Cynthia L. McVey, contributing editor 2025-04-24 06:50:46
WORKING WITH A CONTRACT MANUFACTURER CAN BE A WIN-WIN FOR ALT-MEAT STARTUPS. BUT COMPANIES NEED TO AVOID FALLING INTO A — POTENTIALLY COSTLY — PATTERN OF TRIAL AND ERROR.
When Brett Christoffel, CEO of All Y’all Foods, finally perfected his plant-based jerky, he was excited to bring the product to market. He also knew that there was no way he could make tens of thousands of bags of jerky in his home oven.
Faced with the challenge of getting a plant-based shrimp product into the marketplace in less than a year, one of the first actions Kelli Wilson took in her role as CEO of Bayou Best Foods was to find a contract manufacturer.
And, in pre-pandemic early 2020, Future Foods Enterprises established a state-of-the-art production facility to manufacture its plant-based protein, only to see customers’ needs change.
Regardless of how they arrive at the decision, many alt-protein companies establish relationships with a contract manufacturer (a.k.a. co-man or co-packer) who becomes an important partner in their production process.
Finding and maintaining those relationships, however, can leave brands feeling like Goldilocks in a trial-and-error search for comfortable surroundings and food that is “just right.”
A co-man is a third-party company hired by a brand to manufacture, package and sometimes distribute their products. For an alt-meat company, this partner might be a conventional meat processor, a large-volume bakery or a specialty facility. Some brands also look for a co-man with expertise to help improve their recipes or processes.
“In the beginning, startups had to do their own manufacturing because no one else knew how. Now, the process is normal and there are many advantages of working with a contract manufacturer,” explains Dennis Durban, co-founder of the Contract Manufacturing Alliance trade association.
“Owning a facility is expensive, distracting and takes the focus away from sales and marketing,” Durban says. “For a startup, it’s an advantage to have your own facility, but you need to have the money to build and maintain it.”
Ricardo Cordaro agrees. The president and CEO of Ricardo Food Group, which provides manufacturing consultation to companies, adds that many venture capital firms will not invest in infrastructure before product.
“It takes up to $1 million and 12 to 18 months to open a plant, and most businesses in the alt-meat category have no manufacturing experience. Most VCs would prefer the brand to work with a co-man so that $1 million is available for marketing and packaging.”
Wilson, of Bayou Best Foods, has run her own contract manufacturing company, so she understands what it takes for both co-man and brand to be successful. She also has experience literally from the ground up in the food industry, growing up on a farm before spending the first decade of her career with ConAgra and then Niman Ranch. She agrees it doesn’t always make sense for a brand to have its own manufacturing.
“Having your own manufacturing is fine if you can fill up your manufacturing space,” she says. “Otherwise, it really doesn’t make sense, and you spend your time focusing on something that isn’t your expertise. If you’re an innovator launching new products, learning how to be a manufacturer is hard.”
Instead, she advises doing due diligence to find a contract manufacturer that has the specific equipment needed to make your product and an ability to closely match the process by which it’s made, as well as one that’s willing to work with a company your size.
“A factory that does 1 million pounds a day may seem really enticing because you think you’re going to get a really low cost,” she says. “The fact is, you are going to be a very small part of their business and are not going to be as important in terms of sheer volume and dollars. If you need to run 800 pounds a day, you’re not going to be a good fit. Find a contract manufacturer where you can be an important part of their business plan, and you can rely on each other.”
Wilson also looks for a co-man whose equipment and processes are as similar as possible to her brand’s, rather than expecting the co-man to change. “For instance, if I have a A4 Max 26 or a Tomahawk and theirs is a different model, or if we have a paddle blender versus their ribbon blender, the startup cost and lag of having someone relearn the process and standards is a challenge,” she says, adding process is just as important as equipment.
“Don’t bring in a different planning or inventory system,” she adds. “Find ways to integrate into their processes. If you’re asking a co-man to do something different, at some point there’s going to be a failure. That’s been my experience.”
Other things to consider when choosing a co-man are if they’re close to transportation hubs, if they have a local labor base to draw from and if they’re willing and interested to grow with you.
Even with her background as a coman, Wilson didn’t take the process of finding one for Bayou Best lightly.
“If I’m being honest, it was the thing that I lost the most sleep over,” she admits. “Renovating the product, getting the cost down, building relationships across the supply chain — all those things came easily to me. The hard part was finding the right fit for a contract manufacturer, so when I found the one I’m working with now, it was like the stars aligned and the heavens opened.”
Though she declined to name her manufacturing partner, Wilson does say the woman-led company is a perfect cultural fit for Bayou Best — very communicative and innovative.
For some companies, the stars only align after several false starts.
Many alt-meat start-ups have come across co-mans who won’t even work with them. Cordaro, whose company helps startups get in the door, explains that manufacturers often find startups to be too high a risk or too much of an upfront investment. Some simply find the personalities overwhelming.
“As plant-based brands have gone out of business, manufacturers have been burned. For them, working with a plant-based brand requires a lot of effort, such as adjusting equipment with adapters, filters or even custom parts, and sanitizing and conducting microbial analysis between runs, so they take on a lot of risk,” Cordaro says. “They’ll also often turn down brands because they aren’t ready for production; they don’t have their microbial analysis, formulations, process flow or essential documents ready.”
In other cases, the manufacturer’s process or equipment is not a good fit with the product. For example, a pork plant would not be ideal for manufacturing a kosher plant-based product, or a factory with extruding equipment is likely not a good choice for a product that needs to be formed.
It can take multiple attempts to find the right partner and get aligned on things such as scheduling, quality and scalability. According to Cordaro, it’s not unusual for the brands he works with to go through 30 attempts.
“There were a lot of inconsistencies in the quality of the deliverables with our last co-man, which resulted in some real grief when it came to reviews on Amazon,” says Christoffel, of All Y’all Foods. “My current co-man — my fourth — has more expertise and awareness around issues that are important to my product, such as moisture and correct packaging. The quality with them has been consistent.”
His first co-man partnership ended when Christoffel found himself sending people to supervise quality in the bagging process, which was being done by hand. While things improved with the second co-man, All Y’all was pushed out when a larger contract came along.
Eventually, finding the perfect fit was the result of a referral. “A former mentor pointed me to somebody and said, ‘Look, they’ve got a vegan, gluten- free facility, and they know how to do this,’” Christoffel says. “I have never worked with so many professionals who truly care and are capable from R&D to production and packaging. While I always had to work to get other manufacturers to do better, this company proactively worked with me to help improve my product and find me the right packaging.”
As a result, Christoffel has driven his packaging costs down by a quarter apiece, which is, he says, a huge percentage of his overall cost per unit. And his co-man’s helped him reformulate and tweak his process in ways he hadn’t considered. They’re now working together on another shelf-stable protein food.
Future Foods found its way to a coman relationship through an entirely different path.
In 2020, pre-Covid, the company built a facility to manufacture PAOW! Chef Style plant-based protein, a soy-based product that mimics other proteins based on how it is flavored and prepared. At the time, customers in the plant-based marketplace wanted a highly versatile product they could experiment with to create their own offerings. Then, during the pandemic, things changed.
“Suddenly, kitchens were shortstaffed, and they just needed formed products ready to pop in an oven or on top of a skillet so they could get it out the door with minimal touches from a chef or sous chef,” says Alex Kramarchuk, CEO of Future Foods. “We were faced with a marketplace that was no longer looking for versatility, but machines are expensive, especially to make some of the formed products. We decided to go to co-packers who had the capability in-house to finish the products we manufacture in our facility.”
Future Foods now makes the protein and sends it to their co-packers to create a finished product. With varieties such as chicken tender pieces and meatballs, they have established relationships with multiple co-packers who have different equipment and processes to form, mold, deep fry and bread their different products. As they create new products through their R&D process and prepare them for production, Future Foods makes sure they have the right co-packer for that specific process.
TOO HARD, TOO SOFT
The unique ingredients or composition of alternative proteins can present manufacturing challenges if the brand’s and co-man’s processes don’t align.
Alt-Meat’s sources agreed that a co-man’s ability to get the structure and firmness of the product correct is paramount. Kramarchuk, with Future Foods, notes he looks for a co-man with a cold room for his formed products so the product doesn’t come out too soft. Christoffel says having the right water content can make or break some products, like jerky, in terms of structure, and Wilson identified viscosity as something that caused problems in both her experience as a co-man and a brand.
Brands need to make sure they are clear about needs in these areas; Wilson, for one, always provides a detailed spec sheet for co-mans that includes how the product should feel and look — sometimes even including a Pantone color for reference.
“As a co-man you’re kind of walking in the wilderness if you’ve never made this particular product before,” she says. “I’ve sat there at the mixer and said, ‘Well, I think it looks right.’”
Another challenge is posed when either the brand or co-man has restrictions around ingredients that cannot come into contact with each other, like with kosher or certified vegan products.
As it turned out, the copacker Future Foods found to be the best fit for one of their products also worked with conventional meat. They had to work together to come up with a solution to keep the meat and alt-meat products separate so PAOW! could keep its “vegan- friendly” label.
“They run production for us firstthing Monday morning, then do an allergen cleanse so soy doesn’t get into the other products they manufacture throughout the week,” explains Chef Robert Hodge, director of culinary and plant-based innovations at PAOW! “We also require a cleanse prior to producing our product so no meat comes into contact with it; they break down and clean everything end-of-day Friday so it’s ready for our Monday run.”
Wilson says she creates a guardrail document for every co-man that states what they absolutely cannot have around her product. “There are a lot of restrictions around kosher, halal, non-GMO, vegan and allergen-free, for example, so it’s important to make sure that your factory can meet all those requirements. Also look for factories that have high food safety standards.”
Future Foods has a vetting process that includes a safe quality food (SQF) audit, an extensive examination of a facility and its practices, processes and documentation. The audit score for Future Foods’ protein is 97 out of 100, so they look for co-mans with similarly high scores to create their end products. Their SQF expert goes to the co-man to review, then recommends changes to meet the company’s standards or advises that they’re not a fit.
“If I’m entrusting my product to a third party’s product line, my safety guy is going to make sure they can maintain our standards,” says Kramarchuk, noting they have people on site monitoring every production run.
HOT OR COLD
It’s also critical to assess the potential interpersonal relationship for good chemistry, making sure the people managing that relationship between brand and co-man will be comfortable working together closely and regularly.
The type and frequency of communication should be discussed and agreed upon at the start of the relationship. If a brand prefers to have people onsite regularly or call and check in frequently and the co-man finds that to be too much, the two are not a good fit.
For example, while Kramarchuk wants that constant contact with the product, Wilson would find that kind of relationship overbearing.
“You know, some companies say, ‘I want to have my person standing there for every production run to make sure it meets my standards,’” Wilson explains. “I never loved that when I was a contract manufacturer; it felt very much like having the teacher stand over you during a test.”
Some brands choose to work with third parties to find a co-man and maintain the ongoing relationship.
Cordaro uses his experience as an executive chef and manufacturer to match brands with co-mans through Ricardo Food Group. He has established relationships with more than 700 manufacturers across the country and describes his role as “making marriages” between brands and manufacturers.
His team asks hundreds of questions before pairing a brand with a manufacturer. Once the relationship is established, he’ll also negotiate pricing and other terms.
On pricing and payment, a brand can go one of two ways: tolling agreements or turnkey. For tolling agreements, the customer buys all the ingredients and ships them to the co-man to manufacture. The co-man then returns the product to the brand for distribution. Cordaro is not usually in favor of tolling arrangements because larger contract manufacturers bring in ingredients every day and have greater purchasing power. That often leaves room to negotiate lower prices for the customer.
“When I look for a manufacturer for a brand, I want one that already regularly uses at least 60% of the brand’s needed ingredients,” Cordaro says.
Furthermore, while tolling costs may seem lower at face value, when considering the sort of minimum order quantities typical of a start-up, inventory holding costs can add up — an often-overlooked cost of doing business. Brands need to either work with a co-man that has space to store inputs or have their own storage facility.
“If you don’t have the volume and the co-packer doesn’t have the ability to downscale, expect to buy a bigger lot size. Then you have to store that product somewhere until you’re ready to use it,” Kramarchuk says.
Alt-meat companies also may have to negotiate around standard payment terms, especially when cashflow is low.
“Co-packers usually need 50% payment before they start the work,” Kramarchuk explains. “For some of the smaller companies trying to find co-packers, that becomes a barrier to entry because there has to be revenue coming in to pay bills. A lot of these companies will say, ‘Hey, I can’t pay the bills until we start selling some of this product,’ and will have to work that out with the co-man.”
JUST RIGHT
Ultimately, contract manufacturing can be an efficient, economical solution for alt-protein companies looking to focus on R&D, sales and marketing rather than on being manufacturing experts.
Since a relationship with a co-man affects the brand’s quality and reputation, it’s critical to take time to find a co-man whose people, process and ideals align with the alt-meat brand’s.
Trying to rush the process as part of a startup timeline could cost a brand time and money down the road. And if your co-man has any safety or quality issues, it could damage the product’s reputation beyond repair before it gets off the ground.
Like Goldilocks, at the end of the day, brands should feel “just right” with their co-man. As Cordaro says, “You’re building what is usually a long relationship, so you want to be sure it’s going to be a good fit.”
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THE GOLDILOCKS PARADIGM
https://library.alt-meat.net/articles/the-goldilocks-paradigm