Let's say you want to go commercial... what considerations are needed?

-Pablo-

-Pablo-

What sorts of things are needed for taking a hot sauce to the commercial market in the USA? Besides a business license obviously.

Do you need FDA stamps of approval? I found this... http://www.fda.gov/F...ies/default.htm

Where do the Nutritional Information stickers come from?

What about health inspections of prep area, how is that conducted?

Are there procedural guidelines that must be followed from a regulatory standpoint?

What about Patents?

I have a few recipes that I'd like to take to the commercial market, but I definitely want to make sure I'm minding my p's and q's.
 
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what started me thinking about a business venture was

1) I have 1 free acre with nothing growing on it.
2) I took notice to a website selling 50 pounds of dried jolokia ghost pepper powder for $ 2,509.50
advertised here (note: click select size above add to cart button):
http://www.myspicesa...wder-p-488.html

I'm thinking after seeing that ...that's what they consider a fair price saving the advertised 64%
and now I'm thinking there must be a great demand for them CHA ChiNG $$$

so if I re invest every made profit penny that I make back into thinking bigger
one day hopefully I could find myself in a larger scaled buisness like these guys are doing

http://redhotfoods.com/news/watch-our-bhut-jolokia-ghost-peppers-grow/
 
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LDHS hit the nail on the head

50 lbs powder = >500lbs fresh pods....

the weather here in the DFW area results in your major harvest being late November so you are lucky to get pods before first frost...if you get your plants in the ground really early (like mid-march), you may get an early harvest but you are going to lose at least two months production in July/August because of the heat...

an acre is a whole lot of chili's...a conservative estimate on the number of plants would be 5,000...which brings up the starting process...seed germination and raising the plants until they are ready for plantout...are you set up for that?....you would have to start the first of December (or earlier) in order to get your plants ready...electricity is not cheap and believe me, you will use a lot...if you only transplant once from seed starting trays or what ever to 3.5" square containers, you will be able to fit 80-100 plants in a 2' X 4' area....

I am not trying to tell you not to do this, rather trying to tell you that producing pepper plants to fill an acre is a rather tall undertaking...if you are employed, IMO you just won't have time to do all the work by yourself with all the planting, transplanting, watering, etc the plants will need to be healthy...

then as I think I said in an earlier post, do you have a market?...don't trust people that say they will buy your pods (fresh or dehydrated) unless you have a legal contract with them...

I am not trying to be a know it all, you can trust me on that and I will be glad to discuss this with you in detail if you are interested....I can give you advice based on my own venture that I decided just wasn't worth the trouble or time...your up front cost will be a lot more than you can make in a year...
 
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bluewolfy said:
.
2) I took notice to a website selling 50 pounds of dried jolokia ghost pepper powder for $ 2,509.50
advertised here (note: click select size above add to cart button):
http://www.myspicesa...wder-p-488.html
Click to expand...

One of my favorite shows is "Pawn Stars" - and a consistent theme is customers coming in with some rare toy or piece of art and saying "I want $5,000 for it!"

When asked why, they say "because that's what I see them selling for on the Internet".

They are then asked a simple question: "is that what they're selling for, or is that what they're listed for?"

Same thing here. I find myself immediately wondering how many 50 lb bags of ghost pepper they're selling at that price. I also question why they bothered with the $0.50 but that's besides the point...

I would be willing to bet that if you called them up & told them you wanted to purchase one of those 50 lb bags, 1. You'd be deafened by the "woohoo!!! We sold one!!!!" an 2. It would be their first such sale, or if not, in single digits. In the very least I'd be interested to know how many years old that bag is.

Your best bet would be to get a US Military contract for LTL weapons supplies. That said, I'm pretty sure they grow their own and/or contract growers in south America where labor is cheaper & regulations are more lax.

So take care what you wish for - you may survive the Texas grow season unscathed and have gorgeous pods that all dry perfectly - and you may well work your ass of for that 50 lb bag of ghost peppers...and you may not be able to sell them.

Plus with supply & demand, by growing that 50 lb bag, you just devalued both yours and that other growers product.

Food for thought. Good luck!
 
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LOL I love Pawn Stars & Never miss an episode!

but I see your point /get the drift

I was considering the entire supply & demand problem anyways and seems like I would spend more then I make
not having any serious bulk order buyers lined up and setting my own website up playing the wait game is too much of a gamble.

nah

I'll just carry on growing for hobby unless I come across some sort of opportunity I cant pass up.

Thanks for all the info both jack & Lucky you were very helpful

..& no need to worry about more competition taking food out of your mouths.

Blue
 
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no competition here Blue...I don't have a business any more...IMO commercial production of peppers here in North Texas is just not feisable because of the weather...
 
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Yeah - same here. I have no horse in that race...I just learned about growing stuff in school. I have no acreage nor do I grow anything beyond the African Red Devils in my windowsill.

Just offering insight where I can. And if you started making commercial hot sauce like me
I'll be the 1st to offer you a trade. :cheers:
 
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Just start small and start local. Don't get all bogged down with trademark stuff right now. After you get your product out to the farmers market and maybe a grocery store or two, then start looking at all that other stuff.
Click to expand...
 
Hey SL... I get the gist of starting small and local, but what do you do if you think you have a great name, you design and print labels, and (with any luck) you get them into stores and start establishing a customer base, but you find out your name is a no go because someone has contested it or something? Wouldn't it be more practical to estsabilsh a sound name and trademark prior to selling? I'd hate to have to change my company name or worry about being called to stand tall before the man.

Mark (TSK)
 
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LDSH has more insight on trademarks etc.  You can do name searches and trademark searches on your own pretty easily.  And that's definitely a good thing to do before investing a lot of $$$ in printing etc.  I was just saying, don't get bogged down paying lawyers $$$ to trademark your name/logo etc. 
 
Make sure you have a product worth investing the $$$ for trademarks etc in first.  FM, local sales will let you know if your product is good or   Mehhh.   
 
I THINK ...(don't quote me, I'm not a trademark expert)...I think you can have a business name the same as someone else and market in your own area without issues.  Our electrical business name is A & J Electric.  There's another A & J Electric in the Portland OR area and we have no issues, we both operate in our own area....(until the wholesale house adds their invoices to our account, that is...) ...  Food businesses that sell national are a different issue.    
 
Having said that, in this day and age of technology, you should be able to google "Joe's Hot Sauce", use all the different search engines, and if a person has a business named "Joe's Hot Sauce" and if they don't even have any kind of  a website or even web page listing...and you go out and establish your business as Joe's Hot Sauce....I think you have the upper hand.  If you google "Joe's Hot Sauce" and every time it come back to the same company...might want to think of another name or variation. 
 
And don't just do the search once.  Try it several times over the first few months of your business.  I just think that sometimes w=people get so caught up in the marketing, labeling, designs...etc....that they launch a product that hasn't been tried-and-true tested.  You should be married to the product, no the name/logo/design.  I sold salsa under one name for 5 years.  Our family situation changed and we decided to move.  I sold the salsa business and name for a couple hundred bucks with the stipulation that I could make/sell regionally in my new location the same recipe.  Which I did and continue to do.  We changed the name, same recipe, and it sells just as well as it always did. 
 
The PRODUCT is the key, not the design or logo.  You will get some first time sales with a catchy design or super graphics, but if they don't like the product, they won't buy it again. 
 
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Gotcha SL.  I've searched quite a bit and found one sauce name that has a variation of what I am considering for a company name... spelled differently and logo is nothing alike.  I'll keep looking while I'm working the R & D... 2 solid sauces with 1 in need of tweaking.  As you said, the product is paramount... I just have a nasty habit of trying to have EVERY duck in a row before I proceed.  I guess if I keep all that up, I'll never get my venture off the ground, huh?
 
JHP... why is it I keep hearing Beavis and Butthead in my head right now? 
 
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LS, er, SL nailed it for the most part.
:rofl:

Re: local business: you can have the same name as another company provided you're not infringing or diluting their mark. So long as you're not advertising in their area you should be cool. That said, such a name would be pretty limiting & you should seek to have something original and unique to your business.

Re: search, Google is good. Use every search engine you can, as many have different algorithms and will produce slightly different results. You can also go to the US Patent & Trademark Office online (google that, but I think it's www.uspto.com ) and you can use their search engine to check for existing marks. It'll tell you if something has ever been TM'd and what the current disposition is (live/dead/pending)

Finally, in order to trademark something you must submit evidence that the mark is in use in the category you applied for the mark in (e.g. Condiment class ~> hot pepper sauce). You also just show evidence that you've sold sauce across state lines.

That helps to prevent trademark squatting.

Good luck!
JoynersHotPeppers said:
^^ She said LDSH - Lucky Dog Shows Hemorrhoids? 
Click to expand...
I just trademarked "JoynersHotPeppers". Suck it!

lol




Alsonotreally
 
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Lucky Dog Hot Sauce said:
Finally, in order to trademark something you must submit evidence that the mark is in use in the category you applied for the mark in (e.g. Condiment class ~> hot pepper sauce). You also just show evidence that you've sold sauce across state lines.

That helps to prevent trademark squatting.
Click to expand...
Well, I guess that puts my concern to bed.  I'll run all the searches, but I'd better focus more on the product and selling... as you all have stressed.  I'm still a ways from selling across state lines.
 
JHP... what's in the LuckyDawg Hemorrhoid Cream... nagas?  Scorps?  Either should do the trick, I think.
 
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Some great info in this thread! A question I have is what if you want to stay small? I see a lot of great advice on if you want to go full scale business and such, which is great for those who could possibly want to make a living from making sauces or whatever else. But for those of us who are just doing it straight as a hobby and or for us who would rather keep their sauces "Limited" per say and only ever make a certain amount. What would be the best approach? I want to make a couple sauces of my own but I have a full time job and don't ever plan on going big per say. Simply want to make some sauce and sell it to more or less pay for the hobby itself instead of coming out of pocket every year. What are the regulations on selling sauce if you were to maybe only sell 100 bottles a month or something. And obviously I'm just throwing a number out there. But ya get my point. haha. Would ya still need a license to sell sauces online in that limited amount? Etc etc.
 
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Rent a commercial kitchen. Become a licensed cannery. Make & sell sauce. By the time you have your liability insurance, business auto insurance, product name trademark, certified kitchen expenses, county health permits, and a means of storing and selling your sauces (website/farmers market), you're likely to have invested somewhere around $6-10K

At that point you might decide that with all of those start-up costs, 100 bottle scale isn't large enough to recoup your investment. That's when it makes more sense to start a sauce business & make 1000s of bottles.
 
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as soon as you want to SELL a sauce, you have to get legit. 
 
There are a TON of people who run a legally licensed sauce business as a 2nd business, not their main source of income.  Some use co-packers, some use community kitchens, there are many different scenarios. 
 
Bottom line is you cannot legally make and sell sauces out of your home....as far as I know....
 
And if you internet sell...which is across state lines...you need to be FDA registered. 
 
 
it doesn't have to take a huge chunk of money, but you do need to get your ducks in a row before selling anything.  If you sell illegally, you leave yourself and your family open for huge issues if someone claims to have gotten sick or if you do something wrong and make a bad batch. 
 
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"Not a ton of money" is relative though.

With minimal investment I'd guesstimate the bare minimum to be logo, website/e-commerce, DBA, liability insurance, co-packer/materials/ingredients, etc to be between $6-8K with $1200-1500 of that annual recurring cost of insurance.

For a "hobby business" selling a few bottles here and there that could be considered a ton of money, no?
 
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My start up for making fresh salsa in a shared use kitchen was about half that.  And there are things like an LLC which are a good idea but are not REQUIRED for a start up.   
 
My insurance is about $500/year through Liberty Mutual, I've seen others quote around $500.  $1,500 sounds high. 
 
Also, I just saw some info from the state of PA for home based food businesses and according to the way it reads, it is possible to do a sauce business out of the home. 
 
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