Specialty Food Magazine is the leading publication for retailers, manufacturers and foodservice professionals in the specialty food trade. It provides news, trends and business-building insights that help readers keep their businesses competitive.
Issue link: https://specialtyfoodmagazine.epubxp.com/i/802137
with your co-packer is like a marriage. If you're not getting good, regular, or reliable communication, then you need to start actively looking for another partner," he says. Pricing projections and 'hidden costs' should also be commu- nicated and always put in writing. For example, do you have to pay extra for a specific certification, like kosher or gluten-free? Though final cost may not be determined well into negotiations, industry experts agree it's critical to get payment terms and order lead times in writing. Avoid Contract Confusion Investing in an attorney with experience in co-packer contracts is hugely beneficial. They can advise you on issues like how to specify liabilities around spoilage, delayed production runs, and contract ter- mination, as well as guide you on how to handle future cost increases. When deciding on the terms of the contract, start short-term, if possible, to ease the transition and to make sure you like and are comfortable with your new partner. "But if your product will require significant investment of time and/or money for the co-packer, this may not be possible. If they have to buy $50,000 worth of equipment to run your container, they're going to want a long-term contract from day one," says Doug Renfro, president of Renfro Foods. Though a reputable co-packer will want to protect themselves, and you, signing a non-disclosure agreement before you send the co- packer your recipe is also important, especially if you're concerned about sharing your formula. "If clients are super concerned about handing over their recipe, or won't share their formula, I suggest they, for example, have the spices blended at a different factory than the one that makes their sauce, as a way to protect it," says Lawrence Ames, III, director of sales and purchasing, Golden West Specialty Foods. There are no guarantees when signing up with a co-packer. Businesses go out of business, natural disasters occur, and relation- ships can sour. Some manufacturers opt to have a back-up co-packer in the wings in case of disaster. Ultimately, a lot of pieces have to fit to find a co-packer that works for you, and it's hard to find, says Ames. His advice: Savor the relationship that works. Nicole Potenza Denis is a contributing editor to Specialty Food Magazine. Excerpted from Specialty Food Association's Resource Guide "Working with a Co-Packer," by Contributing Editor Denise Shoukas. To download the full guide and learn more about vetting co-packers, questions to ask, food safety concerns, and red flags when selecting a co-packer, visit the Learning Center on specialtyfood.com. SHOULD YOU USE A CO-PACKER? Co-packing is a common option for businesses interested in breaking into specialty foods—or expanding with new products or certifications—without high upfront investment costs. When should you consider using a co-packer? Ask yourself if your company fits any of these scenarios: • You are producing a product on a small scale and want to expand. • You don't want to invest in equipment or a facility of your own. • You or your investors want your attention on growing the business rather than managing manufacturing. • You need help in understanding how to expand your original recipe to be produced on a larger scale. • You need time to focus on the marketing and management of your business, leaving the processing to a company that manufactures products similar to yours. • You want to add a new product without learning the nuances of a whole other category. • Your facility doesn't have the certification you'd like to use, i.e., gluten-free, kosher, organic, etc. • You don't have the capacity or time to produce a particular item. SPRING 2017 85