The top-three requests I receive are for dairy protein and yogurt beverages, ice cream and yogurt. The strangest one was for a cannabis cheese spread. (If you can do that, please let me know.)
Why beverage, ice cream and yogurt? It’s because millennial entrepreneurs are investing in these businesses. They are creating products they want to buy and need industry experts to help them fine tune formulations, as well as get assistance in regulatory, and finally manufacturing, packaging and distribution.
Co-packers are also often used by large and established national and international dairy marketers. For these companies, sometimes it makes economic sense to outsource, especially when producing highly perishable products such as dairy foods where distribution distance issues may arise with their own production facilities. Also, outsource manufacturing is seasonal for some marketers, when product demand is up and they are already running at capacity at their own facilities.
Identifying the right co-packer and partner for development and production of dairy foods should be taken seriously. It is particularly critical for a start-up looking to get its dream product into the highly competitive dairy foods marketplace. There is no room for error when budgets are tight and you are introducing a new brand. You need a business partner that will be with you every step of the way.
Never forget, however, that you are the brand owner and are fully responsible for the quality of your product. If there’s a product recall, it’s your brand on the line. This is why it is paramount that you ask the right questions and establish a positive relationship with your co-packer.
Deciding on the type of co-packer to use is the first step. There are regional and local dairy manufacturing companies that offer their services to entrepreneurs and start-up companies that do not have the capital to invest in building their own plant. The majority of such dairies produce their own branded products in addition to co-packing for others. This allows them to more fully utilize their manufacturing capabilities by running longer production shifts and keeping employees busy.
There are also contract manufacturers who only produce and pack product for others companies to sell. Depending on the volume and type of product, sometimes these facilities can be commissary-type operations. Even some universities are equipped for co-packing.
Some co-packers provide R&D assistance, for everything from formulating to troubleshooting to quality control and assurance. There are also independent product development companies that handle all aspects of commercializing a new dairy food concept…from formulation to production to packing to distribution.
Reasons to use a co-packer:
- Co-packers can help better predict costs and reduce investments, allowing the marketer to concentrate on selling product.
- Co-packers allow capital expenditure to be deferred and used elsewhere.
- Established co-packers have experience in manufacturing and packaging specific types of dairy foods.
- They can assist with scale-up, from bench-top to industrial manufacturing, in a timely manner.
- They have already been certified and have a HACCP plan in place.
The co-packer becomes your business partner and it is critical that you have mutual trust.
These are topics to address:
- Confidentiality agreement
- Ingredient sourcing
- Segregation of ingredients
- Quality assurance
- Quality control
- Packaging sourcing
- Record keeping