Is a co-packer also considered a distributor?
So, no and yes. And here’s what I mean by that. And I know I answer a lot of my questions with the no and yes, but let me explain.
What is a Co-Packer?
For you that do not know what a co-packer is, co-packers are traditionally just a manufacturing facility you contract with to create your food product for you.
Now when I say create, what I mean by that is that the ingredients, the packaging, the labelling, everything that’s needed to develop a finalized food product, a co-packer brings it together, seals it up and gets it set for the market.
When you contract with a co-packer, you need to supply them with all those elements, all the ingredients, no pun intended, all the ingredients that are required for your product to be finalized, created, and packaged.
Do they do distribution as well?
Some do, and then some don’t. Now, what I mean by that is,
once a co-packer or private label company creates your product, they’re going to need to ship it someplace.
Now, if you contract with a co-packer and let’s say you have a contract with a grocery chain, and it’s 20 different stores. Still, that single grocery chain has a food distribution centre, and the co-packer can ship your product, obviously to the distribution centre for you.
Are they considered a distributor?
No, and yes. I mean they’re not precisely distributing it to everybody.
But, it depends because some and I say this because every contract food manufacturer is different in how they will create a contract for you.
If you create a product, right? And they’re going to manufacture it, and you have four or five different addresses that a segment of each of that order has to go to, there is a potential that yes, they could do that for you.
So and in essence, they can be considered in a way a distributor, because you’ve designated a specific destination for the product.
If it’s a food distribution warehouse, if it’s one single grocery store,
if it’s maybe two or three different stores.
If they’re willing to do that, and that’s part of the deal that you’ve created with them, then yes, they could distribute that for you.
A lot of the people that I’ve spoken with who have worked with co-packers, typically have the product shipped back to them, and they distribute it predominantly online through e-commerce.
Now, what that means is, is that for instance, if I had something made, I would have all the cases of the product shipped back to me.
And since I run 100% of my businesses online e-commerce, throughout my six stores, I could begin to distribute their product, I would stock it in our facility, and then from there, I would distribute it as I like or however sales come up.
So yes, they could be kind of considered distributor, but that’s not really what they do.
They are there for simply creating and packaging your product for you, and then they can ship it to a lot of different places if they’re willing to agree to that.
Do they do that in most cases?
Probably not in multiple locations as far as multiple addresses.
The food co-packers that I have spoken with over the years ship it to one singular address.
Which would work out great if you have a warehouse or a wholesaler or distributor doing all the distribution, you can ship all of the product directly to them, and you’re done.
So it makes it a lot simpler a more straightforward process for you to take an endeavour into doing. So yes, I hope that clarifies that co-packers are not exactly distributors, they’re just there to create the product to your specifications and of course, whatever functionality or ability they have, they can create the product for you.