If you’re preparing to take a cookie, protein bar, granola, snack, or confection from a kitchen recipe to commercial production, one of the most important steps should happen before your first production run: commercial ingredient sourcing.
A food co-packer can help commercialize a formula, adapt it to manufacturing equipment, establish production procedures, and produce the finished product. But brand owners should also understand where their key ingredients come from, what they cost, what certifications they carry, and whether they are realistically available at commercial scale.
Doing this ingredient sourcing homework early can save significant time during food product development and help establish realistic expectations for pricing, minimum production runs, and manufacturing lead times.
Retail Ingredients vs. Commercial Food Ingredients
Many packaged food products begin with ingredients purchased from grocery stores, specialty retailers, or online marketplaces.
That’s perfectly reasonable for early product development. But an ingredient that works for a kitchen recipe may not be practical for commercial food manufacturing.
Retail ingredients are generally packaged and priced for consumers. Commercial ingredients are typically sold in larger formats such as 25- or 50-pound bags, cases, drums, totes, or pallets.
The differences can go beyond package size and price.
Commercial food ingredients may have specifications for:
- Particle size
- Moisture content
- Protein or fat content
- Viscosity
- Microbiological standards
- Heat stability
- Water absorption
- Melting characteristics
- Storage conditions
- Shelf life
These characteristics can affect how an ingredient performs during commercial mixing, extrusion, depositing, baking, enrobing, cooling, and packaging.
For example, two protein powders with similar nutrition profiles can behave very differently in a protein bar. Two nut butters can have different viscosities and oil separation. Chocolate and compound coatings can have different melting and cooling characteristics.
Whenever possible, identify the specific commercial ingredient and supplier you want your co-packer to evaluate.
Define Your Ingredient and Certification Requirements
Before researching suppliers, determine which product claims and certifications are important to your brand.
Your requirements might include:
- Kosher
- Certified Organic
- Non-GMO
- Gluten-Free
- Vegan
- Specific protein sources
- Specific countries of origin
- Allergen restrictions
- Specific nutritional targets
These requirements can significantly narrow the number of ingredients available to your co-packer.
They can also affect cost and minimum order quantities.
That’s why ingredient requirements should be identified early in the food commercialization process rather than after a formula has already been finalized.
Verify Ingredient Certifications
Don’t assume an ingredient meets your requirements simply because a supplier’s website describes it as “Organic,” “Kosher,” or “Non-GMO.”
Ask for the documentation.
Depending on your product and manufacturing requirements, useful supplier documents can include:
- Product specification sheet
- Current Kosher certificate
- Current Organic certificate
- Non-GMO documentation
- Allergen statement
- Ingredient and sub-ingredient declaration
- Nutrition information
- Country-of-origin documentation
- Microbiological specifications
- Certificate of Analysis information
Most importantly, confirm that the certificate actually applies to the specific ingredient or item number you intend to purchase and that the documentation is current.
Your food manufacturer will have its own supplier approval and food safety requirements, but collecting this documentation beforehand can make the approval process much easier.
Contact Commercial Ingredient Suppliers Directly
Once you’ve found a possible commercial ingredient, don’t stop at the supplier’s website.
Contact the manufacturer, distributor, broker, or sales representative and ask about the practical details of buying the ingredient commercially.
You should understand:
Minimum order quantity: An ingredient may come in a 25-pound bag but have a 500-pound or full-pallet minimum order.
Lead time: Common ingredients may be readily available, while specialty ingredients can require weeks or months to obtain.
Pricing: Ask for commercial pricing and understand whether freight is included.
Payment terms: New customers may need to prepay, while established accounts may qualify for credit terms.
Shipping location: Freight can have a significant effect on your actual delivered ingredient cost.
Shelf life: Determine both the stated shelf life and how much remaining shelf life you can normally expect when the ingredient is delivered.
These factors can be just as important as the ingredient’s price per pound.
Ingredient Minimums Can Affect Your Co-Packer’s Production Minimums
Ingredient minimum order quantities and co-packer production minimums are closely connected.
Imagine that your formula requires 50 pounds of a specialty ingredient for a 2,000-pound production run.
If the ingredient supplier has a 500-pound minimum order, purchasing that ingredient provides enough material for approximately 20,000 pounds of finished product.
That raises several questions.
Who purchases and owns the remaining inventory? How quickly will it be used? Where will it be stored? What happens if it expires? What happens if the formula changes?
This is why the cheapest ingredient on a per-pound basis isn’t necessarily the most economical choice for an emerging food brand.
Sometimes paying more per pound from a distributor offering a smaller minimum order can make considerably more sense.
Ingredient Shelf Life Matters Too
Brand owners naturally focus on the shelf life of their finished products, but raw ingredient shelf life can also affect production planning.
Ingredients don’t last forever.
Nuts and nut meals can become rancid. Oils and fats can oxidize. Flavors can lose potency. Powders can absorb moisture. Chocolate and coatings have specific storage requirements. Other specialty ingredients may have relatively short usable shelf lives.
Now combine shelf life with supplier minimums.
If you must purchase enough of an ingredient for five production runs but only expect to manufacture twice per year, the economics may not work.
A good commercial ingredient sourcing strategy considers price, minimum order quantity, expected usage, storage requirements, shelf life, and production frequency together.
Ingredient Lead Times Affect Food Manufacturing Lead Times
A co-packer’s production lead time is only one part of the manufacturing timeline.
Before production can begin, the manufacturer may need an approved formula, approved suppliers, raw materials, packaging materials, an available production slot, and a purchase order.
If a critical ingredient requires eight weeks to arrive, your co-packer can’t necessarily manufacture your product in four weeks simply because its normal production lead time is four weeks.
Long-lead ingredients should therefore be identified as early as possible.
This is particularly important for specialized proteins, fibers, inclusions, flavors, chocolate products, sweeteners, certified ingredients, and imported ingredients.
Your Co-Packer Isn’t an Unlimited Ingredient Warehouse
Food manufacturers have finite warehouse space.
A co-packer serving multiple customers may need to manage hundreds or thousands of raw materials, packaging components, and finished products.
It generally isn’t practical for a manufacturer to purchase large quantities of a customer-specific ingredient and keep it indefinitely while waiting for the brand’s next order.
Ingredients normally need to be purchased against actual production requirements and purchase orders.
This becomes particularly important when your product contains an ingredient that your co-packer doesn’t use for other customers.
Forecasting future production is helpful, but a forecast isn’t necessarily a purchase order. Manufacturers still need to manage warehouse capacity, cash flow, inventory exposure, and ingredient expiration dates.
Commercial Ingredient Sourcing Helps Establish Preliminary Product Cost
You don’t need to calculate your finished manufacturing cost before contacting a co-packer.
However, ingredient sourcing research can help establish whether your target price is realistic.
If the ingredients in your formula already cost $1.75 per unit before labor, packaging, freight, manufacturing overhead, waste, or margin, expecting a finished manufacturing cost of $1.25 per unit obviously isn’t realistic.
Commercial sourcing can also uncover opportunities to reduce costs.
The commercial version of an ingredient may cost significantly less than its retail equivalent. A distributor may offer a better order quantity. Another ingredient may provide similar flavor and functionality with better availability.
These are exactly the types of issues that should be evaluated during food product commercialization.
Ingredient Selection Is Part of Protecting Your Brand
Commercial ingredient sourcing shouldn’t simply be an exercise in finding the lowest-cost ingredients.
Your ingredients help define your product.
If a particular cocoa powder, nut butter, protein, dried fruit, chocolate, vanilla, flour, sweetener, or other ingredient gives your product the flavor and quality you want, identify it.
Don’t assume every commercial substitute will taste or perform the same way.
An experienced food co-packer can help identify alternatives and evaluate how ingredients perform on commercial equipment, but the brand owner should remain involved in those decisions.
Ultimately, your company’s name is on the package.
Ingredient Sourcing Checklist Before Contacting a Co-Packer
Before presenting your formula to a food co-packer, research your important and specialty ingredients and compile the following information:
- Exact ingredient and manufacturer — Include the product name, manufacturer, SKU or item number.
- Commercial supplier — Identify the manufacturer, distributor, broker, or foodservice supplier that can actually sell the ingredient commercially.
- Product specifications — Obtain current specification sheets and relevant technical information.
- Certifications — Obtain actual Kosher, Organic, Non-GMO, or other required certificates and verify that they apply to the specific ingredient.
- Ingredient and allergen information — Collect ingredient statements, sub-ingredients, allergen declarations, and relevant food safety documentation.
- Package size and minimum order — Determine both the package size and the supplier’s actual minimum purchase quantity.
- Commercial pricing — Obtain enough pricing information to estimate the ingredient’s delivered cost.
- Lead time — Determine normal availability and whether the ingredient has seasonal or supply-chain limitations.
- Payment terms — Find out whether the supplier requires prepayment, credit approval, or minimum annual purchases.
- Shelf life and storage requirements — Compare the ingredient’s usable shelf life with your anticipated production frequency.
- Supplier contact information — Record the appropriate salesperson or distributor contact for your co-packer.
- Samples — When possible, retain samples or arrange for the supplier to provide samples for commercial product development.
Better Ingredient Research Leads to Better Food Commercialization
At World Wide Gourmet Foods, we help brands develop, commercialize, and manufacture shelf-stable packaged baked goods and confections, including bars, bites, cookies, granolas, snack mixes, chocolate products, caramels, truffles, and other specialty foods.
You don’t need to solve every ingredient sourcing issue before approaching a co-packer. Commercialization should be a collaborative process, and an experienced food manufacturer can help evaluate ingredients, recommend alternatives, and determine how your formula will perform on commercial manufacturing equipment.
But the more ingredient research you do beforehand, the more productive that process can be.
Commercial ingredient sourcing helps establish realistic pricing expectations, identify certification requirements, uncover difficult minimum order quantities, anticipate ingredient lead times, and align raw-material purchasing with your expected production runs.
Most importantly, ingredient sourcing is part of a brand owner’s due diligence.
Your co-packer can help transform your formula into a commercially manufacturable product. As the brand owner, you should understand the ingredients that make that product unique and make informed decisions about their quality, flavor, functionality, sourcing, and certifications.
Doing that homework before commercial production gives both you and your co-packer a much stronger foundation for successfully bringing your packaged food product to market.
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