Small Business

Is It Time to Out-Sauce?


By Karen E. Klein Q: My husband and I have been successful caterers for eight years and have a unique meat marinade and balsamic vinaigrette that we would like to market on a small scale. Where can we have our products bottled and packaged? What government requirements do we need to follow?

---- D.R., Lodi, Calif.

A: Your idea sounds like a natural: You developed a product that has proven popular in your catering business, so why not take the next step and bottle it? Experts say, however, that you are contemplating a huge leap rather than a tiny step.

Launching a prepared-food product today, with the complexities of production, distribution, sales, and marketing, is a major undertaking that will likely cost you at least $50,000. "Front retail is really tough, and there are a million people selling marinades, sauces, and barbecue glazes," warns Bob Goldin, executive vice-president of Technomic, a South Chicago-based food-industry research firm. "Unless you have a real unique, creative approach, or a completely different, new product, how do you get someone to grab your bottle?"

The production end of things is actually the easy part, Goldin says. You'll need to design a label and have it printed, making sure you comply with the government's nutritional-labeling guidelines, then get recommendations from your Chamber of Commerce, food "co-packer" directories, or a local manufacturing consortium, and hook up with a bottler who will help you tweak your recipe so it conforms to your taste standards when it is produced on a much larger scale than you probably use now.

SELLING POINTERS. All certified co-packers must conform to government standards for food production, and since you are not contemplating a refrigerated or frozen product, those regulations will not be a major concern, experts say. Research the bottling process and try to strike a deal with a manufacturer who specializes in producing private-label output, and do so for the least amount of capital exposure on your part. Most bottlers will want an up-front fee, a percentage of your sales, and will ask you to commit to a minimum production run -- probably 1,000 units to start, experts say.

The more difficult question: How to make your marinade and vinaigrette competitive when the market is chock-full of such products? Do some grassroots research to determine exactly what your competition is. Check out the bottles already on the shelves of your local specialty grocers, supermarkets, and delis. What products do other caterers, restaurateurs, and cooking schools use? How will you make your sauce and vinaigrette stand out? You need to find a selling point, whether it's a particular taste, unusual ingredient, or special cooking process, that will appeal to end-users.

Robert Wemischner, a culinary educator and co-author of Cooking with Tea, recommends that you attend specialty-food trade shows, take your product to local farmer's markets and food fairs, and meet with buyers in small gourmet shops and upscale grocers in your area. "Bring samples in with the foods that your sauce is meant to be served with," Wemischner says. "Shop it around and learn what your price point will be. Do financial projections to determine how many bottles you will have to prepare, ship, and sell before you recoup your production expenses and make a profit."

DRESSING FOR THE HOLIDAYS. There's a good deal of risk involved in this venture, but if you do your homework and really believe you have a niche product, go for it. "Start small and build a ladder of contacts, rung by rung, that will allow you to launch into larger markets," Wemischner recommends.

Perhaps you can find an existing food company looking to add a marinade to its product line and would be interested in partnering with you. Adds Wemischner: "If worse comes to worse and the product fails to sell commercially, you can use it in your catering, sell it at your events, or give it out as holiday and thank-you gifts to your catering clientele." Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 6th Floor, 2 Penn Plaza, New York, NY 10121. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.


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