What is a Co-Packer in CPG?
Have you considered using a co-packer for your CPG?
When a CPG company starts out, they may manage production and packaging themselves. Perhaps they work out of a commercial kitchen – or their own kitchen at home.
Either way, a successful CPG business will soon outgrow this setup. Demand will outstrip supply and a new way of working is required. This is when many CPG brands turn to a co-packer.
But what exactly is a co-packer? And what can they do for your CPG business?
What is a co-packer?
A co-packer is a contract packager or contract manufacturer for CPG goods.
A contract packager is a manufacturer responsible for packaging finished products. CPGs deliver their product in bulk to the contract packaging facility. The contract packager will then package goods according to brand specifications.
A contract manufacturer goes one step further. These guys will both produce and package CPG goods, working to the exact recipe or formula and the packaging specifications requested.
What are the benefits of working with a CPG co-packer?
Working with a co-packer allows CPG brands to outsource the manufacture and packaging of their goods. So why is this such a good idea? They offer scalability, reduced costs, and some extra know how. Let's dig deeper.
Co-Packers Offer Scalability
For smaller CPGs, co-packers allow you to manufacture and package goods at a greater volume than you ever have before.
Ready to scale your business? Need to deliver for a new retail partner? A co-packer could be just the help you need to take your brand to the next level.
What’s more, co-packers often offer the flexibility to scale up even further if demand for your product continues to grow.
If you go it alone, setting up your own manufacturing and packaging plant will cost hundreds of thousands of dollars. It’s a big commitment and a huge investment.
A co-packer already has the right infrastructure in place. They can provide:
- the right equipment
- an experienced team
- any industry-relevant certifications
Because co-packers work with multiple CPGs, they also often get volume discounts for packaging materials and product ingredients.
In a nutshell, working with a co-packer massively reduces your overheads – making you a leaner, more competitive business. It saves you a lot of time (time you can devote to the important tasks of sales and marketing) and a very steep learning curve too.
Another benefit of partnering with a co-packer is that CPGs can mine their extensive experience within the industry.
A good co-packer will provide high-quality production. Having worked with many other CPGs they will also be able to offer their advice for moving your business forward.
Struggling to find the right solution for a packaging problem? Need recommendations for reliable distributors? Chances are your co-packer will be able to give you a few good ideas.
Some co-packing companies even have their own research and development teams – so that next, great product idea might be easier to come by than you think.
Do you need a CPG co-packer?
Whilst working with a co-packer definitely has its benefits, it might not be the right move for your company.
Switching from self-manufacturing to working with a co-packer is a huge step for a business. And there are a few important questions to consider.
How unique is your product? If your CPG product requires a very specific production process, you may struggle to find a co-packer who can deliver.
Are you willing to forgo control? If you’ve overseen every aspect of product production up to this point, handing over the reins can be daunting. You’ll have to accept that manufacturing at scale is a very different process to crafting products in your kitchen.
Can you afford to pay a co-packer? There will be financial gains further down the line but contracting a co-packer will inevitably eat into your profit margin. You should have a tried and tested product and strong sales before you take the leap.
Depending on your answers to these questions, you may find that a co-packer partnership is the next logical step for your brand. For many CPG businesses, working with a co-packer opens the door to greater sales and revenue, whilst minimizing risk.
How to find the right co-packer
So you’ve decided that you want to contract a co-packer. How do you find the right team for the job?
It’s important that you vet co-packing companies carefully. A few things that might influence your decision include:
Pick a huge co-packer and they’ll probably already be contracted to a few big CPGs. This makes it harder to be priority number one and get your brand’s needs met. However, pick a small co-packing company and there may not be enough capacity to scale.
A Goldilocks co-packer will have the facilities you need to grow. But will also properly value your brand and your product.
Capacity for packing products
You’re entering into what will hopefully be a long-term relationship. So communicate your long-term goals from the very beginning. Find out whether a prospective co-packer can keep pace with your business growth.
What regulation and quality checks do a co-packer have in place? Do they comply with the FDA’s Food Safety Modernization Act?
It’s essential that you inspect the plant. Take a look at quality processes on paper. But trust your instincts too. Do you think both employees and management are committed to the level of quality you’d expect?
You need to be 100% confident that you’ve found the right people to support your brand and your product.
Establishing a co-packer relationship takes time, lots of research, and some big decisions. But it’s a business savvy step for many CPGs.
With a co-packer on board, you can upscale production and reach more people with your product, without taking on the financial risk of opening your own production facility.
Great partners help a CPG brand reach great places.
Buffalo Market is a CPG distributor, delivering purpose-driven food and beverage products throughout California and Las Vegas. Get in touch today to find out how we can get your product in front of new audiences and boost sales.