Launching a Craft Food Company from Scratch: My Step-by-Step Guide
Getting Started:
Here is my step-by-step guide on how to launch a food brand with about $5000-10,000 in capital (maybe less if you are tech-savvy) and how to create, launch, and build your brand.
Here is How I got started:
Years ago on a road trip, my husband and I bought
40 pounds of peaches and apples to make holiday gifts with my chunky applesauce and bourbon peach jam recipes.
I had so many apple peels and scraps that I researched “what to do with apple scraps” and found a recipe for vinegar.
I created a soft vinegar that didn’t burn my throat with a PH of about 4.2. The perfect apple cider vinegar for vinaigrettes, deglazing a pan, making sauces or just taking that daily shot.
I then took a course online at Harvard on Food Fermentation – Cooking with Microbes . I also bought the book Wildcrafted Vinegars by Pascal Baudar.
Upon the encouragement of my husband, I began bottling the vinegar and then started down the road of making vanilla extracts as well.
We worked with a local graphic designer to create a label, ordered supplies, bottled everything, and then applied for a booth at my local Farmers’ Market. My products were accepted and our tiny company began selling at the Market, pop-up markets, festivals, wine shops- anywhere I could find a foodie crowd. Then we adjusted our product line based on sales and feedback from customers.
After a few years of selling, we transitioned to a commercial license so that I could sell online through my food blog.
My company, Pine & Palm Kitchen manufactures small batch, premium vinegar and vanilla products in our commercial kitchen here in the Flathead Valley in Northwest Montana. I produce vanilla bean paste, vanilla extract, vanilla sugar, vanilla maple syrup, and apple cider vinegar. We also have two lines of all-natural vinegar-based cleaning products- Citrus- Mint and Lavender-Geranium- the herbs and flowers are all from our gardens here on my property in Whitefish.
Step 1- Creating your product
First steps- What?
So you have a great chili recipe you are very proud of:
And you want to “upsell a spice blend” to your users.
Create the product and do some testing– make sure it is awesome.
Is it shelf-stable? Nuts, flours, and high-fat items can spoil- a factor to consider. Does it need refrigeration? Freezing?
Sources for Industry Information:
I go to Fortune Business Insights and KeyChain.
Look for reports on market saturation and activity around your idea. This is a great website with lots of insider information.
Research your product to see what the market share is:
Examples:Hot sauce is an example of a product with too much market saturation. Coming out of the pandemic, every dad was making hot sauce in their garage.
This year- Tabitha Brown partnered with McCormick to make a salt-free blend, Kraft-Heinz is launching a new US based line of spice blends. Those are factors to consider. Regional analysis is $7.4 billion US.
Shark Tank– This is a great resource to see what products have been successful.
Step 2- Now the How?
How am I going to do this?
Capital– access to capital. I highly recommend having $5000-10,000 in cash on hand. Credit card interest can eat up any profits you may see. Keep your costs low. Order small amounts of labels and packaging at first.
Create an LLC, open a commercial checking account and a Square account for payment processing. You can buy a Square chip reader at Walmart or install the app on your smart phone.
Design your logo– use Canva or hire a graphic designer.
Find your packaging. Amazon, U-Line, TricorBraun, Specialty Bottles (Seattle) – Consider shipping costs- Order only 1 or 2 samples of your packaging to test the label and the shelf life of your product. Does it ship well? Does it leak? Can animals chew into the packaging?
I drive to Seattle (when visiting my children) to pick up cases of bottles to save on shipping.
Labels– Print at home using Canva or use a commercial printer like Wizard Labels, Sticker Mule. etc.
Step 3- License: cottage or retail or Co-packer?
Cottage License:
You will need a food manufacturing license that is obtained through your county and state health department. Every state is different.
A Cottage License is the perfect way to have a proof of concept to see if there is demand for your product without expending a great deal of capital.
A Cottage license allows the product to be manufactured in your own home kitchen. However, you cannot sell retail, online or ship these products.
Typically a cottage license is used at Famer’s Markets, pop-up markets, or Festivals. You can sell face-to-face by meeting folks. You can advertise on Marketplace on Meta and do a pick-up day.
Check out this link for the laws in your state: https://cottagefoodlaws.com/
For a Cottage License, the label requirements typically do not need nutrition analysis until you hit $50,000 in sales, so do not worry about that. Do NOT print your labels until the Health Department signs off on your recipe.
Get to know the folks at your local health department- and if you have a community college as well. These folks are extremely helpful and I find, they want you to succeed.
I love the Forrager Podcast– great to listen to other cottage licnese creators.
Fees paid to the County for a cottage license are typically $25- $100.
Retail/Commercial License:
A retail or commercial license allows you to sell your product in retail stores, online, or wholesale to other vendors.
This license is obtained through the County and State Health Department.
You will also need to obtain a Food manager or Food Handling Certificate-
ServeSafe- https://www.servsafe.com/
You will study for the test and take it at a local community college or online. The cost of the book is around $100. Buy the physical book. I use mine all the time as a reference on safe food-handling practices.
You will need to find a commercial kitchen to manufacture your products:
The kitchen needs to be licensed for your company. If the kitchen is not on a municipal water source, the septic system plan will need to be submitted to the county and the water tested for nitrates and contaminants. This cost about $65. The Septic Plan can be found online with the Planning and Zoning Department of your county.
If you use a Ghost Kitchen or Shared Commercial Kitchen, they will handle these tests for you.
A Ghost Kitchen is where you lease time and space for your business. It is low cost and you simply reserve the times you need the kitchen to manufacture.
You can also look into local B & B’s, churches, community colleges, small restaurants, cooking schools, etc. for a kitchen to use.
Here is a guide for Commercial Kitchens, but this is not a complete list.
Insurance– Food Liability Insurance Program. I use Flip. You must take out insurance if you self-manufacture.
Co-Packer-
A Co-Packer is a company that will manufacture your product at their facility, package it, and label it for you. They will do R&D testing to determine the best ingredients to use before they begin manufacturing.
Some Co-Packers can even help you find a distributor to sell your products. This route is very costly, but if you have capital and one great product, and contacts into retail or the ability to sell online, this may be an ideal route for you to take. The co-packer handles all the licensing and insurance. You just need to sell.
Here are a few websites to help you find a co-packer:
https://www.specialtyfoodcopackers.com
Expect to make multiple inquiries before you hear back from a co-packer. Often, they are busy and it takes lots of persistence to get a callback.
There are manufacturing minimums for a copacker to start creating your product. Just the R&D can run $2,500 and up.
To learn how a co-packer works, have a listen to this segment on the Hot Stove Society Podcast where the owner of Effie’s Homemade Oat Biscuits talks about her co-packer and the production process.
Step 4- Sell, baby Sell!
Okay, you have a product, you’ve tested it, it’s licensed, labeled, and ready to go. Now you have to sell.
Create a website using Shopify or another selling payment platform and social media channels to promote your company.
Photograph the product for your website. Consider hiring a professional photographer.
Enter the product in contests! Create buzz!
Attend the Fancy Food Show, or local trade shows in your state. Attend conferences and join a professional organization.
Promote the product at Festivals, pop-up shops, and through local media.
Give out free samples to chefs, friends, and food writers in your area.
Reach out to influencers and create a brand contract. They develop recipes, and social media posts around your product and receive a flat payment or a commission of every unit sold.
Farmer’s Markets- One thing I’ve learned about Famer’s Market is you need a few things- free samples, and the ability to sell. If you are shy, you will need to push yourself to get excited about your product and sell it. For a Farmer’s market, you will need a tent, banner, tables, table coverings, and displays or shelving. This is about $1000.
Advertise on Meta or Pinterest. Consider hiring an advertising specialist to target the folks you want to sell to.
Collect reviews:
Make certain your business is listed on Google, and set up auto reviews on your website, on Square or Google so folks can gain trust in your brand. Reviews are SO important!
Shipping:
Buy wholesale boxes and attractive shipping supplies, labels, promotional inserts, branded boxes, tape, etc. for your product.
Use a company like Pirate Ship for deep discounts on shipping rates.
Shipping costs can be extremely expensive and eat into your profit margin so before you price your items online, do a hard look at shipping and factor that in.
I only ship UPS.
Final Thoughts:
Creating a food brand that you manufacture and scale is an extremely rewarding business. Like anything, there will be mistakes, missteps and failures. That is OKAY! Learn from them.
Reach out to other manufacturers in your area for help or advice. Other sources are:
Small Business Administration office, your state Ag department for grants, or the local Chamber of Commerce for mentoring.
Good luck!
Feel free to reach out to me for any additional help.
I do coaching sessions over Zoom for $100/ hour for anyone wanting to start a food production business. Email me at [email protected] for more information.
Meggen Wilson
