Expert: Eric Hofer - 10/24/2008

Question
Hi,

I have been doing a lot of research (I may have asked you a number of questions already) about starting a beverage.  I have settled on a process and would just like to ask for your assessment and feedback.  Ill ask some questions at the end if its ok.

Due to VERY limited capital, I need to start small - real small.

The juice is a fruit/vegetable mix.

I plan to buy small amounts of the concentrates for the fruits, and bottles/caps for hot filling.  For the vegetable portion - since it will be a unique blend - I will juice at home on a home juicer.

Then, I will make batches (a gallon or two at a time) and pasteurize on my stove, then hot fill my bottles.  I will also make my own labels and label the bottles.  I'll make a couple of cases via this method.

I'll use those cases to bring to local stores and try to get the product on some shelves.

Assuming the product sells, and I am confident that I can sell the product, I will then be willing to pay a copacker for a minimum run.  It will still need to be small - even by copacker standards.  So I will need to find one that isnt a massive operation.  Ill look for 500 cases - I have found a couple that will go as low - although 800+ miles away.

So, I will have already done research to find a copacker and a trader for concentrates of higher quantities of fruit juice.  I will have the fruit concentrate shipped to the copacker.  For the vegetable part, I will still juice my own, freeze it, and ship it to the copacker as well.  This is only about 1 ounce per bottle so I can spend an entire day or two juicing and freezing this vegetable juice part.

If this next step goes well, I will then look to expand more (a better copacker, looking for investment capital, etc)

So, a couple of questions here:

1) Does the overall plan seem reasonable?
2) Do I need a corporation set up before putting a bottle on a store shelf?  I dont want to get a lawsuit if somehow someone got sick from a bad pasteurization.
3) I know (think I know) that I can pasteurize and bottle at home as long as my pH is <4.6  But how do I label the product (how much vitamin C, Vitamin A, calories, etc)
4) If the juice has a suggested retail price of $2.25, how much should I plan to make per bottle?  
5) What would be a good cost for me to target and be comfortable with - in other words how much should I look to have spent for my finished product before I sell it?
6) Should a copacker be geographically close to me?  I think it should be but I am having a HARD time finding one.

I think thats it.  I appreciate any feedback you can give.  

Answer
Hi Rich,

Saw the 2nd message first and replied on that....

As to this one:-
- I think this the way to go with a new concept.
- Definitely get legal advice, set up a vehicle that protects you (and a corporation should) and whatever else you need to do to indemnify yourself.
- there are independent labs that can analyze your product; but of course a home process may be subject to variations - again consult a lawyer who can research the current legislation.  Usually sampling is done through out the manufacturing process to ensure that consistency remains.
- generally 50% profit is what you should go for, so $1.12.  You need all the "fat" you can get to cover unexpected costs, reinvest, etc.
- target investment depends upon what is your "maximum" pain point, what would convince you that you've got "repeat" customers (not people who try it once and never again - btw keep this in mind if initially you shift everything so as to not think you've immediately got a hit).  Look at your target outlets and estimate the amount of customers that would repeat; if you can hit that value then you know it works.
- the closer the co-packer obviously the less the transport, time in transit and easier it is for you to manage the quality; but if you cannot immediately find somebody - I guess you'll have to accept the situation (or you might find a closer co-packer once you start up, or shift your initial target market to be closer to the co-packer).

E.