business How to Co-op a sauce business

The Hot Pepper

The Hot Pepper

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I was sitting here thinking about all of the smaller sauce companies that bit the dust. Ones that I miss. Great f****** sauces that just didn't make it. The passion sauces. The companies that started up because friends told them "this shit is gold!" So they started small with little knowledge and sold a few hundred bottles and eventually disappeared. I was thinking of how to co-op a brand. So basically there is ONE brand that serves as an umbrella. It has a name. The sauce company that closed up, this would be the brand under the brand and there would be many. One sauce I remember was Feisty Parrot. Great sauces! They were active here and used the forum for a lot of suggestions. We watched them rise and fall. But let's get back to the co-oping.
 
Okay so McCormick own Frank's Hot Sauce. Frank's Hot Sauce has multiple flavors. In this scenario, Feisty Parrot would have been Frank's, not McCormick. McCormick is the co-op. But they do not own the companies under them they serve as a co-op only.
 
So let's give it a name. Fire Frenzy.
 
So Fire Frenzy would be funded by a pool. A pool of saucemakers that own brands. FF handles marketing, etc. Feisty Parrot would be of the many brands. Independently owned but part of a co-op model business under Fire Frenzy.
 
Would this "all-in" model with pooled resources help the small survive? Would they be able to hit hard as a unified effort acting as a parent brand (Fire Frenzy)? Should there be a max of allowed brands to avoid diminished returns? 
 
I have more to say but I am going to hit Post now and continue later. And maybe salsalady can chime in on her thoughts on this model.
 
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salsalady said:
Some things that come to mind-
Why did these other companies fold?  No time to properly work it if it's their weekend project?  No place to make sauce regularly? burnout? Couldn't get the profit margins right?
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This would be a good survey-monkey and we know a ton of companies to ask.
 
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The Hot Pepper said:
Yes they are very open to working with us, I talked to him once about a page for THPA winners and he was down wit that.
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A couple years ago, I was going to be gone on a vacation with my dad and other family for basically the month of December, the biggest Pure Evil sales month. I set up my website to forward buyers to HEATs website. Made sure they were well stocked. It worked great, so I just kept it going.

I dont mind no dealing with daily trips to post office. I was pissed when Amazon locked my account and would not respond to anything I tried to "resolve the issue" and get the account back open. I do miss the profit, but currently I'm satisfied with wholesaling to another hot sauce site who is selling on Amazon.
 
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The Hot Pepper said:
This would be a good survey-monkey and we know a ton of companies to ask.
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Oh, good idea!

Good way to gauge interest in a co-op marketing brand, how much would people pay to buy in, what would they expect, could they commit to keeping the sales site supplied, would they commit to traveling at their own expense to man a booth at an event,

And that brings up a whole other logistic, how would the sauces get there...

I feel like it would take some very committed sauce manufacturers to handle an event, committed to the cooperative.
 
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There's huge potential here for something. We've just scratched the surface and might not even be on he right track. We'll just keep this going and give it good thought and chime in over time. Maybe next year we'll have something. 
 
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FF would be the umbrella yes?  I'm gonna tangent here, bear with me:
 
1. Would FF then handle the negotiations to sign with a copacker?  So that the (roughly) 10 companies involved would bring their total volume to the copacker?  10 companies should have enough volume to interest a copacker is my thinking.  The jump from me doing the hot sauces after hours at work to a minimal run with a copacker (and subsequent need for storage space) has been a hurdle I have yet to clear.
 
2. Would FF also handle or coordinate web hosting and site creation?  I'm working on a wordpress site right now because wix did not work for me but its another hurdle I have yet to clear.
 
3. Marketing and promotion via social media, help setting up FB pages - is that something the umbrella would help with?
 
The two big issues I face as a side gig hot sauce maker who would like to do more are:
 
1. Not enough time to make & market my product
2. Not enough capital or storage space to pay a copacker to make my product for me
 
I'd love to make hot sauce (and all sorts of other flavor experiences) for a living.  I'll have good months and bad months sales wise but I'm still at it 15 years later because I love it.  I would like to explore this idea of banding together to help each other out further and see where it goes. 
 
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Basically yes umbrella as a "brand." In other words the brand does not own the brands under it but it is the parent brand to the child curated product. This means making specific labels to showcase that brand so it can make an impact on the market.
 
So if you went to Walmart you would say, hey I want to get FF into WM... not A, B, C, and D.
 
1. Remember that the co-op is a cooperative so when you say do "they" handle it, you are not taking in to account that YOU are the co-op. So in essence yes, they/you as the co-op can handle it. Even though there is a board it is 100% cooperative. You can even make every member a board member and majority rules. Especially if it is -10 members because that is reasonable. 
 
2. Again, up to the co-op. :) But yes there would be a central brand website. The co-op would decide on design and budget etc.
 
3. The umbrella is YOU. This is not about a parent company this is all about the co-op. It's you.
 
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It's a joint sauce company with a name that uses flavors you already have (or come up with) using the power of many to push it forward. The cooperative element means it is run by all and powered by all, but if the board is smaller than the membership, then some major decisions are deiced by the board. But there is no reason that every member could not be on the board unless they opted out. Some people might want to "buy in" and want to rely on the experience of others. That is the basic premise. 
 
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Indeed that is what it is. That's why I have no concrete answers. I see that as a positive. If it ever comes to fruition it is up to all of us (them)! Then comes the careful planning as to how much money it takes while trying to keep the fees low for all. It's just an idea. Let's see what develops over conversation. I'm not even saying I'm interested I'm just putting it out there right now.
 
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BB, do you have local sales? Wholesale to stores or farmers markets?... I know local sales are really messed up this year, just looking for some general stats from the last few years. How does that compare to any online sales.

This is a question I would put to the monkeysurvey.
 
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I'm mainly at a couple of farmers markets, and the occasional festival or one-off vending opportunity.  Last year I sold a total of about 6 cases to local retailers, a liquor store and a health food store.  Online sales are pretty much non-existent, other than a handful of orders I get after doing a giveaway on here.  My 2019 plants did terrible and I only have about 300 bottles now, so I'm not really making any more efforts toward retail now.  I should have a lot more peppers this year so my big goal next year is to get into the really big farmers market in downtown Lexington.  I hear they have a long waiting list, and I'm not sure if they already have a hot sauce guy, so I don't know about my odds there.  I'm also hoping to expand into powders and maybe pickled peppers.
 
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