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Salad Dressing Empire
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Yay, another foodie!
First, check out my starter guide when you get a chance Food entrepreneurship startup guide
So, copackers, I was going to throw this awesome directory of copackers at you until I saw UK on your profile, so unfortunately can’t be of help in finding you one.
But, I’ve got a fair bit of experience finding copackers.
So, copackers Love to gee you to death. My copacker has yet to give me a breakdown of the costs. Even when I reduced the cost of my main ingredient by 20% it only reduced my product cost by 5.5%.
I have a great document from a copacker I interviewed with that shows the math on the broken system. Long story short it’s something like, (cost of ingredients + 35% markup) + packaging + $0.25/unit packing fee + labor/unit packing fee = crazy high number.
Here are a couple of ways to get lower packing costs.
- provide your own ingredients, all of them. If your copacker is getting everything from a distributor, there’s no telling how much they actually cost. It’s easy for them to add a 10-20% markup for “sourcing and delivery” Same goes for packaging. Getting your bag/bottle/box made offsite and delivered will save this markup too. Now, all they can charge you for is the actual food prep and packing.
- Higher volumes. My product currently is $35/case. But, I did my first run at 1/3 size of a normal production. That cost me $50/case. Because the time it takes to set up the line and then sanitize and break down the line is the same for 100 unit’s or 100,000 units, and it’s a long process. So, you’re paying for those hours regardless. Ask your copacker for quotes at multiple unit ranges to see if they give you reasonable breaks at scale. If they don’t, tell them to pound sand.
- Look for a copacker that charges a flat rate by hour of labor vs a markup. The copacker I interviewed after I found my current copacker does flat rate hourly. But, here’s the kicker, you need to make sure they have the crew to do the job quickly. It would have lost me money because they only had 2 people to work the line, vs the 5 at my current facility.
Relationships go a big way in this industry too. If they can’t give you the best prices, you can negotiate better terms.
Hope this helps a little bit!
First, check out my starter guide when you get a chance Food entrepreneurship startup guide
So, copackers, I was going to throw this awesome directory of copackers at you until I saw UK on your profile, so unfortunately can’t be of help in finding you one.
But, I’ve got a fair bit of experience finding copackers.
So, copackers Love to gee you to death. My copacker has yet to give me a breakdown of the costs. Even when I reduced the cost of my main ingredient by 20% it only reduced my product cost by 5.5%.
I have a great document from a copacker I interviewed with that shows the math on the broken system. Long story short it’s something like, (cost of ingredients + 35% markup) + packaging + $0.25/unit packing fee + labor/unit packing fee = crazy high number.
Here are a couple of ways to get lower packing costs.
- provide your own ingredients, all of them. If your copacker is getting everything from a distributor, there’s no telling how much they actually cost. It’s easy for them to add a 10-20% markup for “sourcing and delivery” Same goes for packaging. Getting your bag/bottle/box made offsite and delivered will save this markup too. Now, all they can charge you for is the actual food prep and packing.
- Higher volumes. My product currently is $35/case. But, I did my first run at 1/3 size of a normal production. That cost me $50/case. Because the time it takes to set up the line and then sanitize and break down the line is the same for 100 unit’s or 100,000 units, and it’s a long process. So, you’re paying for those hours regardless. Ask your copacker for quotes at multiple unit ranges to see if they give you reasonable breaks at scale. If they don’t, tell them to pound sand.
- Look for a copacker that charges a flat rate by hour of labor vs a markup. The copacker I interviewed after I found my current copacker does flat rate hourly. But, here’s the kicker, you need to make sure they have the crew to do the job quickly. It would have lost me money because they only had 2 people to work the line, vs the 5 at my current facility.
Relationships go a big way in this industry too. If they can’t give you the best prices, you can negotiate better terms.
Hope this helps a little bit!