There is no question in my mind that a start up business should, where possible, use an outsourced supplier to get their product off the ground. Contract packers in Europe are excellent and with advances over the years in private label, they have honed their businesses to offer fantastic supply to would-be brand builders.
To my knowledge they understand confidentiality and offer superb research, often inclusive in the price, alongside packaging advice and guidance on supermarket demands for matters like retail ready packaging. Outsourced production companies can also offer information on current and up and coming label regulations and more often than not distribution into the logistics chain.
Western Europe has excess capacity in almost every aspect of FMCG production. It seems silly to build factories when you can outsource. The final and most important point is that if the project fails - and many do - you are left with some unsold product which can normally be turned into cash, thus mitigating some of the loss.
A lot easier than trying to get rid of a dodgy lease on a factory no one wants as a gift! When it comes to outsourcing production there is no discussion. Outsource, even if the product is so brilliant a top secret facility is needed.
A: Ed Caporn, Director of operations, Klein Caporn
Outsourcing production was the only way Klein Caporn were able to launch our business of a brand of premium fresh pasta sauces. With an unproven concept, a heavy capital expenditure would have been a hard sell to investors and an unnecessary risk for us.
The main challenge we faced was finding a company that was able to meet our very high standards and who didn't require one tonne minimum runs, but was also able to offer production expertise and the ability to scale up as our business grew.
This was not easy as there are few manufacturers who operate in this space and many that do were sceptical about spending development time with us while we were an unproven business.
Because of all this it was necessary to find a small manufacturer who was willing to enter into more of a partnership than a strict supplier relationship.
As well as avoiding high capital expenditure, outsourcing gives you immediate savings in ingredient purchasing, logistics support, general industry contacts and a useful partner to bounce ideas off.
This obviously comes at a cost as you have to pay their margin. There is also a loss of flexibility (less so with smaller outfits) and quality control procedures need to be watertight. In addition you have a significant business relationship to develop and sustain.