Years ago my friend Gordon and I started Califa Foods. Our original intention was to commercialize his family’s recipe for caponata, an eggplant based sauce/relish. Along the way, we learned a lot, but never did produce the caponata. Recently I saw some folks on Hacker News asking for information about starting a packaged food business – that motivated me to write up the following summary of some things I learned:
- Production happens in factories, typically fairly small scale, that often produce similar (or identical!) products for many brands.
- You can easily get started by “private labeling” a manufacturer’s existing formulation – for example, they already have 12 kinds of pasta sauce in their “catalog” – you choose three, maybe pick a custom jar (if you want to get fancy), get labels printed, and the manufacturer will put it together for you – then you need to market and sell the product. Talk to to get started.
- Selling into grocery stores is possible, but can take a lot of leg work. Big chain stores are very tough to penetrate, but local chains and one-off stores are much easier.
- When selling to grocery stores, they typically want you to have a “range” of products (more than one type of pasta sauce) – you should have an odd number (three flavors of sauce is good, five might be better, but two or four is not recommended).
- Selling direct to consumer via special events (put up a booth at a street fair, jazz festival, etc) is the route my partner and I chose – we made higher margins, and got our brand established (over 1mil “impressions”!), then sold the company to someone that was going to shift to the higher-volume, lower-margin sales to grocery stores. This type of selling is a lot of work, but you can get some valuable product feedback.
- On the other hand, when selling packaged foods, customers (at least in the grocery setting) can’t taste your product first, so they make their decisions based on price, appearance, and copy (the words on your packaging). Getting these right is tricky – we used a combination of rapid feedback from the customers at special events, and digital label printing (to eliminate costs of printing plates when changing label copy) to iterate and find the optimal mix.
- You can also sell direct via new and not-so-new online markets like and – my company sold a few jars now and then through our own website.
- Developing your own recipe is tricky – expect to pay a contract manufacturer to do this for you (they have the skills) – you might just have to commit to a minimum purchase, or you might have to actually pay them for development AND commit to minimum purchase. Once developed, the formula is fairly transferable – you can take it to a different manufacturer, either to get a better price, or to produce elsewhere to minimize shipping costs (which can be a LOT on product in glass jars).
- Organic is a big draw – it raises costs a bit, but can raise your price a bit more, leading to higher margins.
- The above is drawn from my experience with food that is cooked then jarred. Other types of food and preparations (like baked, canned, dried, etc) may be similar.
- The main industry event, which you must attend (at least as a registrant, to learn the business, if not as an exhibitor, to sell your product) is the , which is held in both NYC and San Francisco every year.
Let me know if the comments if you have questions not answered, or if your facts/opinions are different than mine.
{ 8 comments… read them below or add one }
Very interesting article; thanks for taking the time to post it!
A couple of questions:
Do you know how the rules change depending on the ingredients? For instance, if you have meat in your product?
What’s the order of magnitude of costs for the contract manufacturer / custom recipe?
Overall, what do you suppose costs are to get started, order of magnitude?
Once again, thanks, this is very interesting.
The rules for food products that can be cooked and put into glass jars are fairly consistent, AFAIK – they are mostly about how the food is cooked and jarred, and the pH (which affects if bacteria can grow or not). I’m not sure how much meat you have to have in a product before it comes under different rules.
For a custom recipe, that has no meat, and is cooked then jarred, I think the development costs were a few thousand dollars, which included a sequence of increasingly large production runs (which you may or may not be able to sell or eat, depending on how they turn out) which are used the fine-tune the recipe scaling (because making a batch of pasta sauce 200x as large as you make at home is not as simple as multiplying the ingredients by 200x)
The costs of getting started with a “off the shelf” recipe are far lower – I’m not sure what Mad Will’s (and other contract manufacturers) minimum order is, but I believe if you go with their “stock” labels, you can order as little as one case of one product for less than $100 shipped.
The real challenge with a food business, and with most businesses, is not the product itself, but the marketing and sales of that product.
I was always toying with the idea of private labeling some food products and starting a business selling my line of food items. Can you be honest with me: What’s the usual average start-up costs to get a line going, and is this a business that I can make good money with?
Thanks
I wanted to know how I would get a new product out there. We have done several field tests and gotten back great feedback. It is an amazing Indian food jarred product. It can be dipped with bread, nan, beagles, and really anything. It can be put on sandwiches or just eaten as a side. It is very healthy. Whats the best way to get this product out that will be a Top seller once customers see it, and then try it. Thank you
Where do you find information on when/where street fair, jazz festival, etc will be hosted?
The best source is – they have great listings, with lots of details, and it is well worth the moderate cost. Once you start actually attending events, either as an attendee, or as an exhibitor, keep careful notes on which ones are good and which aren’t. Talk with other vendors and get their opinions too. Then, go back to the good ones, and skip the bad ones – you’ll be much more profitable!
Do you have any experience/information on getting hot foods into a grocery store, such as pizza, pastas, ect. Food would be made onsite in the grocery store and put out in buffet style.
Sorry, I don’t have direct experience with this – I believe most hot food at grocery stores is made on-site by grocery staff. I think you’d have a hard time getting approval from the store to let your staff work in their kitchen.