Co-Packing: The Simple Explanation

A co-packer, co-manufacturer or co-man are the short-form industry vernacular for contract packer or contract manufacturer. These terms refer to a facility that either manufactures your product line or receives your finished goods in bulk and packages them for you. This is an efficient, cost-effective way to bring your products to market rather than building your own manufacturing facility. Unfortunately, co-mans are not easy to find. Their websites are usually designed for experts already in-the-know. Descriptions of their processes often use unfamiliar terms like “flexible pouch retort”, “extrusion facility”, or “form and fill sealers". They have been burned by clients over the years and have learned how to avoid the phony’s. They have heard projected sales numbers hundreds of times over before taking on projects that failed. They have heard every story you can think of. So "honesty" is the best policy to get into the door.

Manufacturing food & bakery products is very expensive and co-manufacturers know that many start up companies and food entrepreneurs don’t have the funds for all the test-runs and experimentation needed to validate the manufacturing product. Experimental test-runs and line time can cost thousands of dollars and manufacturers would prefer to work with established food companies. Because of this, manufacturers don’t invest money into marketing their facilities and they don’t bend over backwards to work with you unless you work through a sourcing broker like RFG.

Co-Packing: Who Benefits? Co-Manufacturers can save significant money on labor, materials and other expenses related to production and overhead. So long as the company maintains appropriate oversight, contract manufacturing can permit a company to lower its production costs, maintain the quality of its production, and increase its profit margins.

Companies are finding many reasons why they should outsource their production to other companies. Cost savings being priority. Companies save on their cost of capital because they do not have to pay for a facility, and the equipment needed for production. They can also save on labor costs such as wages, training and benefits. Some companies look to contract manufacture so they can cut out there over head expense and bring up their profit margins so they can focus more on marketing. 

Mutual benefit to co-packing is setting a contract between the manufacturer and the company it’s producing for that may last several years. The manufacturer will know that it will have a steady flow of business until then.

What are the benefits of co-packing for bakery & food manufacturers?Greater product visibility, increased management of costs, flexibility and environmental benefits are just some of the benefits food manufacturers can derive from the process. The primary driver is managing costs, because third-party operators already have the expertise, resource and staff in place. 

With co-packing, companies can take advantage of skills that they may not possess, but the contract manufacturer does. The contract manufacturer is likely to have relationships formed with raw material suppliers or methods of efficiency within their production. Contract manufacturers are likely to have their own methods of quality control in place that helps them to detect counterfeit or damaged materials early. With co-packing companies can focus on their core competencies better if they can hand off base production to an outside company. 

Contract manufacturers have multiple customers that they produce for. Because they are servicing multiple customers, they can offer reduced costs in acquiring raw materials by benefiting from economies of scale. The more units there are in one shipment, the less expensive the price per unit will be.  

-Ricardo Food Group is a sourcing company for all your Co Packing & Private Label needs. We have formed alliances with 324 US base food, beverage & bakery manufacturing facilities. Ricardo Food Group is an advisory firm made up of Manufacturing & Production Expert Consultants in the food, bakery and beverage industry. Serving as consultants to businesses regarding partnerships, investors, mergers, performance base equity and acquisitions, leveraged and management buyouts, debt restructuring, capital firm investments, entrepreneur’s investment, & commercial bank investments. 

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