"A co-packer will make your recipe for you and pack it. They have the know-how and can do the labeling for you." - Karen Kilkenny, owner & founder of Prickly Pig
Karen Kilkenny, owner and founder of the Prickly Pig, a gourmet food company based in Oakland, CA
"Bottle gallons of sauce myself for national distribution? Nope!" declared Karen. Instead of continuing in a commercial kitchen, Karen decided to work with a co-packer so she could focus her main energy on developing her brand and recipe instead of spending hours mixing, stirring, checking temperatures, and pouring.
A co-packer is a turnkey outsourced company that works under contract to manufacture and package food products. "It turns out there's a lot to know when selecting a co-packer," says Karen. "And you can't just ignore the manufacturing process. When you're building for scale, you may need to adjust ingredients and substitute with ones that the co-packer has on hand."
Here are some of the questions Karen had while searching for the right co-packer, as well as her answers looking back:
Can the co-packer make a sauce that works with my special flour?
Possibly, but it might cost too much. Lower cost ingredients may need to be tested to see if they result in the same flavor.
Can I use those cute jars I really like?
Maybe, maybe not. It depends on what type of fill process you're using. I'm using a hot fill so the liquid is heated up to over 200 degrees fahrenheit before filling. I only found two jars that could handle that.
Will the co-packer be able to use my labels?
Probably not. The existing labels might not fit the jars and may need to include ingredients, nutritional facts, and UPC codes depending on certain state, federal, and store requirements. Bar codes are expensive to purchase and can cost $1,000 upfront to register plus annuals fees. If you are distributing in a store that uses bar codes, you'll need to plan for this.
Does the co-packer charge start-up fees?
Some co-packers charge $5,000-$10,000 just to get started!
How do I get my product shipped from the co-packer to the store?
Shipping is really expensive. If an order is local, I try to deliver it myself. You need to do your homework on shipping so that you can compare costs.
Do I have enough working capital to fund the first production run?
Having enough money to start and run a business isn't easy. I took out a Kiva loan to cover the cost of some of my initial equipment. I also worked full-time AND catered on the side to make enough money.
Will a co-packer treat me like a business partner and teach me how to work with them? Or will they expect me to know all the right jargon?
After a lot of research and talking to more than 30 co-packers, I found one that would work for my budget, timing, and scale ... and help me along the way.
Does a co-packer have all the registrations, licenses, permits, and safety regulations covered?
There's a lot to cover here! Do your homework. [Editor's note: check out the Association for Contract Packagers & Manufacturers.]
"I was 1/4 of the way through the process of finding a co-packer when I got my first order from a national grocery store."
With her first national order, the need for a co-packer became critical. Karen quickly finished evaluating 30 co-packers to find the one who could manufacture her products at a price she could afford and walk her through the process, including helping with jar selection and workable a label design. Soon, 240 cases of sauce sat on two pallets until they could be picked up and delivered to stores. After many ups and downs, Prickly Pig Barbecue Sauce and Signature Dry Rub was delivered to Cost Plus World Market's distribution centers and was ready to hit the shelves on a national level!
"Kiva was the best."
"Kiva helped me through the entire loan funding process," says Karen. "I spoke with Anne Lufkin, my Kiva representative, on a regular basis. Anne helped me reach the network I needed to fund my loan. I was also supported by my trustee, Popupsters. I'd love to help other entrepreneurs learn more about how to set-up and structure their businesses. It's important for us to help each other."
"Our product and customer experience should be the highlight of people's day and give them something to look forward to. It's critical to do a great job. 100%"
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