From stove top to store shelf | 2021-11-22

CHICAGO — Established brands appreciate the flexibility of co-manufacturers to provide line time when orders exceed capacity at company-owned production facilities. And while this is important business for co-manufacturers, it’s the entrepreneur who has a concept that was created in the home kitchen and wants to commercialize it who reaps the benefits of working with an experienced co-manufacturer. Finding that partner is not easy.

Startups often don’t think about finding a co-packer until they believe they have perfected the product. This thinking is a big mistake, said Avi Belson, senior director of contract manufacturing, Imbibe, Niles, Ill.

“Identifying a co-packer early and upfront during the innovation stage assists with having a better understanding of available and affordable ingredients and packaging,” Mr. Belson said. “The co-packer also knows how to troubleshoot. They have a day-to-day understanding of what works and what does not.”

Carla Fabian, senior director of sales, Agropur Inc., La Crosse, Wis., said, “Finding the right co-packer takes a lot of research, networking and a lot of cold calling. An independent product development company will know the right questions to ask the co-packer, questions that someone who’s just starting out might not know to ask.”

The middleman

The concept of an independent product development company is not new, but it has been growing rapidly as a result of the growth in startups. Too many people think their hot sauce or gluten-free cracker is the best product ever. Consequently, turnkey companies that assist with everything from “realistic” product development to commercialization, even distribution, are booming businesses. This middleman takes the time to understand the innovator’s needs and problems and then can play matchmaker with a co-packer.

“We create a list of potential co-packers for a client, which includes gauging the feasibility of manufacturing the product based on capacity and interest,” said Doug Rochon, commercialization manager, Mattson, Foster City, Calif. “New food companies may not know what type of process they need to ensure that their food is safe.”

Food safety and shelf-life testing often are overlooked by the food novice whose enthusiasm to bring a concept to market is being fueled by emotion. Most home kitchens don’t have petri dishes or pH meters.

“We work with the co-packer to build in proper hurdles,” Mr. Rochon said. “We do all the diligence to build a robust product that can sit on shelf and not spoil.”

Jaime Reeves, executive vice president of product development and commercialization at Mattson, said, “We make sure the co-manufacturer meets the client’s needs for all product guardrails, including sensory targets, label claims, allergens, packaging, temperature state and target cost, along with all processing equipment requirements.”

“A good co-packer will look for opportunities to optimize your product, be it for safety, profitability or efficiency.”
— Paul Noble, Sokol & Co.

Montreal-based Innodelice focuses on bringing brands, manufacturers, suppliers and brokers together in the ice cream sector. Clarity and trust are key to developing a successful relationship with a co-packer.

“When identifying a co-packer, it’s important to remember the relationship is more than just producing a product,” said Andrea Montreuil, partner. “It’s important to consider the infrastructure, the available resources, the co-packer’s purchasing power and even cash flow.”

She explained that part of being a “middleman” includes building trust in the relationship. The middleman serves as a neutral party looking out for the best interests of the brand and the co-packer.

“We emphasize that we are all working on the same project and that project does not have feelings and emotions,” Ms. Montreuil said. “Once we agree that we all want the project to be successful, it’s much easier to collaborate and have trust.”

There must be respect in this process to make it work, said Jeremy Anderson, founder, Fifty Gazelles, Chicago. Brands must be open to suggestions from the co-packer and be thankful for their investment in the project’s success.

“Right now, it’s a co-packer’s market,” Mr. Anderson said. “Brands must be flexible and ready to spend money. You need to show up prepared and nice.”

Building a relationship

Brand owners must remember they are working with the co-packer’s employees and equipment. Being professional and respectful will create a strong collaborative relationship.

“Many times innovators start with demands rather than questions,” Mr. Anderson said. “Co-packers can help to minimize financial risk and navigate uncertainties. They invest in their facilities and love to find new ways to do things better.

“The more you can make the relationship a collaboration to solve problems and the more your expectations are aligned, the better your chance for success.”

Paul Noble, chief commercial officer, Sokol & Co., Countryside, Ill., said, “A good co-packer will look for opportunities to optimize your product, be it for safety, profitability or efficiency. They will come to the table with innovative ways to improve and grow your business.”

But stuff happens. A good co-packer owns the problem and works with the brand owner for a resolution.

“A good co-packer will come with information and solutions rather than placing blame,” Ms. Fabian said. “We had a product that we had made for more than a decade and got a call that the product failed, that the texture was wrong.”

After troubleshooting, Agropur learned that one of the ingredients was changed slightly.

“Because we have the expertise and the equipment, we were able to identify the issue, solve the problem and make sure we wouldn’t have the issue again,” Ms. Fabian said. “The customer appreciated that we took the time to figure out what happened, that we were honest, straightforward and found a solution. True partners work together well beyond simply a fee-for-service.”

Lance Avery, founder and chief executive officer, Big Fork Brands, Chicago, relies on four different co-packers to produce his portfolio that includes premium sausages, meat snacks and condiments. He said he has a unique relationship with each one that requires effort, much like a marriage.

“They are an extension of my team and my brand,” Mr. Avery said. “My business is only as good as my manufacturers.”

He prefers to work with nearby co-manufacturers, as he likes to be involved during production runs when possible.

“It’s nice to be a car ride away,” Mr. Avery said. “I source many ingredients locally, and it’s not uncommon for me to go pick up spices and other ingredients from the supplier and drop them off at the manufacturer in order to keep production rolling to fill orders.”

Such cooperation is only possible when communication is strong. A lack of communication is a red flag he said makes him leery when he starts working with a new co-packer.

“I want them to return my call or reply to my email in a timely manner,” Mr. Avery said. “I also get concerned when there’s a lot of employee turnover or management changes. I need full transparency as to why there’s a change in culture.”

Purchasing power

Co-manufacturers are helping brands navigate pandemic-related supply chain challenges that have driven the ingredient market into a frenzy. Their ability to procure in bulk keeps production moving and assists with price. Tight specialty ingredients supplies has prompted some reformulation. Co-manufacturers can assist in these efforts. They have the expertise to identify viable and available alternative ingredients that have minimal impact on the finished product.

“These are very challenging times,” said Francis Rinfret, vice president global supply chain and client interface, Nellson Nutraceutical LLC, Anaheim, Calif., a manufacturer of branded and private label nutritional bars and functional powder solutions. “Key ingredients are in short supply, making it difficult for brands to get products manufactured and on store shelves. We have a strong supply chain foundation and can help brands find solutions to overcome these formidable challenges.

“We have the ability to provide our customers with options and increased leverage in sourcing. Our brand partners benefit from our large volume and footprint, our extensive strategic procurement knowledge and our solid network of market contacts. Being proactive is key, as we anticipate the next hurdle and find creative solutions to counter it before it happens.”

Sokol uses its purchasing power to deliver packaging solutions.

“We had a customer bring us their sauce in a glass bottle,” Mr. Noble said. “They were having issues sourcing glass and wanted to explore other options. We were able to run various challenge studies and pull from our decades of packaging experience to introduce a new PET plastic bottle for the product. We also ran the necessary tests to explore hot-fill vs cold-fill. Being able to lean on our R&D and technical teams allowed them not just to scale up their production, but improve their overall processes and profit.”