Co-Pack Your Hot Sauce…Here’s Why!

Co-Packing is becoming a standard business practice for many hot sauce companies when it comes to manufacturing and bottling their sauce. Hiring a co-packer to help develop your recipe and package it into bottles gets you out of the kitchen and making sales. Marketing your product once it is packaged is one of the key components for making sales. Hiring a company to make, package and distribute your product allows for the focus on promotion, sales and marketing.

The initial cost of co-packing or contract packaging for small-batch manufacturing is between $1,500 and $2,000 for the initial startup costs. There will be additional costs for producing and labeling the sauce once the recipe has been fully developed and these costs can reach up to $5,000 per recipe. Most co-packing companies will give you complete control of the recipe and help you create your unique hot sauce recipe using their facilities. There will usually be a minimum production quantity and upfront costs or contractual obligations to create the recipe and any shipping, distributing, and marketing is the responsibility of you, the client.

What is co-packing?

Co-packing is hiring another company, using your recipe to make, bottle, and package hot sauce for your distribution and sales. These companies will have a registered manufacturing and packaging facility and probably sell their brand of hot sauce as well as for other companies. Co-packing is common practice in the hot sauce industry because it allows a business owner to concentrate on the promotion and sales of their products.

“Do what you do best…hire people to do the rest”

Don Button, Hell Fire Detroit

Many successful hot companies have started making hot sauces in their own kitchen but have turned to co-packing facilities to mass produce and bottle the sauce. Companies such as Hell Fire Detroit and Bumblefoot have stayed out of the manufacturing side of things entirely and have worked with co-packers for their hot sauces. For many companies the cost to hire a co-packing company outweigh the time and effort needed to set up and license a commercial kitchen facility.

What to look for in a co-packer

Search and select a co-packing company that has a vested interest in your sauce as much as you do. Personal relationships can be very valuable for any business practice. Some co-packers will help create unique recipes to call your own and place emphasis on your needs. Not all co-packers will be able to bottle a hot sauce because most manufacturers are set some for specific operations. Even co-packers who manufacture sauce may have strict guidelines for producing your specialized sauce.

According to forbes, history and reputation of the company are an important factor in selecting a co-packer. The short path to this task would be hiring a company who already produces hot sauce for other entrepreneurs. This is not uncommon and shouldn’t deter you from having them also produce your sauce.

Low startup costs will benefit a hot sauce co-packing investment

When you are first starting out in the hot sauce business, the amount of money you have available for investment can be a determining factor when hiring a co-packer. The profit margin for a bottled hot sauce can be very low after you subtract co-packing costs, so the lower those costs are…the more profit you make. It is possible to find a co-packing facility to bottles your hot sauce for $1,500 to $2,000 to include the startup costs and a pre-determined quantity of sauce.

Larger companies may be able to produce hot sauce at a lower cost per bottle, but their initial start-up costs may be higher. Co-packing is big business and larger companies may not be able to downsize their operations for your needs. Know how much sauce you want to produce before signing on with a co-packer. Projecting profits can be difficult to do but it all comes down to how much money you have available to invest. Read more on the best approach to finding money to invest in a hot sauce business in How To Start A Hot Sauce Business. Available as an Instant Download Here or also as paperback on Amazon.

Having recipe control provides a personal approach to co-packing

The idea behind hiring a company to produce and bottle your hot sauce is that it is still YOUR hot sauce. Many companies will have their sauces available for purchase and resale with your label on. This is called private label and you usually do not have any control over the recipe. Private Label is also very common practice for many entrepreneurs entering the business.

A private label hot sauce company will provide and control the ingredients in a hot sauce, but a co-packer will give you full control of the recipe, within the limitations they may have in their facility. Many companies will offer guidance in creating recipes, but this will be an additional cost for developing a unique product and may not be a service every co-packing company provides.

Typically, a hot sauce recipe is created in small experimental batches in private kitchens or very controlled environment. Hiring a co-packer will mean that the recipes will be produced on a mass scale, and this could slightly alter the flavor and appearance. Make sure the company you work with provides the opportunity to sample your hot sauce before final production. Maybe you are searching for a one-stop-shop that provides label design as well.

Some co-packers provide label design for hot sauce

In some states, the co-packer cannot ship hot sauce or even allow it to leave the facility without a label on the bottle. They will often provide design services or allow you to provide your label design as well. Any design services offered will usually be additional costs on top off startup costs and operations to continually produce sauce.

Many times, labeling a hot sauce can add an interesting marketable aspect to a hot sauce. Label requirements may also include the nutritional contents as well. Read How To Add A Bar Code To Hot Sauce, Providing A Nutritional Label For Hot Sauce and the FDA Requirements For Labeling Hot Sauce if you are planning on the commercial sale of your sauce.

The location of a co-packer can reduce some distribution costs

Typically, the co-packing facility does not provide shipping, that would be the responsibility of the client (you), or a third-party distribution company. Therefore, the closer your business or distribution center is to the co-packer, the lower the costs. Shipping costs can be a large added expense to hot sauce sales especially when there is high trucking and labor costs attached to a hot sauce product before a single sale is made.

The location of the co-packer can make a difference if you plan on developing recipes for future hot sauce creations. The costs associated from making additional visits with a recipe developer can add up with multiple recipes. Chances are if you have one successful recipe…you will want more.

Co-packing contractual obligations

Most companies that create recipes with you will require a vested amount of time so there will most likely be a contract to sign. There is nothing wrong with signing a contract but make sure you understand it completely and it is the terms you agreed to. This is the document that will provide exactly what they costs will be for each recipe development, every case produced, and any additional services provided.

Benefits of hiring a co-packer to bottle hot sauce

One of the main benefits that a co-packer will handle is the licensing, registration, and permits needed to operate a commercial kitchen facility. Operating a home-based hot sauce business is possible but the process of starting up and continued operations can be inundated with the finding the right licensing process per your jurisdiction.

In addition, a co-packer will handle all of the ingredient inventory, mixing, bottling, and packaging of a hot sauce. This can amount to a lot of work. They specialize in producing and packaging hot sauces so larger companies can offer lower costs per bottle. Their high-volume production lines can greatly reduce the cost to produce individual bottles, and this can lead to higher profit margins.

“Assembling the right team – manufacturer, distributor, and international re-sellers was the most successful move”

Ron Thal, Bumblefoot

How much does it cost?

The cost for hiring a co-packer for your hot sauce business will depend on the company, the intricacies of producing the recipe, and the order amount. There will most likely be a minimum purchase, but costs per bottle will be decreased with larger orders.

Some smaller co-packing companies have an initial start-up cost as low as $1,800. Peppernutz.com has an established understanding of the recipe development process and provides private-label sauces as well as spices and rubs. Their start-up costs are some of the lowest in the industry, but they provide top-quality service and products. Best Brand Bottlers offers a onetime fee including consultation for $1,500. Additional cost for packaging will incur as the sauce is made and bottled.

According to Pemberton Gourmet Foods the average cost of hot sauce through a co-packer is between $1.95 and $2.50 a bottle for a simple hot peppers and vinegar hot sauce. The final cost depends on what additional ingredients are included, what type of process is used, and the size of the bottle, so these average costs will go up with gourmet hot sauces.

Make it happen!

The best way to determine if a co-packer will fit your needs is to contact them personally with a phone call. It is difficult to determine processing, contracts, and minimum order from a website. Email contact is also useful information to make initial contact but make sure you have a list of questions or concerns before you reach out to someone.

“None of us had any idea what we were doing when we started, but we made it happen and that is the best thing anyone can do”

Elijah X, Elijah’s Xtreme

Hot sauce co-packing checklist (in no particular order)

Have a checklist or list of questions and concerns ready when you speak with a co packer. They may have many of the same questions to ask you before an initial visit. A draft email can be sent out to multiple recipients but lacks a personal touch and many may not respond. Create a list of question or concerns before you reach out to a company…or use the checklist below. Download the FREE Hot Sauce Co-Packing Checklist Here!

Do you bottle hot sauce? – Many companies may co-pack sauces, but not hot sauce or they have grown their business to include the demand for new sauces being created.

Know the recipe ingredients – If you are using your Grandma’s hand-me-down recipe, make sure you have the ingredients and amounts listed somewhere…in detail.

Have a detailed description of the process – Is the recipe fermented, roasted or does it involve other complex processing? This is just as important as the ingredients.

What is the largest batch produced? – The co-packer may have to manipulate the recipe slightly when it gets mass produced. What size batch do you typically produce?

Initial startup costs – Every customer is different but discussing the costs upfront could be a deciding factor in your decision. The should be able to provide estimate figures.

Provide sample – You will need to provide samples to the co-packer and they may need to be shipped if you are not within travel distance.

Contract signing – No contract means no commitment. Larger companies may have a minimal order amount and need a signed contract before further consultation.

Label design – If you already have a label design most co-packers will work with that. There will be additional costs for the label application.

Can I provide my own label? – This will depend on the company because the physical label may not work with their machinery and equipment.

Recipe control – This is what co-packing is. If you don’t have control or recipe creation and development its called Private Label. Make sure you (they) know the difference.

Testing pH – Most facilities are capable of pH testing. Find out if it is part of the initial consultation and recipe development or is an additional cost.

Nutritional testing – Some states and providences may require this before the bottles leave the facility. This should be included in the costs but ask.

What is the minimum order? – This will most likely be provided without asking and is very common. A facility won’t go out of their way for a couple bottles but maybe a couple cases.

Is sampling provided? – It is standard operation to test your sauce throughout production but inquire how many times before you sign off.

Can I provide my own ingredients? – Grow your own product for your own hot sauce? It all depends on the co-packing if they want to accept outside product or not.

Hot sauce co packers listed by state

Here is a huge resource of co-packers in each state. The truth is…it may take a lot of conversations to find the right co-packing to fit the needs of producing a specialty hot sauce. Determine what is important to you before reaching out each company. There can be a lot of information on a website.

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