darlochileman said:
Hi Uncle Big,
Were based in Darlington in the North east of England. I read quite a lot of your posts with interest and would love to get some of our sauces produced commerrcialy. What sort of margins do co packers normally charge?
For example if it costs $1 to produce (including bottles & labels) and you sell them for $3 what is the usual split of the profits?
Any help or guidence would be very much appreciated
Mark
Mark,
Well..........here's how we do it.
You come to us with a recipe that you want to make including your ingredient lists, etc.
We take your recipe (or create one for you if you want to brand a private label), extrapolate it into commercial recipe quantities and calculate a per gallon raw cost on the sauce. After your test batches are tweaked, there will always be a minimum run with a copacker. Make sure you get that little detail figured out from the get go.
That raw cast of ingredient is then added to the cost of bottles, caps and seals.
The labor, electricity, etc is then added to the cost formula which looks like this:
cost per gallon of sauce (25 X 5 oz bottles per gallon)
+
bottles 25 per gallon at $X (caps and seals which varies)
+
labor/production costs per gallon divided by 25 bottles per.
_________________________
Total cost per bottle cost.
So, there are a lot of variables when you work with a copacker.
One variable that I have never come across is the copacker taking a cut of the profits.
It's usually a strict work for hire situation. You pay them for the finished product and your transaction for that batch is done. They don't get anything on the back end.
Perhaps we do things differently here in Canada, and I'm sure other makers could give us input from the U.S., but it's always a wham bam thank you ma'am arrangement for us.
The more volume, the lower the costs is the most likely scenario.
For us it's around 100+ cases of product. I mean the batch is already being marinaded, mixed, etc. and the kettles are already on, so adding more to the pot and outputting more bottles should see a 10% or 15% drop in your cost.
Again, I'm not sure if this is in line with the U.S. copackers, but that's how we roll up in here in the GWN.
I haven't even addressed the labeling and the rest of the bells and whistles, but it's late and Mrs. Uncle Big is beckoning me to come to bed. Who am I to argue??
I hope that sheds some light.
