why? Because we can chat about what we’re doing, how we’re growing, share suppliers, new retailers, etc. Our co-packing facility is a small family — we all help each other out. And it’s a main reason why I’ve stayed with my co-packer for several years.
7. It’s less expensive
Say what? It’s true! Co-packing is significantly less expensive than opening your own kitchen. If you’d like to open your own kitchen, you’re looking at at least $100,000. And you probably don’t have that hanging around on your kitchen table. You can use a co-packer for a couple thousand dollars a day (all said and done — ingredients, packaging, and labor). Because of our smaller production capacity, my co-packer costs me a couple thousand dollars a month — soon to be more with holiday demand – but it’s still less expensive than finding my own commercial space. It’s just another thing to do.
Those are my personal and business reasons of why I co-pack my food product. It’s ultimately a business decision. You may never want to co-pack your product – ever. But, for many food companies, it’s the next logical step for your company to take production out of their house or a shared kitchen.
The last reason on the list — the fact that co-packing is significantly less expensive – is the main reason I co-pack. I’m young, I have no collateral, and can’t get a bank loan to save my life. So, I co-pack because I can afford to. It helps me grow my little mustard company and create life-long relationships.
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If you’re thinking about co-packing or unhappy with your current co-packing relationship, I’ve written The Ultimate Guide to Co-Packing to help you navigate finding, negotiating, and working with a co-packer for your food product.