co-packer Coupla questions for those who have used copackers

Matanzima

Matanzima

YACPT (yet another co-packer thread) ;)


My sales are growing nicely, and while for now I can handle the growth with my current manufacturing setup (DIY with a couple of helpers, out of a shared commercial kitchen) I foresee that at some point I will have to make a choice:
  • Either get my own place and invest in expensive production equipment, or
  • Go with a copacker

I've read all the threads on what to look for in a copacker, but even so I still have concerns

In my mind, the risks associated with going with a copacker are (in order of importance)

1. Recipe theft - even with a confidentiality agreement, copacker decides they will make a "similar" product for their own account... I'm paranoid about this, maybe overly so. But has anyone ever had experience or heard of this actually happening?

2. Quality - right now I'm involved with every step of production. How do ensure quality is good on every batch? (not just the first when they are trying to impress you, but the 20th and 30th...)

3. Scheduling - with your own equipment you quickly ramp up production to deal with spikes in demand. With copackers i'd imagine you'd have to plan ahead a bit more to schedule your run. (Although, having to do an "emergency" 500 case production run would be a pretty good problem to have :)

For those of you that have used copackers (and had to change copackers) are these the right problems to worry about? What other issues did you encounter? Do you think going with a copacker was the right decision?

Thanks

Wayne
 
Sort by date Sort by votes
1. Recipe theft - NDA's work, but you're correct that thay are not foolproof & you can't trademark a recipe. So you select a co-packer that has their own products & reputation to uphold it might cost more to use them - they may have larger batch minimums - but they also have a rep to protect. And think about it - if they're a sizable co-packer, why would they risk that entire side of their business to steal your recipe? Word would get out & no one would ever use them again. I see this as low risk.

2. Quality - I chose an award-winning pasta sauce maker. They've been in the business 30 years & insist that I be there to walk them through the 1st batches. Use a place that make high quality products and you'll likely get high quality results for your saues. This one's going to be a gut feel by you when you meet with them & their reputation should precede them in terms of products they're doing. Also insist on seeing the sourced products - and research their sources to ensure they're reputable. Good quality ingredients generally results in a good quality product.

3. Lead time - this is a negotiated contractual obligation. Mine's 3 weeks. Terms of payment are also negotiated.(most folks do
cash --> cash --> net 30 once they know/trust you)

One helpful tip: use a copacker that already uses a lot of the ingredients & bottles you use. You''ll benefit from their economies of scale. I could never get garlic & onions cheaper than a company that's churning out thousands of gallons of pasta sauce for example.

Good luck!!
 
Upvote 0 Downvote
Definitely be there for the first few runs until they learn how you want it done. And go back every few runs to make sure it's still being done the same way. Employees change, so the person who knew how you want it done might not be there any more.

The reputation of the co-packer will tell you a lot. Ask to speak to some of their other clients. How long have they had those clients? Ask the clients what issues they've had with the co-packer.

If you use some dry ingredients, and you are seriously worried about recipe theft, look at splitting up the operation. By this I mean- have the dry ingredients for your sauce portioned and packaged separately. Most co-packers will not allow you to bring in ingredients from your home, but they might allow you to use the licensed shared use kitchen to measure out your ingredients into per-batch portions.

I use the pre-portioning idea for the spices I use in our fresh salsa. I line up several gallon jars, measure each ingredient down the line, then when I need to make a batch, I just grab a jar and off I go. The co-packer would just dump the blend into the batch. They wouldn't know what the dry ingredients are or the quantities.

If the co-packer won't allow you to pre-mix your spices/dry ingredients in the shared use facility, I'd consider talking to another co-packer. If you really need to work with that co-packer, and you really want to separate the operation, there are several spice companies that can produce your spice/dry blends in totally legal facilities and package them in per-batch portions.

There might be other ways to separate the operation for recipe protection. It's something to think about, anyway.

Glad to hear business is increasing and you're looking to the future.
 
Upvote 0 Downvote
How much information should you disclose with the co-packer during an initial meeting?  I'm planning to meet with a local co-packer and just trying to get a sense for what might come up.  I'm guessing we will discuss packaging, process, rough idea on ingredients, and minimums?  Later down the road when we're asked to submit everything by gram weight then we'd need an NDA.  I know some co-packers have their own NDAs for both parties to sign off on.  Do I need to pay for an expensive lawyer to write/review something on my end?  
 
Upvote 0 Downvote
No need for a lawyer that I've seen.  A NDA should be very straight forward.  If there's enough mumbojumbo in it that you can't understand it, I'd proceed with caution. 
 
Take a bottle (bottles) of your product that will be made with you with a label.  Without knowing any details, the copacker should be able to look at it, read the ingredients and get a pretty good idea of what's going on.  If there is anything special about how the sauce is made or things that will take time, make sure to bring that up.  Any chiles that need to be processed by hand, canned items that need to be picked through for seeds, roasting or fire-grilling, smoked, etc, etc....that all adds to the process. 
 
Good Luck with your meeting!
 
Upvote 0 Downvote
You must log in or register to reply here.
Back
Top