In a market as competitive as food manufacturing, you should understand your options and your rights to the products you own. One area that is particularly important in terms of your proprietary formula is your private label food manufacturing agreement. It’s different than a co-packing agreement, despite the two being closely related.
This blog post will help you gain a better understanding of co-packing vs. private label.
The Difference Between Private Label Food Products and Co-Packing Food Products
It’s crucial that you read all the fine print and consult with all involved parties. Here are the basic differences between private label food products and co-packing food products:
- Co-packing — Under a co-packing agreement, the customer owns the rights to a proprietary formulation, even though the food manufacturer creates the product. Under this type of agreement, the manufacturer usually signs a non-disclosure agreement that prevents it from sharing that information or creating any additional product outside of the agreement.
- Private labeling — The food manufacturer often will produce and package its own formulation under the customer’s label. Under this type of agreement, the food manufacturer retains proprietary rights. In some cases, the manufacturer will work exclusively with a single customer to produce a formulation specific to that private label.
Ultimately, both co-packing and private label manufacturing result in products created and/or packaged by the manufacturer and distributed under the customer’s brand. The difference is who owns the formula after the transaction is fulfilled.
How to Decide Which Is Best for Your Business
On the surface, formula ownership is the primary consideration of co-packing vs. private label. But there are other factors:
- Cost — Depending on the contract negotiated, a co-packing agreement can save the customer money.
- Responsibility — Under a co-packing agreement, all rights-handling responsibilities fall to the manufacturer. For some companies, navigating proprietary laws is a burden they would prefer to do without.
- Logistics — Sometimes the stars just don’t align for a co-packing agreement due to manufacturer capacity and capability. While it can certainly pay off to secure a co-packing arrangement, this is something to consider when shopping around.
- Marketing — Exclusivity can be a boon to marketing efforts. When the customer owns the rights via a co-packing agreement, or if the manufacturer agrees to exclusive production under a private label agreement, the customer has a powerful marketing tool at its disposal.
What Can PacMoore Do for You?
One of the major benefits of working with PacMoore is our flexibility. We have the bandwidth and resources to adjust our operations to suit your needs. If that means taking on a complex co-packing agreement, we will carry out the process from start to finish on your behalf. We want you to enjoy all the benefits of a world-class food manufacturer while allowing you to take full advantage of what your own brand has to offer.
Learn more about the nuances of contract packing vs. private label by contacting PacMoore today.