Expert: Eric Hofer - 10/24/2008

Question
Im looking to get a copacker in place for a fruit/vegetable juice.  Im having an incredibly hard time finding one - but thats a different issue.

For my question, I will assume that I have found a couple and need to decide.

1) I am in NY.  Should a copacker be near me geographically?  I should expect to be on site when the product is being mixed, filled, etc., right?  This will also save considerably on shipping - both shipping concentrates to the copacker as well as shipping to my warehouse area.  Are these typical concerns?

2) Assuming my juice will sell for $2.00 per 12 ounce bottle.  How much would I typically look to make on each bottle?  Im thinking that if I can produce it for $1.30 (the cost of shipping concentrates to the copacker, bottles, having them process and bottle, and then ship back to my warehouse), that I would sell to a distributor for $1.50.  Distributor would sell to retail outlet for $1.70 and the retail would sell it for $2.00

Does that seem about right?  Are my assumptions reasonable?

Answer
Rich,

Have you already done the test, determined the optimal flavour mix, shelf life, etc.?

I'm concerned that your costs are high vs your RRP, leaving 0 room for error, returns, etc.  Of course, the 1st production runs are loss leaders as you establish whether your concept works.  Once you start to get assured volume, will you be able to get your costs down?  

Typically the buffer is not 15% but nearly 100% - e.g. if it's going for $2, then costs all in are $1.  Will the market bear $2 a bottle?

E.