Introduction
Breaking into the consumer packaged goods (CPG) industry is exciting but also one of the most challenging ventures an entrepreneur can take on. From navigating co-manufacturer contracts to understanding the realities of scaling production, new brands face a steep learning curve. What looks like a straightforward recipe-to-market journey is, in truth, a process filled with technical, financial, and operational complexities.
This article explores the ten most important things every new brand should understand about the CPG space. Whether you’re a founder bringing a family recipe to retail shelves or a brand manager tasked with expanding a product line, these insights will help you move with confidence, avoid common missteps, and prepare for long-term success.
1. Co-Manufacturer vs. Contract Manufacturer
One of the first challenges for new brands is determining who will make their product. While “co-manufacturer” and “contract manufacturer” are often used interchangeably, the difference is subtle but important. A co-manufacturer usually provides more strategic support, such as ingredient sourcing, small-batch testing, and packaging advice. A contract manufacturer, by contrast, focuses primarily on fulfilling production orders to your specifications. Early-stage brands often benefit from the flexibility and guidance a co-man offers, while larger brands may prefer the transactional clarity of a contract manufacturing relationship. Knowing which partner best aligns with your stage of growth is a crucial decision.
2. Food Production Is More Complex Than a Recipe
A great recipe is only the starting point. Turning it into a shelf-stable, compliant, and commercially viable product requires food science, packaging validation, and regulatory know-how. Shelf-life studies, nutritional labeling, and safety testing are not optional steps—they are essential parts of CPG manufacturing. Skipping them can lead to recalls, failed retail launches, or wasted investment. The sooner a founder embraces the science and process behind food production, the smoother the commercialization journey will be.
3. Manufacturing Costs Go Beyond Ingredients
New founders are often surprised by how quickly costs add up. Beyond the obvious expenses like raw materials and packaging, there are line fees at manufacturing facilities, freight charges, warehousing costs, and minimum order quantities that lock up working capital. Even small fluctuations in ingredient prices can erode margins. A robust cost-of-goods-sold (COGS) model is not just a financial tool; it is the backbone of pricing strategy and investor confidence. Brands that build financial discipline early are better equipped to weather the volatility of food production.
4. Scaling Production Takes Time
Many first-time entrepreneurs imagine moving directly from kitchen to retail distribution. In reality, scaling production happens in stages: small bench trials, pilot runs, regional rollouts, and finally national expansion. Each stage validates not only your product but also your process, packaging, and market fit. Attempting to skip steps often leads to costly reformulations, missed deadlines, or lost retail opportunities. A phased approach may feel slower, but it saves money and headaches in the long run.
5. Commercialization Means More Than Manufacturing
The word “commercialization” is often misunderstood as simply making a product at scale. In practice, it involves regulatory compliance, retail readiness, marketing, and ongoing supply chain management. Retailers will expect certifications, nutritional panels, barcodes, and consistent lead times before they consider placing an order. At the same time, commercialization includes positioning your product within the broader market, aligning with consumer trends, and proving you can deliver reliably. Brands that treat commercialization as a holistic strategy—not just production—stand out in a crowded space.
6. Contracts Define the Relationship With Your Co-Man
A co-manufacturer is not just another vendor. They become a partner in your success, which makes a clear contract essential. Agreements should outline intellectual property ownership, payment terms, quality standards, and production scheduling. Without strong documentation, brands risk disputes over who owns the formula, unexpected price increases, or production delays that ripple through distribution. Protecting your product and your margins starts with putting the right legal framework in place from the very beginning.
7. Quality Control Protects Your Brand
Inconsistent product quality is one of the fastest ways to lose consumer trust. Every batch must meet expectations, which requires clear quality assurance processes. Critical control points for food safety, shelf-life validation, and sensory testing should all be part of your workflow. Many brands rely on outside consultants or food scientists to periodically validate these systems. The upfront investment pays off by preventing recalls, avoiding waste, and building confidence with retailers and consumers alike.
8. Distribution Choices Shape Manufacturing Strategy
How your product reaches consumers will influence how it should be manufactured. A direct-to-consumer model often requires smaller runs, flexible fulfillment, and packaging that can withstand shipping. Retail distribution, on the other hand, demands larger runs, pallet-ready cases, and compliance with retailer-specific requirements. Foodservice channels may require entirely different formats, such as bulk packs or alternate recipes. Aligning distribution with production strategy prevents costly adjustments later and ensures the product flows smoothly through the chosen channel.
9. Cash Flow Is as Critical as Sales
The CPG business is capital-intensive, and cash flow can be a silent killer. Retailers may not pay invoices for 60 to 90 days, while manufacturers demand deposits upfront. Brands must bridge this gap through a mix of fundraising, credit facilities, or creative financing arrangements. Early-stage companies that focus only on top-line sales without managing cash burn often find themselves unable to fulfill orders despite strong demand. Managing liquidity with the same rigor as marketing and sales is one of the most overlooked skills in CPG.
10. The Right Team Makes Scaling Possible
No founder can master every aspect of food production, commercialization, and scaling. The most successful brands surround themselves with expertise—food scientists, supply chain managers, brokers, marketers, and advisors who bring depth in areas the founder does not. Even if hiring a full team is out of reach, fractional executives or advisory boards can provide critical guidance. Building the right network early creates resilience and opens doors that a solo founder might never access.
Conclusion: A Clear Path Through Complexity
The CPG industry offers enormous upside; however, it can also be unforgiving. New brands must navigate the technicalities of manufacturing, the discipline of financial modeling, and the realities of scaling production. Success comes not from moving the fastest, but from moving deliberately, with the right partners and processes in place.
At Alchemy in the Kitchen, we specialize in helping brands navigate this journey—from formulation and co-man placement to full-scale commercialization. If you’re ready to bring your product to market with confidence, let’s start a conversation.
