The Startup CPG Podcast

*02:35* *Jessi -* Hi Kit, hi Adam, welcome to the show today. So excited to have you both here. I hope you're doing well and super excited to have a conversation about co-packing today. to get to meet you both in person at Expo West earlier this year. So thank you so much for being here and just would love if you could each start us off with just a quick introduction about yourselves and then a quick overview of what Motherload is.

*04:20* *Adam -* Thanks so much for having us on, Jessi. I'm Adam and at Motherload, I am the product development manager. So I deal with products all the way from the bench top all the way to the scale up.

*04:34* *Kit -* Hey there. Kit Maxfield, I'm the CMO and partner at Motherload Co-packing and I handle most of the sales and onboarding of new customers along with more the business side of things. Back in 2018, we decided that we wanted to open up a contract manufacturing facility in the Denver area. We felt it was an underserved market. So I got with my two business partners, Greg and Jim and located the town of Hudson, Colorado for the demographics of the workforce. Great people in that town found a building and since then we've been building it out and now we've got a bunch of high speed lines and stainless steel everywhere and rocking and rolling.

*05:22* *Jessi -* Awesome. That's great. And you primarily work on liquid co-packing, correct?

*05:25* *Kit -* We've got several fillers that specialize in rigid containers from glass to plastic, but everything's liquid. So beverage through salsa, essentially.

*05:43* *Jessi -*  Awesome. That's great. That's super helpful. And I also would love to hear a little bit of each of your career journeys to kind of end up working at a facility like Motherload and also so that people know like I've had with Kit and Adam before in my operations work and they're just really very informed, educated, ready to help people in the industry. So I love that you're here to get to help us like shine light on this topic because I think as a brand, it's intimidating to scale up with a new co-packer. It's intimidating to find someone that's going to be the right partner to work with. And so I just appreciate both of you taking the time to kind of help share and shed some light in, you know, kind of some of the maybe corners that feel a little dark and scary of just kind of how it works. I think it's helpful to learn how what the career journey looks like to work at a facility like this. And so I'd like to hear from each of you, you know, kind of how did you end up in your current roles? What are the roles that you have before this to, you know, to kind of prepare you for the work you're doing now?

*06:43* *Adam -* So, yeah, I started my career in food in sports nutrition. So I decided a while ago that I was pretty passionate about food and performance via food, eating the right things and, you know, how that kind of crosses over to how you perform just in general in life. So I started off working at a company that specialized in protein powders, vitamin and mineral supplements, pre workouts, basically anything, you know, they'd see on the shelves in a vitamin shop or a GNC. And we were working on not just, you know, making products that everyone else was doing, but we were really working on stuff that was, you know, super beneficial, super clean label and stuff that was, you know, within a reasonable price range for the everyday person. So I started off for the first couple years of my career in the product development side of things, developing all sorts of, you know, functional foods and that kind of thing. Really enjoyed it. It was great to give product to someone and then catch up with them a couple of months later and get such positive feedback that it really did benefit them. You know, protein powder that you can take if you're lactose intolerant that really could change someone's entire workout, you know, progress, things like that was really great to see. So I kind of, you know, really figured out that that's what I wanted to do. Product development is really cool because, you know, you get, you have a vision with something and you work with someone to make their vision feasible. A lot of times people, you know, don't know what it takes to go from the bench all the way to actually seeing, you know, a bottle or a product on the shelf. So it's really enjoyable to be able to help them from start to finish with that. So after about four years of working in sports nutrition, I switched over to the CPG sauce realm, which is where I'm currently at right now and have worked here for about two and a half years. At Motherload, we do barbecue and hot curry meal starters, you know, basically anything in a glass bottle that you'd see on the shelf we've dealt with all sorts of unique products at Clean Label as well. So yeah, you know, we here as well get to help people, you know, make their vision possible starting in the kitchen and bringing it all the way to on the shelf. So the product development side of things is really interesting and, you know, it's something that, you know, that I truly enjoy doing because at the end of the day, you're helping someone, you know, make their product a reality.

*09:19* *Jessi -* That's great. And before we jump to Kit, I also just want to clarify a term since some listeners might be, might not be familiar. Can you explain the term like bench, benchtop? Like I know that confused me at first. I was like, what are bench samples? Did they put the samples on benches? What does that mean? So could you just explain that term a little bit as we get started?

*09:35* *Adam -* Yeah, absolutely. Yeah, benchtop just meaning the R&D side of things. We have what's called a test kitchen here at Motherload. So it's exactly kind of what it is described as. We have, you know, the bench basically just be in the large table that we work on. And it's just, you know, a very small scale version of what will eventually be produced. So, you know, working on the bench is taking maybe a gallon at a time of a formula, dialing it in, in that small quantity before then eventually bringing it to the thousand gallon quantities. Perfect.

*10:12* *Jessi -* Yeah, that's great. Thank you. And Kit, yeah, I would love to hear your background as well. I believe you've got 10 years or 10 years plus in the food industry.

*10:25* *Kit -* Yeah, I started off at a sauce contract manufacturer in 2008. I started off in product development, doing test batches and working in the lab, working with all the different customers and entrepreneurs, chefs and, you know, brand builders and helping them get their product across the finish line is super fulfilling. I'm very entrepreneurial minded. I get the squirrel gets me. I chase shiny things a lot and co-packing helps me scratch that itch because we can live and breathe growing on-trend brands and it doesn't, they never get old. And I've stuck with it since then. Gone from product development up through sales, had a brewery, beer brands, then started motherload co-packing. It's one heck of a ride. It's a lot of fun, a lot of hard work. I mean, food business, the thing about it is it's so much fun. Everybody knows everybody. But it's hard. It's extremely competitive and it takes a lot of work from both the brands and the co-packer working in tandem together to make it all successful. And that part's great. I hope to continue on many, many years. We've, I think we've doubled every year for the past five years, just like holding onto our bridges. It's been a ride.

*11:50* *Jessi -*  Yeah. Oh, that's awesome. That's really cool. And that kind of starts to lead into my next question that I also wanted, I think, and, you know, regular listeners know this, but I think it's super helpful to just kind of understand, you know, the other side of the table, whoever you're trying to work with, you know, what's the day in the life of the person that you're trying to form a partnership with just to add some understanding and know how to be a great partner. And so on that note, I'm like, you know, can you kind of tell us like the business model of a co-packer? Like, what does it look like? You know, because a co-packer is a business at the end of the day and, you know, for brands to keep that in mind. So how does, how does that work? And then just a little bit of, you know, what that, what that looks like day to day to make that business model work on each of your sides.

*12:35* *Kit -* Right. Yeah, it's a, that's a, that's a good question. And, you know, it's, it's, it's going to change from co-packer to co-packer. But there's a lot of things that are going to ring true for everyone. You know, being a co-packer, you know, it's, it's not, it's a tough job. When I, you know, product development's all fun and, you know, that's, it's still a lot of hard work, but, you know, in a manufacturing environment, it is, it's not glitz and glamour. It's, it's a lot of hard work. You, you know, managing supply chain is all encompassing the financial side. I think a lot of people don't realize how big of a deal that is, especially if you're turnkey, meaning for, for the majority of our customers, we're purchasing all of the raw materials. So they, they place a purchase order with us. We buy all the raw materials. We bottle, you know, bottle the production orders, ship out the trucks. And we get, you know, obviously we get paid for that. It's, it's just, it can be very cash intense. It's all numbers. The, the margins aren't, you know, like brands margins, you're, you're dealing with tighter margins and you just, you gotta be dialed. And a lot of that, you know, we try to manage through technology, utilizing our ERP systems and hiring the right people. But it's, you gotta, you gotta try to build the best name for yourself. Most of our business, I would, I can easily say that 90, 90% of our business is referral based, you know, so we're always focused on like always doing the right thing. And if there's a, you know, there's always going to be problems trying to manage those on a daily basis, putting out fires, planning for production and the scheduling. And I think a lot of people don't understand that the scheduling pieces, and that will vary from co-packer to packer scheduling pieces is tough because as a co-packer, I think we've, we make around 350 different products, you know, all those customers need something. And a lot of times they need it yesterday and just trying to align everything so we can be as efficient as possible to pass on the best pricing. It's, there's a lot of moving parts. And I think that brands tend to oversimplify what a co-packer does. The best relationships that we have with our brands are ones that are true partnerships, not just throwing around the word partner, which is easy to do, but actually living and breathing the partnership. And when there's challenges, navigating, you know, navigating the challenges, because there's always going to be something, navigating those challenges together versus finger pointing, you know, if we're going to use this podcast to kind of outline the snakes in the grass, brands can, brands can fall into a pit if they don't have the right mindset when they go into a co-packer. You know, people talk about like getting a business partner when you're starting a business, it's you and your buddy. And it's like, you're like getting married at that point. And it's very, very much the same with the co-packer, you know, for us, we're always trying to help act as a, as a fiduciary. When it comes to the supply chain and raw materials, you know, always, always advocating for our customers, trying to get the best raw material prices, working on contracts, getting forecasts, putting it in a, in a format that we can all digest and then act on. There's, there's lots of that every day. Obviously, you know, Adam, depending on the ebb and flow of work, is working on 40 to 90 different projects and brands that typically start up, they don't necessarily know kind of where they fit in the world. And it's good, it's good. I'm glad we're having this conversation to understand that, you know, co-packers are trying to run their business and they expect you to run your business and drive sales because that's what it ultimately comes down to. We're going to make it, you sell it. And as long as we're both doing that to the best of our ability, we're just going to, you know, take off. It's going to be, it's going to be awesome.

*16:33* *Jessi -*  Yeah. And I'm really glad you mentioned like mindset, because I think, I feel like the brands that have often have a lot of great co-manufacturer relationships, they treat their, their co-packer like a, like an investor rather than a vendor. And I think that that difference can, can be huge. And I appreciate that you point out the intricacies too, because I think it also can be hard when you're like, you know, you know, this is the price per unit for my product. And it's like, well, okay, well, but this is how much is, I think ingredients cost this and labor costs this and, you know, what's all this, these other pieces and so much goes into having a plant, you have audits that you have to pay for every year, you have certifications that you're keeping up and you have a labor force that you're managing and you have, you know, staff to manage the labor force. And then you have your product and development. And, you know, I assume that generally really you're, you're not making money on a product development project of, you know, helping commercialize, like, you know, come up with the formula. You're, you're not really going to, it's not going to make sense for you as a manufacturer until you actually get to start producing that product at volume. And so all those things have to be considered in cost so that you can keep existing and providing a service. And it's, it's a complex business.

*17:51* *Kit -* Yep. That's there's, there's certainly smaller co-packers that, you know, maybe have one 80 gallon kettle or in our world or, you know, more, more hands-on and they're obviously not going to be near as sophisticated. They're great for proof of concept. So there's a spectrum, but to do it right, it's, it's very complex and, but fun too, you know, hard, hard work, but fun.

*18:11* *Jessi -* Yeah. Adam, did you want to add anything on the kind of the product development side, you know, as far as how that impacts the business model or even, you know, day in the life wise of, you know, managing a workload perspective of like, you know, incoming projects that you've got to work on to, you know, pilot runs or would love to hear a little bit more.

*18:34* *Adam -* Yeah. Yeah, absolutely. I think the, the, just to add onto Kit's point is, you know, with most co-packers, they're not only are they dealing with a lot of different customers, but every customer is at a different stage of the process. So, you know, you have the guys that may be a really big and are coming to us to work on just a new skew, or you have, you know, the guys that are really big that are bringing over existing business, or you have medium, you know, you have the size of, you know, customers and where they're at in their process, whether it's, you know, a new product or an existing one. So, you know, every single day is different in the sense where we might be matching products, we might be creating new products, we might be cost engineering existing products. So it's, you know, the product development side isn't necessarily always just new products. It's, you know, making things that are already in market work better, or even, you know, changing over the packaging that they're in, that kind of thing. So, yeah, we are always juggling, you know, different stages of, you know, of development for quite a few different customers. But yeah, the, you know, the whole process itself, you know, when I explaining it to people, I think it's a lot more involved than a lot of people think, because, you know, there's quite a bit that goes into making a food safe product, we have to make sure that everything is within certain parameters. There's a lot of testing, some of which are, you know, pH, something called bricks, which is just a percent solid content, everything is filed with the FDA, everything goes through, you know, quite a bit of testing before it's eventually scaled up. So, you know, it could be it could be quite a long process from when a recipe is handed to us to when we're seeing bottles come down the line. And sometimes and sometimes not. Yeah, yeah. So we you know, we can move quick. We don't like to. Yeah. So I think that's just a big thing is, you know, if if you are a brand who has a product, you know, don't rush it and, you know, expect if you want to do it the right way to give plenty of time to the team that's R&Ding it as well as scaling it up. That way you can make sure that the product that you get out on the shelves is, you know, your best work that you're proud of. Because, you know, rushing through to hit deadlines, just to get a product out, I think doesn't work about 50% of the time, as opposed to, you know, taking the time doing the due diligence and scaling it up, you know, on a slightly longer timeline.

*21:13* *Jessi -* Right. Yeah. No, that's those are super helpful points. And yeah, because I think it first it's like, OK, well, I have, you know, maybe if your brand that has, you know, has a recipe that you've been making, say, in a smaller kitchen, you're like, well, here's my recipe. Why don't you throw the ingredients in and, you know, run run it in your facility. And, and, you know, it just it's it's a it's a lot more complicated than that, to your point with all the different pieces of and also just, you know, recipes don't, you know, this is why making food in masses is difficult. The recipe you can make at home that your grandma made is just not going to run the same in a larger facility. And there's a lot of pieces and a facility that operates on, you know, I believe your facilities, SQF level two, which is a global food safety body that oversees that. And so you also have to use the right ingredients like and have the right, you know, I've had worked with a brand just the other day where I was like, well, we really love this supplier we're working with. Well, the supplier was so small, they didn't have the, you know, they don't have the right paperwork to then be able to go through like a supplier approval program that, you know, a facility operating on a on a larger level is going to need. I was actually going to ask a question about on like kind of some of the differences between I see some I just talked with the brand also recently that was using a co-manufacture those very, very small and then realizing as they onboarded with a national distributor and a national retail, you know, as they were going through this sales process, they're like, oh, this facility can't complete the paperwork, like they're not up to the food safety standards. Can you talk a little bit about what goes into, you know, what it means that you're a facility that is SQF level, level two, you know, what that means as far as extra steps that you're going through, as opposed to, you know, someone working in a commercial kitchen or a really, really small facility that doesn't have those standards, like what extra steps kind of does that add? What are the extra checks and balances that that means? Can you tell us a little bit more about that?

*23:11* *Kit -* Sure. So, you know, there's obviously the FDA set regulations that everybody has to follow. And there's health department in cities, as basic good manufacturing practices. And then you get into a third party like SQF or BRC, and they have a playbook. And there's do's and don'ts on how you handle allergens. When a truck comes to your facility to bring in IQF onions, you know, you have to go through set processes, check the temperature of the trucks, you know, pull samples for micro, have, make sure that you have COAs and all the proper documentation.

Jessi: Quick pause to explain a few terms here because this can all get confusing. I mentioned SQF stands for safe quality food. And Kit just mentioned BRC. Both are types of GFSI certifications, sorry for another acronym, which stands for Global Food Safety Initiative. Many large retailers require products to be certified to GFSI standards but GFSI is not itself a certification body, so they create the benchmarks that SQF, BRC, and other certifiers make sure manufacturers are compliant with. Kit also mentions IQF which stands for individual quick freezing. The IQF process involves spreading freshly harvested herbs or vegetables in a single layer on a slow moving conveyor through sub-zero air, so that manufacturers like Motherlode can more easily handle the ingredients. He also mentions pulling samples for micro and COAs. Manufacturers will use their own lab an outside lab or a combination of both to run a microbiology analysis testing for things like salmonella, listeria, and others and these results are listed on the COA or certificate of analysis. Okay, back to it.

Kit - There's these boxes that you have to check and it's somewhat formulaic. It's standardized. And then you're scored upon that standard. Now, the biggest thing is when you're doing SQF or BRC, it's not only checking the boxes, but it's there's lots of logs and documenting. It's like, okay, do what you do and then document what you did. And a lot of reviewing processes and procedures to make sure that you're staying up to snuff on everything. It's very detailed, aren't it? I'm the worst person on the planet to manage anything like that. Our director of quality, Tanya, is very well suited to do that. She's been in bakery, she's been in dairy, contract packing, and she does that stuff in her sleep. But it's a lot of work and it's very cross-departmental. A lot of times, you know, we'll have our head of administration who deals with HR and office stuff on a audit team and she'll walk the plant and be checking what batching is doing or going through the lab and making sure the lab's got everything buttoned up. It really involves everybody in the company being a part of it. And it's a lot of good work, but it makes you a better manufacturer when you're doing those boxes, getting them all checked. It's a lot. And the certification, you know, SQF, organic, non-GMO, kosher, Whole30, Paleo, all of them certified humane. They're all going to have their own things and it just takes time to onboard those. But just like you were saying, Jesse, you know, if somebody's looking for a coat packer, they almost need, well, you for sure help people do this. And you know, this is, you live and breathe that. But there's boxes that you need to check. I keep on using that analogy. You know, if you're going to find a coat packer, you need to be thinking, you know, do they have the capacity for what my plans are? Do they have the right equipment? What's the communication like? Are they transparent or are they going to be like, here's your price? Well, how did you get to that price? And it's like crickets and they don't want to give up any information. There's some things that you want to look out for, you know, it could be as detailed as how much insurance they have. It's going to depend on each brand on what's the big things. But getting down to brass tacks at the very beginning is super helpful because you could talk to a handful of coat packers and I just got off the phone with a guy and he wasted three weeks and he's out of product. I couldn't make his product and I told him that within the first five minutes, but it's tough. It's tough and you got to know the right questions to ask. And so the process that we do, you know, a customer reaches out to us on our website or somebody shoots me an email, Hey, Bubba Joe told me to give you a call, you know, whatever. It's going to start off with us, you know, finding a little bit of information about the product and you don't have to give away everything, but you do need to give the coat packer enough information so they understand your product so that you can say, yes, this is a fit. No, it's not a fit or I don't know. Let's find out some more information and dive in a bit further and see what this looks like. And at that point, that's the non-disclosure agreement step where the coat packers typically going to have a non-disclosure agreement that's tailored fitted to that type of relationship. And some brands have their own, certainly the big CPG companies are, you know, they're going to have their 79 page NDA where you have to sign it in blood. But, you know, once that non-disclosure agreement is signed, which is basically saying, once we execute this, I'm going to tell you about my product. I'm going to share with you my formula, process, procedures, maybe sales channels. They're going to give you information above and beyond, and you're expected to keep it a secret. You know, that's not to leave your company. And that's very important to have done. And it's important for us too. You know, we do things a specific way and I don't necessarily want other co packers to know all of our details as well. So it's typically a mutual non-disclosure is what we're getting and then go off to the races from there.

*29:03 Jessi -* In that initial outreach, if someone fills out a contact form or they send you an email or initial phone call, is there anything for you that's an immediate green flag or a red flag of like, oh, if I see this in an email, I know it's not going to be a fit or something that you're like, oh, they laid out these three things. I know you mentioned a couple things, but I'm curious on that first contact because I feel like that's where a lot of brands, they have a hard time getting your response. Part of that is that co-packers may not have someone on staff who is available to handle sales, but also for you, if you're fielding requests, what do you look for? What's super helpful and what's not?

*29:48* *Kit -* Yeah, that's awesome. I wish it was more of a science than an art, but after doing this for so long, I think I can just talk to somebody on the phone for about five minutes and know if it's somebody I'm going to want to spend some time on or not. Contact us form if you go to our website. I don't have it in front of me, what our form is, but we're wanting to know where are you in the process? Do you have existing volume? If so, how much volume? I get emails all the time where somebody has their annual volume is less than our minimum order quantity. We're going to want to get down to brass tacks on run rate and their products velocity. For us, we have our certain window of velocity that works great in our plan. Then there's other co-packers have a different window that's smaller or larger. That's going to depend on the co-packer and what they're looking for in the volume, but that is going to be some information that they need. There's some co-packers that specialize in startups. For us, over the past, so the previous company that I was at, we did tons of startups and it was so much fun, but the fail rate is so high and you spend so much time educating folks from should they sell to Dubai? Answering every single basic business question, it just takes so much time. Our company is a little bit different. We're a medium to large co-packer where when we do startup projects, which we definitely do, it's typically with an existing sales and marketing company or a company that has other food brands that's just launching something new, so it's not their first rodeo. Volume is key. If somebody starts off an email saying, my mom thinks my salsa recipe is the best thing in the world, I've sold 12 bottles this year, you're not going to get a phone call. It's just not going to happen. For those people, it's not that they should not do it. They need to start with a co-packer that specializes in startups. In our world, I would say find somebody who's got an 80-gallon kettle or something. It's going to make a half-palate of product, but it's different for spice and all the other baking. It's going to be all different for every company. Volume, what's their motivation for doing it? What's their brand look like? That's big for me. If they send me a clip art thing that their niece did in art school, I'm out. The brand is so important. If you think you've got an awesome brand, I'd try to include that in the initial communication because I fall in love with brands all the time that are probably too small for us anyway, but I want to do it anyway because I just think it's cool.

*32:37* *Jessi -* Is part of that looking when you say they have a brand and you go to their website, is part of that looking too to see if you can tell maybe they're kind of early stage, but you're looking to be like, oh, have they done things like nutrition facts? If they have pictures of packaging, you know that someone's at a certain level. Are you sometimes, if you're intrigued, are you clicking through to take a peek and see how far?

*33:01* *Kit -* Oh, yeah. I wouldn't have mentioned nutrition facts, but if I were to see that, that would show me that they've got to the stage where they've got things figured out. They've been through some stuff at this point. They've gotten nutritional information. They probably have a process authority letter. They probably made batches already. That's good. The other thing is I always look at their social and I spend a lot of time on that. And if you don't have a social media presence, you're not going to be selling, you know, or which is that's not necessarily black and white, but I'm always again, it's our job to make the product. It's the customer's job to sell the product. And if I don't think that they can sell it, that's a big, there's so many chefs out there that have these beautifully delicious sauces. But when it comes to business, it's just, they might as well, they have no idea how to operate a business, how to factor in, you know, all the margins at the different levels, whether that's the 30, 30, 30 or whatever, you don't know what you don't know. And I don't want to discourage people from starting, but there's a lot of naivete when you start and believe me, I've been there. I've had brands that have been co-packed myself. I've been there, you know, it's, we're trying to find companies that are going to consistently grow and do a good job. And I would have to say that most co-packers are going to be looking for somebody who's got, the product is rarely ever going to sell itself. And if they don't have a plan on how they're going to market and sell it, that's, they need to spend more time on that than trying to make the sauce taste exactly like their grandma Dixie's, whatever sauce tastes like, whatever. That's not even important in the grand scheme of things. If nobody buys it, nobody's going to try it. So.

*34:46* *Jessi -* Right. Because like, I would assume that, you know, if a brand only does one run with you, that that's really not going to be profitable. Like that's not going to help you stay open as a company because there's so much work that goes into, you know, getting to that first run. And then if they never reorder, because they go out of business, like you wouldn't have a business if you only worked with, you know, brands that that happened with.

*35:09* *Kit -* Yeah, that's, that is true. We, we charge for our product development. There's, there's typically, like a project fee for, for, for each product. We provide a lot of services that a lot of co-packers don't necessarily do from lab services and things like that. But we do cover costs, but we don't look at our, at our product development team or our lab, which is our QA office, which is actually just outside of our production room, which is where we do like street plating and yeast mold, you know, all of that stuff, titratable acidity, all of that stuff's going on there.

Jessi - I thought Kit said street plating right here, but he’s not talking about getting take out at a food cart. It’s actually streak with a k, streak plating. This is not my specialty but basically it’s something use to isolate and quantify bacteria. Titratable acidity is an acidity measurement that’s a little different from pH that helps predict an acid’s impact on flavor.

Kit - We don't look at that stuff as a profit center and we only have a certain amount of bandwidth. I think four different companies reached out to me today on, in, in email, on, on our website. And we just don't have enough time to devote to everyone, unless we think that it's actually a good fit. And I refer so many people that reach out to us to other co-packers that are peers in the industry and competitors for that matter, if I feel that they're better suited.

*36:14* *Jessi -* This also kind of fits into, you know, you mentioned at the beginning that scheduling is such a tricky piece. And so when a brand reaches out, I'm guessing that you're also kind of thinking how this is going to fit in, like, okay, is this a something that we run once a month or like, can you talk us through kind of some of the considerations there through kind of thinking through like how a brand fits into your schedule and some of the components there? Cause I think that's also a tricky piece on the, the brand side, because you know, you're managing, like if something changes last minute, like your staff needs to be able to come to work every day and make something. And so that's, you know, we've got minimum order quantities and those things. So can you, I'm curious if you can kind of dig into the scheduling and what you start to think through when a brand sends their volume, you know, what goes through your mind? How do you start to plan that out and how that will, how that will work?

*37:02* *Kit -* Right. For us, the way that we view it with our lines is by the bottle type. So if you were to look at a, a bottle, like, I'm trying to think of a brand that most folks would know Primal Kitchen. They're in a, what's called an eight ounce glass ring neck. And there's quite a few brands that are in that bottle. We run quite a bit of that bottle at our facility. If a customer comes to me with a project and they're in that bottle, I'm like, yeah buddy. Cause I can plug that. I have a lot of flexibility because our line is set up to that bottle frequently. If somebody comes to me with a, like a lot of these, the non-alcoholic spirits, they're in, you know, the fancy bourbon bottles and they're very high end unique bottles. I don't do those bottles for anybody else. So what I have to look at is I'm going to have to break down the line, change every rail on every conveyor, adjust the filler, the air rinser, the capper, steam tile. Everything's going to have to get adjusted to fit that bottle. So for us, and I'm sure it's different for other, you know, spice blenders or whatever for us, the bottle type is a big one. And we've, you know, we deal with lots of different bottles, but there's, you know, it's the 80-20 rule. So that's a big one for us for scheduling. You know, if I can get a customer that orders every other month, I'm happy. We don't lock anybody in. I mean, if somebody didn't have the business to order, I'm not going to hold that to anybody, but you know, I wouldn't want to go into it knowing that for our company, that we would only make something once a year. It's cause it's like, we're just covering costs and R&D. I could have spent, or Adam and James and the lab could have spent more time working on a project that would have been, you know, a little bit bigger bang for our buck. You know, the scheduling has to do, sometimes it's like, how much IQF are we bringing in? It can be, obviously there's the lead time for the raw materials, but a lot of it's just like, how do you set your lineup to produce the most number of widgets in a shift without changing over and running something else? You know, we're happy if we run like five days, six days on the same bottle. That's awesome for us. But we also don't want to do only one thing. We want to be very diverse. We want to have small customers and we want to have big customers and we want to have a mix of all of them. You know, brands go out of business all the time. You know, we always give everybody the benefit of the doubt, but I've seen, I can't even count how many businesses go out, you know, and it's countless, hundreds and hundreds over the years.

*39:37* *Jessi -* Yeah. You've got to be diversified, but you've also got to play Tetris with, you know, filling the schedule in the most efficient way to maximize your plan.

*39:47* *Kit -* Yeah. And that's one of those things that we're trying to figure out on those first calls. It's like within five, 10 minutes, it's like, this is a great fit or, you know, hey, why don't you call, you know, this guy or call Jane in Utah or whatever. Yeah. The scheduling piece is a big, a big part of it. And if somebody's got raw materials that we, I mean, we have, I don't know, Adam, how many raw materials do you think we have? You were just, you just did that export import thing. What do you think? We've got like lots, lots of different ones. Yeah. It's definitely in the hundreds and many few hundreds. Yeah. So if, you know, if a brand's coming to us and they use IQF cilantro, IQF onions, red bell peppers, Scotch bonnet peppers, vinegar, everything that we already have under our roof, that makes it awesome. If somebody comes to me and they've got, you know, bourbon barrel aged ashwagandha sap, whatever that is, that makes it more difficult. We're happy to bring in new raw materials. It's totally fine. But that makes it less appealing, harder, harder, I should say.

*40:46* *Jessi -*  Do you feel like you can tell when a brand kind of does their homework before reaching out as well? And not all, not all co-packers have as like straightforward of website, as I would say, Motherload has, you have a great FAQ section that's very clear, but can you kind of, you know, can you tell like, oh, this person read the FAQs, like, you know, like, you know, does that help? Does that kind of peak your interest in your mind too, when you know that they did their homework and they're not like asking you to make something that's not a liquid, for example?

*41:22* *Kit -* A hundred percent. And that happens all the time. Somebody asked me yesterday, if I could give them a quote on making jerky. Right. Yep. Not gonna work. You don't do that. Yeah, that you can tell. You can tell. And that it's not, if I need to explain it to somebody, I love talking about our company, you know, we're super proud of what we've built. It's not that I don't want to explain it to them. It just shows me that they have drive. And it's like, you wouldn't go to an interview for a job and not do some research on the company. And it's the same thing, you know, if you're gonna, I could go on for examples all day, but yeah, having that baseline information. And for any coat packers that are listening, you know, put more information on your website and you'll get, you should get less emails that don't fit. Yeah. Yeah. Definitely doing your homework. I do homework when somebody reaches out to me, I'm diving into as much info as I can. I mean, it might be only five minutes of my time, but I'm looking at everything for sure.

*42:20* *Jessi -*  Right. Yeah. I like the job interview example of, you know, doing a little, a little bit of prep goes, goes a long ways. I also, I know that we could, we could spend a lot of time just on the outreach piece. I'm also curious if there's any tips top of mind for you for once, like, you know, a brand has, you've kind of mutually said like, all right, you've got the NDA, you're going to go and you're like, all right, we're going to go through and we're going to go through the R&D process together. Is there anything that sticks out for each of you that you wish brands knew about the process or anything that you love that like brands come prepared with that you feel like makes the process way smoother? Like anything that stands out to you for that kind of piece of the onboarding process?

*43:04* *Adam -* Yeah. I think the most important, if I had to pick one is, is just flexibility. You know, Kit spent a lot of time talking about how people will come with this recipe that's been passed down for generations and, you know, they want to stick with it and aren't willing to make any changes or concessions. And, and, you know, that's the hardest type of customer to work with because you can't do the same thing that you do on your stove and 1600 gallon kettle in a manufacturing plant. So I think just, you know, openness to ingredient substitutions, process changing, you know, just general flexibility and that on that side of things really goes a long way. And if someone comes in and is willing to, you know, work with us, as opposed to just telling us what to do, that makes the whole process a lot easier. And those are the people that, that you see being the most successful.

*44:00* *Kit -* Like on site, you're meaning work with us on site versus just emailing the recipe and asking us to send samples. I think getting, it's a small detail, but we do everything in kilos at our facility, kilos, grams, everything's by weight. And, you know, you can do pounds or whatever. It doesn't matter as long as it's weight. Having your formulas in weight and not in gallons and cups and teaspoons and tablespoons is huge. It's a small detail, but it's huge. And I've seen, I've seen folks where I've said, you know, can you, can you send this over instead of in volume, but by weight, they would, they would take whatever container of tomato paste and it would say 12 fluid ounces or whatever. They would relay that 12 fluid ounces to me as 12 ounces or yeah, 12 ounces. And I see, especially for startups, a big problem with conversions where 12 fluid ounces of tomato paste is not 12 ounces of tomato paste. They're, they sound very similar, but they are very, very different. One's volume. And the other one is weight, fluid ounces versus ounces. So that's, that's a big one. I see consistently, especially when we did more, more startups at when we very first started our company. And then at the previous company, it was always, you know, a teaspoon of this. Well, was it a level teaspoon? If somebody spends like 30 bucks on a decent scale on Amazon, that gets down to, I don't know, well, as, as fine as you can. And if you weigh out your recipe, you do your normal recipe, how you do it at home, but instead of dumping it in the bowl, just weigh that ingredient real quick and have your recipe by weight is big time. Cause you can, you can waste a lot of time making test batches in the lab that are wrong because of just a conversion error. So that's, that's, that's a big one.

*45:55* *Jessi -* Yeah, that's super helpful. And I'm also, I know we're, I know we're running out of time here. I, to Adam's point on the, you know, visiting in person customers that you have really great relationships with. And I know this would vary, you know, some by, by facility, but like, how often do you, do you recommend customers coming to visit in person, you know, for during a production run or during R and D, like, what do you see that in person? Where does that really, do you find that helps?

*46:26* *Adam -* We definitely recommend coming out for two major parts of the process. The first being the initial bench top session. You know, we have people fly in from all over the country, but that initial session, you know, it kind of helps us gauge the tolerance that, you know, the customer has for how far away we can get from the recipe they provided, how willing they are for some sort of changes. And also just the real time feedback is priceless. If I can sit in a room with you and just add a little bit of salt, have you taste it and tell me what you think that's a lot better than me sending you a package to arrive in three to five business days. You email me back that feedback and have to describe it in words as opposed to just, you know, telling, you know, typing it as opposed to saying it. Doing a brand new test batch instead of just adding salt to the one that you're doing right there. Yeah. In real time, for sure. Yep. So that's, that's the biggest thing is it helps and saves so much time when we have our customers coming in and we will work, you know, all day with you. I've done two to three days at a time onboarding 15 SKUs at once. The ROI is huge on just coming in and initially just working on that R&D side to get the best possible initial samples. And then from there, you know, small tweaks can be done mailing them out, but that that's absolutely, I think crucial is to make sure, you know, brands come out and work in person on the initial R&D side. And then the second is definitely coming out here for the first run. You know, just like we tweak things on the bench when we first start, sometimes you have to tweak things before bottling something, you know, adding a little bit of extra water or even adding a little bit of salt or some other spice when it comes out of the kettle for the large scale production run sometimes also has to happen. So just making sure that, you know, all brands send at least one person for that first run to make sure, you know, they're the ones signing a piece of paper saying, I feel comfortable with what they're bottling. That way we all feel better about what we're putting in 16,000 bottles, you know, coming down the line.

*48:31* *Kit -* Very, very important. We love having customers to our plant. We're super proud of it. You're going to be the number one advocate for your brand. And although I feel like we do a phenomenal job, we're not as close to your product as you are. And, you know, if a customer wants to be at our plant every time we run, that's totally fine. I mean, we don't want them in the way of the production staff, but we love taking them on the line and taking pictures and doing the whole thing. And I hear lots of stories about co-packers not allowing their customers on the floor. Let's remove COVID situations because, you know, that was a thing that that should be a big red flag if you're not allowed in the facility or in the production room. That's a big one.

*49:14* *Jessi -*  Oh yeah. And you always learn, you know, I usually, a lot of times I'm working with clients and representing them at a co-manufacturing facility. And I go every run that I can usually without, you know, being in the way just because it's FaceTime with the humans that are working on the product, because ultimately it's a team of human people that are working on your, your trusting them to make your product every day. And those relationships are important. And then I always learn something new about the facility and the capabilities. And it just helps me have a better lens when I reach back out to, oh, hey, you know, can we do this on the next run? Or it just helps you have so much better understanding and communicate better. And so, yeah, I think the in-person visits, the more brand can, you know, have those in-person touch points if it works, you know, as long as you're not interfering with the facility and everything, you know, I think that that can be extremely valuable.

*50:11* *Kit -* That's rarely a problem, but it has been a problem. So it's worth mentioning when you're on the floor, you know, you got to, you're a guest, you got to make sure you're not in the way. And, you know, the employees are there, they're doing their job and then they, you know, they see a customers there, you know, it's going to make them nervous too. And I want them focused on doing their job. So it's, it's a fine line, but we, if we had to choose either there or not there, we would always choose be at the plant. And that's great. Another, another thing, this is a little bit of a tangent. I did want to mention that it's kind of on the pricing side and how, how this is how we do it, but I don't know if this, I don't think it's industry wide. We learn as much as we possibly can about a product. I don't want to get into too fine of details here because some of it's kind of unique to us and I don't want to give away all the secrets, but essentially you're going to establish like, we're going to say we need to make X amount of money. Let's just say for round numbers, we need to make a dollar. And then you layer on the cost of goods on top of that. If a customer, especially a startup, typically it's not going to make sense for them to do some type of volume contract because you know, they're proof of concept stage. They're trying to grow. It's tough to lock in raw material prices if you can't lock in your volume. So what, what we do is share the bill of materials and the landed cost per kilo for everything from tomato paste all the way down to sugar or whatever, banana puree, whatever it is. Our customers have visibility to that and it can and does change depending on the situation. And as you go through that and you have conversations every couple of weeks or whatever, you can talk about those cost drivers from bottles and lids and labels and figure out, what's the biggest cost driver? Is there supply chain risk on any of these things? And just having informed conversations versus just getting a price to produce a widget. And then you also need to make sure that you're asking about tiered pricing. We, I mean, we're going to do that automatically, but if you're talking to a co-packer, you really need to nail down like, okay, what's my MOQ? What's the plant trial? Because our MOQ is higher than the plant trial for us, you know, plant trial, MOQ. And what if you order more than your MOQ? Are there price breaks to be had? That needs to be, they need to make sure that they're doing that. Because I think you could get taken advantage of if you're not having those conversations.

Jessi - MOQ stands for minimum order quantity, which many of you are familiar with. The reason I wanted to pause here was to reflect on the word “minimum” and why Kit’s note on tiered pricing is important. If you are asking a co-packer to make the minimum amount of product that makes sense for them to keep the lights on, that’s definitely not the best pricing they have available. You want to know upfront, where the price breaks are, so that you understand where the sweet spot is for their facility and what pricing you can work toward as you scale.

Kit also mentioned that the plant trial is smaller than the MOQ. Plant trials vary by facility, but a co-packer may require this step in between your bench samples and full production run. This is to test how the formula runs on the larger equipment but usually without needing to dedicate an entire labor shift in case something needs to be adjusted, so maybe it’ll be added on to the end of a full run of another product. For example, if I’m making energy bars, we may make 10 sample bars on the bench to prove the recipe, a 1,000 bars during the pilot or plant trial to prove the recipe at scale, the size, how it runs on the equipment, and then 50 to 100,000 bars during a full production run.

Kit - And it's good to establish that at the beginning, be extremely transparent. And, you know, it might take six months. If you're trying to save some money on your product, it might take six months to go through line by line and make some impactful changes that, who knows, you might be able to save 10% on your product or something.

*52:50* *Jessi -*  Just make sure that you have those conversations. I wanted to mention that. It's important. Yeah, no, that's super helpful. And yeah, I think, you know, like I said, we could talk for a long time. Was there, was there anything else that either of you really wanted to make sure that you mentioned today for this kind of 101 episode that we didn't cover already? I appreciate that.

*53:10* *Kit -* On the finance side, you know, co-packers aren't banks. You got to be respectful of their money. You know, just having an understanding on, you know, co-packers are out there buying lots of raw materials and whatever your terms you work out, whatever terms you work out, you know, you got to live and die by those. And you need to respect the co-packer, you know, because you're a startup, you're strapped for cash. They're a manufacturing company that's not just rolling around in it also. And, you know, just, just be mindful of it. You know, that the financial piece of our business is something that we focus very, very heavily on. And we even do a lot of work on helping raise capital for brands that we work with as well. Our CEO's, X Head of Global Equities for Credit Suisse, and he's just enamored with the whole financial world and loves raising capital for brands and trying to link things up. And that, that whole financial piece is, is very important. And, you know, every co-packer is going to have different views on terms that they're comfortable on offering. So just go into it open-minded on kind of what that would look like when you talk to the co-packer and kind of nail that down at the beginning. Don't get to the finish line and just assume you're getting net 30 terms. You know, that, that needs to be a conversation at the beginning, not the end.

*54:26* *Adam -* Yeah, that's great. How about you, Adam, anything that you wanted to add? Yeah, just one point I wanted to just reiterate the importance of that the kit mentioned is the importance of social media. And the brands that we see that are successful have a huge social media presence. And I think you can't underestimate that marketing side of things. I think most brands already know that obviously marketing is super important to selling product, but just as a trend personally that I've been seeing is even especially in sauces because of how saturated the market is, you know, there's barbecue sauce from bottom to top on an entire aisle of the grocery store these days is that differentiating and you know, as a brand just to focus on, you know, what are you doing different? And are you telling people that you're doing that thing different? So I think as much as important as it is to have a really good tasting product, I think focusing on, you know, that social media marketing side of things is also crucial.

*55:28* *Jessi -* Yeah, I'm so glad that both of you brought that up because it just helps to show that, you know, it's more than just the widgets piece of like, let's make the widgets or, you know, let's make the certain product like, you know, as a co-maker, you're thinking through how it's going to get sold and what that looks like for the product to be successful in the market because ultimately that means that you and the customer can all like everyone can be successful. So I love that you both brought that up.

*55:53* *Kit -* Yeah, we can't control sales. I mean, we can help by lowering costs and things like that, but that's on the brand and we want to support it. But again, you know, they expect us to execute orders. We expect them to sell and grow their brand as well.

*56:12* *Jessi -*  Yeah, great. Awesome. Well, Adam and Kit, this has been awesome. I really appreciate both of you sharing your insights and, you know, wisdom with us and just kind of enlightening us on this topic. I'm going to link in the show notes, you know, each of your LinkedIn profiles in case people want to connect. And then, you know, if you want to visit the mother load website, it's the word mother and then L O D E co packing, no hyphen or anything, just motherloadcopacking.com. And I'll link that in the show notes as well, if you want to check out the website and yeah, is there anything else you want to mention as far as folks connecting with you?

*56:48* *Kit -* Nope, just don't, even if you have questions, don't hesitate to reach out. You know, we're, we always try to help folks out, even if it's not the best fit for us, we're passionate about it. We love to be a good resource for folks and things like that always end up coming back around. So don't be bashful.

*57:02* *Jessi -*  Awesome. Great. Well, thank you again to both of you. Really appreciate you. And it was just so great to have you both on the show.

*57:12* *Kit -* Yeah. Thank you so much for having us. Thanks so much. Neat that you're doing this. This is, this is awesome. I love it.