Moving to co-packing is one of the biggest steps in a food brand’s evolution. The thought of leaving your product in the hands of someone else can be daunting for many entrepreneurs. That’s why finding the right partner is so important. Your co-packer should make you feel safe, secure, and like the product will only get better. Starting conversations with a co-packer can be daunting, so we sat down with Corey Meyer, owner of Little Bird Kitchen in Plainview, New York. He told us about how his relationships typically work, and how makers and manufacturers can work together for a successful partnership.
What are the process steps for engaging in a relationship with a co-packer?
Little Bird is different from most other co-packers. We are very flexible. Not only do we work with established brand but we have the flexibility to work with emerging brands. We help them from formulation, production, packaging and even offer help with their marketing/sales.
We started co-packing 2 years ago and we have refined our process. Now, we send out a questionnaire and an NDA to make sure that everyone is comfortable. The questionnaire helps us have an informed first conversation.
Then, we meet the client. We make sure that what they’re doing is something we’re capable of. We want them to feel comfortable with us and trust us. It’s difficult for entrepreneurs, because their product and recipe is their baby. It’s hard to give up control of the thing that you started and are dreaming about becoming a nationwide product.
After that initial process, what are the steps?
We tour the facility, show them the equipment, and point out and specify the pieces that will work for their product. We show them smaller and larger scale production options and help decide which option is best for their company at this point in time. Then we sit and get their formula, their procedure and recipes, and figure out what it takes to make it. Then we determine some pricing for them, see if that aligns, and then call them in for a test run.
What type of contract is common at Little Bird?
A one size fits all contract doesn’t work for all brands. It will depend on if they are already established or a start-up. Little Bird is extremely flexible. We can tailor it specifically to each client. We might do a month to month for some and an annual contract for others.
Generally, clients are not usually signing up for a long-term contract unless the two parties agree that it’s beneficial. For some clients, we do have for example a two-year contract, because we’re investing in equipment, which is something we do if we see that the relationship is working for both parties.
We try to build relationships. Some co-packers have 500 clients because their clients say, I need a run of 200 cases of hot sauce, and that’s it for the year. We generally don’t seek out those jobs. We’re really looking for a business that wants to grow with us.
We have a chocolatier who was making 5-10 pounds at a time by hand and wanted to scale, so he came to us. Other co-packers had told him 25,000 pounds as a minimum. You can’t even fathom what that looks like if you do 5-10 pounds. So we did 400 pounds for him, and the next run we did was 1800 pounds. We’ve invested in molds for him. When we see that the relationship is good, and both parties are making money, we’re willing to invest in equipment to keep the relationship.
These sounds like custom partnerships. Do you have a minimum production run?
It’s mostly custom. Where a lot of co-packers have a minimum, whether that’s 100 gallons or 500 cases, we do a day’s worth of work. This helps us align with smaller and emerging clients. We try to make this fit for each individual brand.
When you’re doing a very small run, it’s going to be more expensive. Our daily rate is more than when makers are doing it themselves. And now, if they’re only doing a small volume, you’re taking the amount we’re charging and only dividing it by that small amount. We try to convince them to produce as much as possible in that one day, so they’re dividing that number by as big a number as possible.
In the end, it needs to make sense for all parties. In the end, both sides have to benefit from the partnership.
Is there a normal lead time once a contract is signed to when a production run would happen?
If clients are proactive, with all their ducks in a row, like formulation and schedule process, we can see their ingredients and start pricing right away. Usually within a week or so we’ll have a general idea of costing.
We try to be flexible, so usually within two weeks we can have the client in for their test run, and then hopefully that runs right into production.
After initial test runs, pricing and ingredient/supplier verification is complete, standard lead time is about 10 days.
Do makers pay for the test run, or is it built into the contract price?
There is an element of cost for test run, scaling up and R&D that rests with the brand.
Usually, they’re paying for the test run. And we don’t guarantee that any amount will be usable, because it’s a test run. But generally, we’ll credit them the money from their test run towards their production. So it winds up being built into the contract. If they decide they don’t want to work with us, then they pay for a test day and whatever work we have done with them.
Do you store ingredients or finished products?
We have brands that handle all procurement and logistics. We also have brands that we handle everything for them. In short, we can do whatever the client needs.
In what instance is it a good idea to have multiple co-packers?
You’re hedging your bets. If you’re worried about the co-packer, maybe because your volume is too much for them, having more than one is pretty common for medium to large companies. It’s a volume and a risk liability thing. If anything happened to that co-packer, like a fire, your other co-packer can pick up the slack and you don’t have to cancel P.Os. Most small companies don’t, because it’s expensive and they don’t have the demand yet.
All of us at Little Bird Kitchen believe in having multiple sources. We pride ourselves with creating relationships. We will grow with the brands so they don’t need to go anywhere else. When you are an emerging brand, we can be their one stop shop. When you have a nationally distributed brand, there might be a need for multiple co-packers due to cost of shipping ingredients and finished goods across the country.