The information I will be sharing with you will help you in achieving your dream and provide a roadmap to assist you in getting your product on shelves.
Begin with the end in mind
In Stephen Covey’s bestselling book, Seven Habits of Highly Effective People, he emphasizes the importance of beginning with the end in mind.
It is necessary for you to do so as you begin your journey of building a successful beverage product.
One of your first steps is to do market research on your competitors currently on the shelf. Although you may have an idea that you consider unique, you should investigate your closest competitors in the category your product will be selling.
This would include a focus on competitor’s pricing, packaging, ingredient statement, and label claims.
Establishing your SRP, suggested retail price, should be one of your first steps. Once you have established that, we can work with you to estimate the layers of costs involved to get your product on the shelf next to your competitors.
Before spending money on further developing your beverage, you need to know that you can make a profit. Without a clear idea of the price point of your product and the costs throughout the process to get it on the shelf, you will be unable to determine whether it is viable.
During this step, it is important to identify your potential targets. This will include the end user, but also the retailers/wholesalers you intend to reach out and sell to. We will discuss this in depth later.
Educating yourself on the industry terminology
It is important to understand terms and phrases related to food manufacturing as you engage with others in the industry. I have included several here, but you should seek out sources of information on this topic.
With this knowledge, you can discuss your project with others and feel comfortable with the conversation.
Key Terms to Understand:
MOQ – minimum order quantity. This is the minimum number of units your co-packer will require to run your product. This will be a major consideration in vetting your options. Some co-packers require massive quantities that are not reasonable for startups.
Aseptic processing – technique wherein commercially thermally sterilized liquid products are packaged into previously sterilized containers under sterile conditions to produce shelf-stable products that do not need refrigeration.
Cold fill/Ambient fill processing – beverage formula inhibits microbial growth using preservatives (sodium benzoate, potassium sorbate, etc.)
pH – measurement of the acidity of a product in numerical terms. This measurement determines the processing required for production. Low pH beverages can be produced without heat treatment although preservatives will be necessary to keep it safe.
Tolling fee – the cost per unit your co-packer charges to run your product. This can include just the running of each unit through their filling line (no packaging or ingredient cost included) or the co-packer may include some ingredients and/or packaging in the fee.
Turnkey – the co-packer handles everything, ingredients and packaging, within the tolling fee. This is usually a more expensive option than when you provide the materials yourself.
Developing a winning formula for your product
During my discussions with potential customers who are just starting, my first question is whether they have a formula. Some are making their product in their kitchens and cannot keep up with demand. Others have a concept, but do not know how to get it developed into a viable product.
I advise them to get the product formulation before coming back to me or to any other co-packer. I have included resources below of companies/individuals I am familiar with who have successfully developed formulations that have gone to market. I highly recommend you contact and discuss the costs and scope with more than one to determine who is the best fit for you and your product.
Of course, you can use others. You may want to locate someone closer to you so that you can take and receive samples easily. This is an ongoing process that takes time to get right. Do not rush this step as your success depends on a winning formula.
Your formulator should be able to provide other necessary documents. These would include a commercial batch sheet, an ingredient statement and a nutrition panel.
A commercial batch sheet is a document that details the ingredients in the order they are added to a mixing tank in the co-packer’s facility. Beside each ingredient there are blank spaces to input the identifying information necessary per FDA requirements. These include the specific name of the ingredient, the vendor the ingredient was purchased from, the batch code listed on the packaging identifying the specifics of that ingredient, etc.
Additional spaces are included at the bottom of the form to record details on the finished product once it has been completed.
Shelf life study
It is imperative that you obtain a shelf life study on your product as soon as you are able. All retail/foodservice customers will want to know the life of the product they will be purchasing. You will want to find a reputable lab that will provide you with the steps required. Typically, this will involve providing several small bottle samples that will be evaluated over time to establish what guarantee dates can be established. Some of the testing will involve stressing the product in a hot and cold environment.
Sourcing ingredients
If you choose to do much of the work on your own, you will need to find sources for each of your ingredients and establish credit terms with each vendor. I suggest finding an ingredient broker whose job it is to connect buyers to ingredient manufacturers. A good ingredient broker is key to finding reliable suppliers at competitive prices. It has been our experience that potential suppliers will agree to small samples of their products in anticipation of future purchases. This can be important as you create samples for shelf life study, for use by the company/food scientist formulating your product or for your use in working on your formula.
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Considerations as you vet potential co-packers:
The most important determinant of your success with your choice of co-packer is the communication you have together. Over the many years we have worked with clients, this characteristic is key. As you talk to companies you want to consider, pay attention to their responses to you. Do they take time to answer your questions? Are you able to reach them easily? Do they return phone calls or emails on a timely basis? No matter the convenience or cheaper costs they provide, if the communication between you and your co-packer is poor, it will hinder your opportunity.
Your initial run is likely to be the minimum your co-packer requires (MOQ). Typically, all you want with an initial run are samples to present to potential buyers. Most co-packers will provide tier pricing. That is, the more units you run, the less your per unit cost. Many co-packers require large runs. One of the ways you can determine a good fit is to find one who allows smaller runs. This would indicate they are open to working with startups and have experience in working with smaller companies.
Geographic location – beyond communication, having a co-packer nearby to you is certainly a benefit. Face-to-face meetings help with communication and allow you to evaluate their willingness to accommodate your needs. Also, because freight costs make a major impact on your costs on delivering products to your distributor or end user, having a co-packer near your distribution options is an important consideration.
Your co-packer may be able to assist you in finding selling opportunities. In many cases, they are selling products to distributors that may be open to picking up your product at a location they are already servicing. You should ask about these types of opportunities when vetting co-packers.
Freighting your product is another area that your potential co-packer might assist you with. They will have relationships with carriers that might benefit you.
- Shelf life study
- Sourcing ingredients – ingredient brokers
- Sourcing packaging – distributors
- FDA requirements
- Labeling
- Turnkey
- Picking a copacker
- Pricing your product – foodservice vs retail
- Online opportunities
Advice from a Beverage co-packer to Start Ups
Please call or email me if you want additional advice beyond what is written here.
It is in your best interest and your most economical option to come to your perspective co-packer with as much of the initial steps of your project that you can accomplish on your own.
There are 2 reasons for this:
Most co-packers are not incentivized to work with startups and the challenges they face. Without volumes to produce, there is not a compelling financial reason for them to help you. If you come to them with most of the work done, they will be much more willing to be accommodating. You have completed several necessary steps they would either have to accomplish in house or outsource.
If you find a co-packer willing to work with you, they will upcharge you for the time and effort on tasks that you can do on your own for less.
Turnkey vs Customer supplied material
As a co-packer, we have been burned when offering turnkey services. We no longer do it. If you want the co-packer to do everything from ordering ingredients, ordering packaging and the responsibilities to pay vendors for your material, you likely can find someone. However, you will be paying
upcharges for their time and effort to do this for you.
My suggestion is, as much as possible, find your own packaging and materials, make your own deals with vendors supplying your material. Otherwise, all of it will be marked up if it is run through your co-packer’s credit accounts.
Consider starting off by producing product in a commercial kitchen and shipping it to your co-packer. I have had folks use church kitchens which are largely available during the week. You can fill 55 gallon food grade drums and ship to your co-packer. You will need to create a simple
Certificate of Analysis document (I can provide an example) to attach to the drum or tote, but you won’t have to commit to packaging and ingredient material that would be shipped to your co-packer and, they in turn, have to keep detailed records and store your items at their facility.
I have listed resources here. Some may pertain to you, others may not. I am happy to consult with you at no charge to help you get your project onto shelves.
Shelf life study – highly suggest you do this as customers will want assurance that your product will stay sellable for the period you state. You will need to work with both a food lab (we use Quanta in Selma, TX) and with Dr. Al Wagner at Texas A&M. They will request a certain number of small samples and the lab will stress those samples to determine shelf life:
Quanta Lab
9330 Corporate Dr # 703, Selma, TX 78154
(210) 651-5799
Al Wagner, Professor and Extension Food Technologist,
Department of Horticultural Sciences,
Texas A&M University
College Station, TX 77843-2134
Phone: 979-845-7023
E-mail: a-wagner@tamu.edu
You probably have been purchasing ingredients in small quantities. You will need to find a source providing commercial quantities for your co packer. We have had success with Haile Resources:
Ingredient broker – Cliff McCrary/Haile Resources 214-507-7232
You likely have a formula you use for small batches or you need a formula developed. Flavorman (https://flavorman.com/) can develop formulations, but Chris may be able to do so as well. He definitely can take your formula and create a commercial batch sheet. This is a document necessary for all
co-packers. I can explain it easier in a phone call, but it allows documentation of ingredients added to mixing tank, details regarding
packaging and readings of pH, brix, etc. for each batch. This is a primary document that you can provide your co-packer at the time you select one.
Chris Williams – formulation/creating batch sheets from your formula – 972- 816-6598
Until you are buying truckloads of bottles/cans, you will need to work with a distributor. We primarily use Berlin. You will need to provide your co packer with the exact bottles and caps you will be using. I suggest at least 8 bottles/caps. Typically, distributors such as Berlin will provide free samples.
Berlin Packaging – distributor of containers/closures
– www.berlinpackaging.com should have a location near you
You are ultimately responsible for what is on your label. Become familiar with FDA labeling requirements and be aware they change periodically. The more labels you purchase, the less the unit costs. However, if requirements change you may need to change your label.
FDA labeling requirements – https://www.fda.gov/regulatory information/search-fda-guidance-documents/guidance-industry-food labeling-guide
Co-packers in TX – https://aggie-horticulture.tamu.edu/food technology/food-processing-entrepreneurs/getting-started/co-packers-in texas/
BevSource – they attempt to match your project up with vetted co-packers in their database – https://www.bevsource.com/
FB group with good info on beginning and developing your food/beverage business: https://www.facebook.com/groups/buildyourpackagedfoodbusine ss/
