The players in the food business game: Part 1
Knowing who does what is important to getting your food product on the shelf.
There are many players involved in the development of a successful food business. If you are exploring an idea to get a product on the shelves, knowing the terminology and distinctions of who does what will give you a leg up on understanding what’s involved and how the industry works. This article is part one of a two part series.
First of all, the product originates as an idea, and is developed by you, the vendor. Your role is to grow and protect your product, including licensing, quality control, marketing and selling the product you make. All decisions will come down to you as you choose any of the other players on this list.
Unless your food product is being sold under the Cottage Food Law, you will need to make it in a USDA licensed kitchen – by converting your own, or by renting space in a licensed incubator kitchen. There are several incubator kitchens in Michigan that will rent preparation and storage space to new food producers by the hour. To see a current list of Michigan incubator kitchens, contact the MSU Product Center. If you produce the product yourself, you are the manufacturer. Otherwise, you will have to hire a co-packer or co-manufacturer to produce your product. This is a third-party factory that produces your recipe on your behalf.
Where will your ingredients come from? Ingredient suppliers are the people that grow or produce the tomatoes, peppers, oats, sugars, or whatever other ingredient you or your manufacturer needs to make your recipe. Many co-packers work directly with larger industrial suppliers who provide a number of ingredients at once, rather than working with individual farms. Knowing your ingredient suppliers is important, as many consumers today want to know where their food originated. It will also help you better sell your product because your passion will come through when you talk about it. Knowing your sources will also help you predict and manage shortages, price changes or potential recalls.
You will also need to package your product; perhaps a jar or plastic sleeve, plus labels, boxes, etc. Manufacturers will also have relationships with these sub-manufacturers; however, you may want to decide yourself on a particular container or design for your product, buying it separately and then shipping it to your manufacturer. MSU Product Center counselors can help with packaging sources and the entire process of producing a food product for sale, if you sign up for free individual counseling at the website below. Watch for part 2 of this series for more players in the food industry.
The MSU Product Center, in partnership with Michigan State University Extension, provides business counseling for product development, packaging and marketing strategies that will help Michigan entrepreneurs commercialize high-value, consumer–responsive food, value-added agriculture, and natural resource products. For more information, visit the MSU Product Center website or call 517-432-8750.