When you’ve created your food or drink product and established a customer base, it’s probably time to think about scaling up your food and beverage production.
Froghop founder Melanie Loades recently covered this topic in Froghop’s Online Product Development Kitchen. She outlined how to get ready to scale-up and explained the options available for producers in terms of food and beverage production processes and operations.
What you need to do to be ready
Before anything else, your food product needs to be in a state to up-scale. Melanie points out that it starts with understanding it inside and out so you can take it forward to the next stage. Having a checklist is advised and an idea of what level of up-scaling you’re aiming for as this will impact on accreditation, volume, contracts and more.
You will need to have an outline of:
- Ingredients
- USP
- Storage
- Packaging
- Shelf life/stability
- Pricing
All of this information will be necessary if you intend to use a commercial manufacturer, but will be useful even if this isn’t the case. It’s also essential to have at least tested your product on a group of consumers. That should have given you vital feedback so you can be happy with the composition and appeal of what you’re producing.
Costing your product
In the video, Melanie warns against building your product pricing estimates based on the cost of buying your ingredients in a supermarket. Supermarket prices will provide you with an inflated view of your fundamental costs. When you move into production, ingredients should be procured on a larger scale, and you should be getting them cheaper than on the high street.
Consider what you can leverage, Melanie recommends: “If you’re moving to someone else to make your product, it’s always worth having a conversation around what they use already – do they use some of the same ingredients? What kind of packaging do they have available? Can they handle your packaging?”.
Contract manufacturers may have packaging appropriate to your product or procure the same ingredients but at a vastly lower cost than your smaller scale business could attain.
Order quantities, Melanie says, are probably the most challenging aspect to establish. As a start-up, you may not know precisely what this will be. However, you will need this when working with a commercial manufacturer, so her advice is to draft up a basic sales strategy, looking at potential demand over the next 3-12 months and factor the shelf-life of your product into this plan.
Levels of scaling up: pros and cons
“Most people go to a contract manufacturer, but it’s not the only route,” says Melanie. For your business, the next level of production could simply entail working from your home kitchen but using a contract packer, or moving to a commercial kitchen instead. This means you can retain a “cottage business” feel to your brand and keep your recipe under wraps. The downside could be that you reach a ceiling for sales that might be lower than your product’s potential, and if demand grows, you may struggle to meet it.
A contract manufacturer allows you to create much larger production batches and enables your company to obtain more powerful accreditations (the type that the bigger retailers demand). The downside is you will have to share your recipe with the manufacturer.
Check out the full video where you’ll learn:
- More about being ready to find a manufacturer
- Your options for scaling-up production: certifications, capabilities, equipment, IP and more
- How to find the right contract manufacturer: what to ask, what they want to know, what to look for
- The value of networks and relationships in upscaling
- What Froghop can do for you
