Chris Bauer - A Masterclass On Co-packers

On this episode, we’re joined by Chris Bauer, CFO at Catapult Commercialization Services, the product development and commercialization “fixer” for the CPG industry - from R&D and formulation to supply chain setup, manufacturing, co-packers, and go-to-market strategy.

Chris provides a masterclass on the world of co-packers. He breaks down how to actually pick the right co-packer, how to structure the agreement, why so many brand-owner expectations go sideways, and what good looks like when it comes to transparency, contracts, and operational readiness.

We talk about why most brands are over-optimistic about production timelines, what co-mans won’t tell you, and how to spot the red flags before you sign. Plus: whether it’s better to use a single turnkey partner or build a modular supply chain with separate vendors for R&D, production, and fulfillment.

Episode Highlights:

🏗️ What Catapult Commercialization Services actually does
🔍 How to find and approach the right co-packer
💬 Getting a co-manufacturer to take you seriously
🧪 Vetting co-packers without relying on vibes
📝 What should (and shouldn’t) be in your co-man agreement
🔒 How to protect your IP before you scale
📉 Avoiding runaway COGs before it's too late
⚠️ “Take or Pay” clauses and how to negotiate around them
👩‍🍳 Going from kitchen-made to co-manufactured
📊 What KPIs you should track with your co-man

Table of Contents:

00:05:30 – Sourcing co-packers
00:10:44 – How to properly vet co-packers
00:13:30 – Structuring a co-packer agreement
00:16:58 – Protecting your IP
00:21:03 – How to avoid runaway COGs
00:30:13 – Tracking co-packer KPIs
00:33:38 – Risk planning

Links:

Catapult Commercialization – https://www.catapultservices.com
Follow Chris on LinkedIn – https://www.linkedin.com/in/christopher-bauer-4623b55a/
Follow me on LinkedIn – https://www.linkedin.com/in/adam-martin-steinberg/
Check out https://www.kitprint.co for CPG production design support

Transcript

0:00

welcome to Shelf help today we're speaking with Chris Bauer who is joining us from the Milwaukee area Chris is the CFO at Catapult Commercialization Services a services company that does a lot of really cool things working with brands on the commercialization process R&D setting up production and supply chains as well as helping them scale and troubleshoot as they grow I think get out Chris is an expert on a number of areas in the CPG world but we're definitely going to be focusing majority of the conversation on co packers so maybe just to kind of set the stage just for the listeners that aren't as familiar with with Catapult Chris maybe just give us you know quick lay of the land in terms of you know origin story of the company course services you guys offer and then kind of maybe a bit about the structure of the work in terms of how you bring in different people into projects depending on what the focus is yeah absolutely uh thanks for having me I appreciate it I always appreciate a the ability to have a conversation with someone at a Bolt itself we're eight years old now we were started on April 1st which is always the best time to start a a new business of seventeen I've been with catapult uh since the following year uh and what it was is uh Jamie Valenti Jordan is our CEO and founder he's worked for some of the larger groups in the world right the Campbells the Del monte's you know milk bones those sorts of groups and then he started working for smaller and smaller CPG groups so he went from as a process engineer he went from a huge organization with multiple people in the same department launching new products down to a smaller level where he was the only one working on these technical operational side of things and then he kept going down in size all the way to the point where he got asked well what's a process engineer and why do I need you which is an interesting question to have in an interview so that's where the Genesis of catapult began is how do we bring these technical services to smaller groups that don't necessarily have the financial wherewithal to add the headcount or don't have the need for to add a full time process engineer or whatever so that's where catapult uh is founded it was started as a solo consultancy and it now has grown to a group of 80 or so of us spread all across the United States all of us have some sort of expertise in the food and beverage world obviously and then the commercialization side of things more specifically the technical side of things so product ideation and brand positioning kind of that fuzzy front end of figuring out what the brand wants to be when it grows up into the product development phase making sure that it checks all the boxes it's food safe it's ready to go into production across state lines and then into all the bits and bobs that you need and actually to land on shelves so contract manufacturing which is my area supply chain development and management logistics packaging quality regulatory certifications all of that and then it gets back into process engineering right because all of this is just becomes an iterative thing to drive down cogs drive up production yeah and so just kind of keep keep growing the uh the the in the business and the industry so how we work is actually somewhat different most if not all clients come to us with some sort of problem some sort of pain point we're looking to grow beyond the commercial kitchen for instance can you help us do that well great here are the steps that you need to do and here are the different experts that catapult can pull on in order to make that help make that work you're working under cottage law you want to sell across state lines great we have to bring in a product developer to make sure that your supply chain is redundant is good and industrially sourced and then we can also find help you find the comman and negotiate with them on board with them because that's all a process and I'm sure we'll get into that here shortly or it's a larger group we are having this problem we need someone to fly out to California tomorrow to look at what's going on and why we have insects in our meal and figure out where they came from and figure out how to fix it going forward we've done that project too where we had someone on site within two days to figure out what happened and do an after action report you don't want to necessarily hire a person to be able to do that you know year round right you don't want to add headcount so let's just bring in an expert and take care of the problem and I can keep going but I don't want to bore everyone but the idea is catapult to CPG fixer kind of to a certain extent very much so yeah absolutely like what is your problem here's how you here's the general steps on how you solve it here are the experts that we need to get it done and then we provide an estimate of course and say great it's going to take 100 hours of work boom there's your how long it's going to take and your budget too yeah that totally makes sense man yeah it sounds like you guys are you come in when founders and operators having really big challenges I feel like you're probably the saving Grace for a lot of operators so it's cool what you guys do the interesting thing is that people who know us absolutely love us because we do exactly that and then they don't tell anyone else because we become their sacred sauce great we have a new problem let's go talk to Chris and figure out how we fix it alright yeah so let's do this so yeah absolutely we are the secret sauce of a lot of small yeah starting out from the the first stages let's just yeah starting with just sourcing and evaluating co packers what would you say are the best way or best ways actually just go about source I can co packer options and you know where the best places to look whether it's like you know events directories those kind of things cause from what I know they don't really market themselves all that well so it doesn't seem like it's the easiest type of business to find so we'll start there yeah absolutely when I joined catapult it was my first foray into the food and beverage industry and Jamie was telling me that it's really just kind of like a you know a boys club right you have to know them know where commands are in order for you to know that they even exist um a lot of them are very technically minded and some of them are very brilliant but that's not in marketing right that's not something that you can find easily yeah so it takes time it takes reaching out to them over multiple things or at least that's my the reason why I'm able to charge money for what I do because the process itself is not rocket science it's building out a list as long as you can from all the different sources right there are lists that exist online there are event directories there's hey did you ever meet Bob Bob does this and just talking through hey I'm just talking through with someone be like great this is what what I'm working on and they're like oh yeah George is just down the street he's been in business for 30 years he doesn't have a website right okay great does he have a phone number I've literally had to FAX people information in order to get it into the hands of the right person which is very strange to say in 2020 at the time was 2023 but it's just one of those things where I'm like okay great um I'll I guess I'll figure out how to use a FAX now but yeah absolutely it's everything yeah just building out that network building out a reputation of just knowing who who to talk to is is a critical piece there people that are at the center of the hub and spoke so they've got a lot of network and kind of like point you in the right direction I imagine yeah absolutely let's just say you're a new brand new operator found a co packer that seems like it'd be good gonna be a good fit based on let's just say recommendations or research that you've done they're probably you know and work with us for a long time onboarding a small new brand integrate integrating them within their operations and workflow and everything is you know so I generally what I've heard is it can be challenging to kind of get a co packer's attention and get you to give them the time of day give you the time of day so I'm curious you know 2 to 3 points that a a brand owner could could use or focus on when they're reaching out to copacker to to make it sound like OK this is a real brand this is a real person and this you know I'm the copacker side I'm actually gonna give these people the time of day sure the trick to that is to realize that these are businesses right and I'll kind of hit this over and over again right and if they're a successful business they're going to be really busy so the first thing is is every single time that you interact with them realize that they also have about 30 other things going on in their mind so you have to be exceptionally to the point because you have about 30 seconds before their mind wanders onto the next one especially if you're just doing a cold email right so you have to be very precise this is what I'm looking for these are the certifications this is the process this is the volume this is the size of the prize are you interested let's talk once you get in front of them they generally have more time and attention but if you're not actually talking directly to them you know talking to their gatekeeper for instance or to just cold emailing them you'd really just have to realize that they're humans that are very very busy and then as they ignore you because they your No. 42 on the list of 100 emails that they have to respond to right of course and you transition from a cold email to a follow up call or to connecting with them in LinkedIn or anything like that realize that they're not going to respond to you right away and that it takes a couple of times be like hey I get that you're busy I'm here this is the project are you interested and the answer will likely be no right it's going to be a numbers game to an extent because they might not have capacity you might have misunderstood their their capabilities they might just be having a bad week and they have an audit and a Fortune 500 company in in the building at the same time in a day like I've had that happen too that happens right it's going to take time I always recommend that it takes about six months six to nine months from introduction to actually getting to the point of being able to have product in hand yeah and that's can be on the aggressive side depending on the the part of the industry that you're in yeah matter the complication how complicated the formulation and touch points are and everything too right yeah or just the nature of the product too right like there's there's a barriers to that too totally yes you've brand they've they've gotten attention of a copacker now it's kind of an even footing the copacker's really engaging them feels like you know they're getting a real attention now it's kind of on the brand a bit to be doing some real evaluation and due diligence like what should that of copacker evaluation checklist look like and you know I guess what are just some of the most important factors that a brand should be considering to make sure that they're going to be dependable and a good fit and all those things yeah um as you work through right so typically as I hand off the relationship to my clients and the co man the next steps are usually doing a data transfer right get them samples get them get them samples get them the formulation get them your list of ingredient suppliers the quicker that you can get that to them the quicker that they can put that in the queue right because some commands literally don't start until they have all of those things and if they don't you know you're just going down on the queue because you're less of a serious client after that like you can realistically expect them to want to test it on their machines right a thing that I call test day and that takes time to schedule and to be there that's really where you want to make sure that you're also there if you if at all possible to sit there and just talk with them realize that they're human make them realize that you're human walk the line with them if you can right you shouldn't be seeing extreme examples you shouldn't see rats flying through you shouldn't see big puddles of water just standing there you know not getting cleaned up right that's the type of level that you want to be at at that first that first meeting in person QA side other than that it's making sure their documentation is in order making sure that they're being reasonably responsible in getting back to you again they're very busy people and then making sure at the end of that test day the product that is coming out yeah is what you want and that you've written down how you got there right because test day they're going to try 50 different ways of doing it right are we cooking it for 18 19 or 20 minutes are we doing this are we doing that so that way once it's all written down you can trust that the co man so long as they adhere to that product spec they're going to be doing it right every single time and that's exactly what you want on a co man yeah they'll adhere to that and they'll make sure that uh it's exactly the same thing 100% of the time yeah all those make total sense that's that's really helpful alright so bring gets through that due diligence process they like the co packer they're getting to the point of negotiating terms and actually putting things on paper and putting together an actual contract what's a what do you feel like are some of those top of mind things that are most important to include in that co pack agreement just to ensure success minimize risk and really aligning expectations from the get go working through all of those things one at a time right figuring out what your entire logistics chain looks like from ordering supplies and ingredients landing it where is it going to be how much does that cost right that's another thing that you're always going to want to keep an eye on is where where are your packages being stored where are your trades being stored are they branded are they safe and how much does that cost going into each individual thing how much you should they might throw it all together as one lump sum cost all in and that's fine others line it all out right how much is it how much is the cost of the facility how much is the cost of the employees how much is the cost of storage on the front end and the back end because you're not always going to have truck right there for them to load each pallet on individually and that would be kind of expensive and silly to do it that way so having all of that kind of spelled out in a fair way in the contract is important I mean don't be necessarily rude and demanding about it because again they're humans and this is more akin to dating than it is a marriage or just a straight business deal you have to wanna make sure that you work with them other high points that you wanna make sure that you pay attention to who owns the IP right one thing that I have encountered multiple times is groups try to take the shortcut they try and say great I have grandma's recipe can you make it a million of them for me the co man might have a product developer they might not depending on what their infrastructure looks like and they might be willing to front that cost to you but always make sure you know who owns the IP if you're not paying for it the likelihood is that it's the co man's IP because they're paying for it that's theirs now so there have been several examples where the client's relationship with the co man was going great for several years something happened it's spoiling and now they want to move to a new copacker but they took the shortcut in the beginning they don't actually own the IP they have to regenerate their own product which is a position to be in that is not particularly good so know who where the IP is yeah and the last piece I completely blanked on when things go wrong right because things will go wrong right someone will cook it for 22 minutes instead of 19 and suddenly you burned an entire batch of something mistakes happen so making sure that there is a well spelled out way of reconciling that figuring out how to work together in order to fix it and to move forward that's done in a fair way because commands are always going to walk at least going to balk they might walk away from a deal that is too stacked in the brand's position right and the brand should do the same thing if it's too stacked in the command's position yeah and that sort of negotiation is is always kind of touchy at the start right because you don't necessarily trust the other person across the table for you so having someone there with you to kind of go through it is useful yeah you talked about you mentioned IP a little bit I was gonna ask about that in terms of protecting IP and if yeah let's just say you you did go the the correct route whether you develop that formulation with a copacker and you you paid for that IP or what not or you brought a formulation that you developed somewhere else to that copacker I guess how do you prevent that you know formulation magically ending up in the hands of another one of the co packer's clients with like a very small minimal tweak that makes it not totally stealing IP and or I've also heard about here and there a copacker decides to launch their own in house brand after a while or maybe they didn't have an in house brands before and they decide they're going to or they always have and then somehow you know that brand finds out oh the formulation of their own in house brand products are basically almost identical to theirs like how can I'm sure there's no you can't entirely prevent it but I guess how can brands think about that in terms of minimizing the risk of that let's say sure and I have this conversation with clients regularly right they say great I wanna make 10,000 cookies a month no problem we can do that I wanna be the only one who makes chocolate chip cookies in that facility because my brand my formulation is so special I don't want it stolen that sort of thing that's not gonna fly right this is a business they're going to need to use these ovens all sorts in all sorts of different ways the IP rights and how that IP is protected should be in your contract as you're talking through this with your co man right where is it going to be stored how is it going to be defended what's how is that all work then you realize that commands are going to be here even when you're not they were here when you were not in existence right and they were making effectively the same way they might know ways to make your chocolate chip cookie better than you do because they've made billions of them so that comes with a fair amount of expertise so and there's only so many ways to make a chocolate chip cookie right there's only so many ways to make anything right so you also have you the brand also have to realize that one they've been in existence in a business a long time if they're just giving away or stealing other people's IP in order to give it to someone else that's not going to work for them long term they're going to get sued they're going to get closed down they're going to develop a reputation in the industry where that's exactly what happens and they're going to be shunned rightfully so if that's what's happening so realize that their reputation is online and their reputation is probably more valuable to them than your business and that's okay then the final thing is is realize that there are groups out there and their job is to literally take a product off the shelf reverse engineer it and then make a small tweak so it's not the exact same thing and then sell it off to whoever wants to do it right how many chocolate chip cookies are there great we can make a different one we'll make it a little bit saltier this time or we'll do something else about it in that case the thing that you're selling and brands sometimes have to realize this the thing that you're selling is not your chocolate chip cookie and I swear I'll stop using chocolate chips as the example but it's not chocolate chip cookie anymore it's your brand and it's the following that you've developed that's the important thing people will buy your brand over someone else's brand and realizing that that marketing is the thing that keeps you sustaining even when me too products come on board because if you're completely new and you do all sorts of things that are astonishingly new and it's successful someone's going to rip you off they're going to make it right Oreo made one to whatever the thing was before Oreo and they're more successful than the original brand right okay that happens they that other brand that remains nameless because I can't think of it right now okay um they didn't have the same marketing skills as Oreo did right yeah all those yeah those are really valid I think that's a good reality check I would say how about from a a um projecting cogs and margins in terms of how you're working with your co packers what are some of those you've seen the most common hidden line items that can balloon total landed cost whether it's you mentioned storage cost if you're not picking it up right away or maybe it's you know testing cost that kind of stuff like what should brands I guess try to address upfront in that in that co pack agreement and or just be you know keeping a close eye on in general sure and this is where it really gets very fuzzy in almost any contract negotiation because it becomes very specific to the product and how all these things do you need to take it and send it for testing every single time can we do it in house right how long does it take to and how expensive is it to land all of the equipment or not the equipment the the supplies and the food and the ingredients right right all the inputs right how long does it take to amass all those things how much does that cost on the flip side how much how quickly can you get a truck there to pick up your 10 pallets of product and get it to somewhere else these are a lot of variables that can be controlled through the contract right so making sure that you work through the entire process of where is it come in what and how should it all be put together when does it go through how much is that cost and then all the different pieces and then there are going to be a whole bunch of things that you don't get to control right you don't get to control the price of milk or eggs right you you don't get to control tariffs you don't get to control the cost of labor because minimum wage jumps legally in that state that you happen to be producing in you don't get to control those those are all things even outside of the control of the co man and that's going to be passed on to you the brand yeah so how do you mitigate that if you can figure that part out better than anyone else you should be in my shoes because locking a co man into a contract that limits all those things they're not gonna do it not if they're smart and if they do good on you right how about so just work at the take your pay minimums uh specific I've heard those can be challenging for brands basically they're not I'm correct if I'm wrong if I'm defining take your pay incorrectly here but it's basically whether it's an agreement or not basically you're securing certain line time at the copacker and if you don't use it cause you're you know projecting forecast or meeting that you still gotta pay for that line time essentially whether you're using it or not yeah um yes it's challenging particularly for small brands um 100% how do you avoid it you match it as best you can so there's two ways that minimum order quantities really get created one is it takes so many gallons of liquid in order to pressurize the machine so that I can get it into your bottle yeah that you're not gonna mess with right you have to go to a smaller command if you are going to try and play with those minimums you just there is no alternative physically on how to do that yeah the one that you do have more flexibility with is working your way through other things right so typically the other way that you can establish a minimum order quantity is how many widgets can you make in six hours because you know it's going to take an hour to set up the line it's going to take an hour to clean up the line there's your 8 hour shift boom how many widgets can we make now if you only need 3 hours of production sure the command can do that for you but you're still going to pay for that full 8 hours because no one's going to work for them for 3 hours just making your your widget so it's more of a match making sure that you're matching their minimum order quantities and you're not going to really huge groups for small stuff right that's just not going to work the other thing that I've seen is are people and people get good by doing the same thing over and over again right so the more that you can get um your production together and replicate it multiple once a month for instance there are commands out there that do it once a month uh once a quarter 1 once a year is really kind of difficult or can you bring those four days five days of production all together does your shelf life support it and sometimes the answer is no and that's unfortunate for you but a lot of times the answer is yes alright the difference between um a a loaf of bread that has been frozen for 5 months versus a loaf of bread that has been frozen for one month the common consumer is not going to notice that why not make it all sure you have more cost in terms of in terms of keeping it frozen for that long sure right but that usually is a wash or in the brand's advantage to bring it together as opposed to worrying about minimum order quantities the other flip side to your take and pay idea is some parts of the food and beverage industry simply require higher minimums the plant based milks and the plant based creamers those are exceptionally difficult to get into because of the techniques used to get them to be shelf stable at ambient temperature and you're going to have to start with 7 8 digit numbers in terms of volume in order to have any co man be interested in you so just choosing the right product if you're in the right venue whether it's refrigerated or frozen or a shelf stable at ambient is all going to be part and parcel to making sure that you're even in the right part of the industry for your size or if you have to figure out different ways of doing it too right totally yeah that that's that's super helpful too a lot of brands are coming to you when they're in kind of pivot points their other business or challenges as well so I'm curious I imagine it might be a pretty common scenario where a brand that's in their earlier stages they've been just self manufacturing whether it's in their you know probably not in their kitchen they're probably beyond that but maybe in like a you know personal kitchen personal kitchen where they're still doing it themselves and now they get to the point they come to you and say hey we're at the scale we can't do this anymore we need to transition to a co packer can you help us um I'm curious what have you found is is the most often like challenging part whether it's like you having to change the formulation to optimize for scale or um just different you know manufacturing processes that have to be due at scale versus what you can just do in a small kitchen what do you what have you found as the most challenging part of this and and how does catapult how do you guys help with that process overall you're really not going to like this answer the most challenging part of all of that is actually realizing that you're that the brand is not paying the individual right so a lot of groups as they're going into their first co man they're self producing commercial kitchen no big deal I'm just going to do it on my weekends when I have the day off and I'm just going to get it done no problem you're not going to get away with that with a co man the co man needs to pay themselves so that would be No. 1 cannot catapult help with that no what Cannibal can't do is all the other pieces that you're talking about if you're working out of a commercial kitchen under cottage law so you're just going to Costco and buy flour and you're bringing it in that's great you can do that but once you get to a co man that game changes they have to have formulations they have to have it in the right way they have to have industrial suppliers they have to have all of their documentation in order and that's the type of challenge that catapult excels in is figuring out all of those things that makes a lot of sense and then but yeah I think the best example I have of both of those is actually a co man that came to me and they wanted to stop being a co man they just wanted to convert from being a co man into being a brand no problem here's you know I go through my search here's a dozen different groups that can do the same thing that you can more or less in your area and they ended up rejecting them all and there's a command to this day why they were underpaying their management right their leaders and 2 um while they had the formulations they were doing it roughly as efficiently as anyone else was so the you weren't saving all that much in employee costs and that sort of thing so I still call them to this day and say hey do you want this this gluten free bread or whatever yeah because they're still in business they were I don't know if they're doing it now but they were underpaying themselves if they didn't shutter their doors and then hope to make that leap right yeah absolutely and we had that conversation too at the onset I'm like I mean you're doing this you're making it work like and you figured out the hard part which is how to be a manager of individuals on a process that has to be replicated 100% of the time that's the part that you're paying for is that expertise and that machinery and that mortgage and those lights and and right totally um alright brand has has kicked off things with the copacker they're starting to kind of get into regular cadence what what do you recommend to your guys as clients in terms of what should the kind of ideal let's just call it KPI dashboard look likes in terms of the the the core metrics that this brand should be closely tracking in terms of the co packer output sure on the product side it should be keeping an eye on any complaints that come in hey this bread that you've been making suddenly taste different right that's an indication of something going very wrong at the command level other than that are they meeting their deadlines if you're doing it just in time is everything arriving just in time are they schedule scheduling you regularly enough and efficiently enough that you're meeting all of these things noting that if you have a sudden explosion in demand for whatever reason the marketing sales thing goes well they're not going to be able to pivot as quickly as you would like them to but being able to have things arrive when you need it to would be the first one consumer experience should stay the same right you shouldn't be seeing up swings up and down right that's indication of something going wrong at the command on the financial side keep an eye on the cogs are they staying reasonable and about the same each time is it going trending upward trending downward sometimes commands get more effective any more efficient the more they do run your product so they can actually produce more widgets during that same 8 hour period and that's something that you should be having regular conversations with your commands on hey I'm noticing this what is causing the cost to go up well flour is going up or eggs are going up like this is out of our control and we're buying it for you so I mean those would be the two those make a lot of sense yeah those two things that I would want to keep an eye on yeah those make a lot of sense and how about just from a kind of like snop process cadence standpoint do you typically find it's probably also this comes down to how often co packers are willing to meet with you as well but in turn like from a cadence snop standpoint do you typically find you're recommending or most common is it you know monthly biweekly is it even like weekly or is it something else realistically however long however often you're running the product in their facility you should probably have one just a check in meeting might be only half of an hour right just running through hey anything change nope good lovely let's move on so they don't need to meet with you biweekly if you're running once a month yeah they don't need to necessarily meet with you monthly if you're doing it quarterly yeah and again those sorts of things or at least the option to have those sorts of meetings should be outlined in your contract like we want to have a 30 minute meeting before launching any product just to update you on what's going on that would be um a reasonable enough point to keep down there I would expect to see setting it up a little bit different right more time on site more time setting things up but once things start getting going and rolling it's more check ins making sure that everything is going well making sure that management over there is staying stable right because if you have new management suddenly they read your standard operating procedure in a different way than the previous person did yeah okay that's fine that that happens but also why isn't your SOP being updated regularly right so totally yep those all make a lot of sense too a risk planning standpoint I think it's probably especially with this tariff situation coming into account it's more top of mind in some of the conversations you're having with your clients but I'm curious from how important is redundancy and supplier diversity let's say and then kind of a building on that question is like what is supplier diversity actually look like is it just having a few backups or is it more strategic than that that's where it starts right there's currently several projects that are ongoing that are just looking at different suppliers and then testing it both at the bench and then also testing it in production making sure that they react the same so that way when one flower that's being produced in I don't know the Ukraine has problems generating that grain and that flower you have a US base facility that's able to help out or you have a Canadian facility that's able to help out and that's you know a wise brand has that in place especially as they scale up despite whether or not we're worried about terrorists because who knows the next time a country invades another country and throws everything into chaos or you know anything else so how does all of that work a wise one a wise brand usually has a couple of options in their back pocket able to work on and they check regularly in like well has the prices changed at all like what's the harvest looking like in Florida for oranges as opposed to somewhere else just kind of keeping tabs on that and working their way through does it have to be if oranges get over this price then we're going to this does it have to be that's precise no not necessarily especially not if you're a small brand it can be much more of a I know these two things work and I'm going to go with whichever one makes sense at the time yeah yeah and the co man should be able to help with that too because right if they're bringing in flour for you they're bringing in flour for someone else too yep yeah they've been growing for a while things are going really well yeah the margins are good they got app they've got access to some fair amount of cap ex at pretty reasonable terms and what not for those brands where vertical integration moving away from co packer that they're working with for a long time would make a lot of sense whether it's at some point they may be able to save cost bringing it in house or what not when does it usually make sense to start looking at bringing manufacturing back in house let's say and maybe it's maybe never but the answer maybe never for any sort of brand right the startup costs of building your own facility absolutely need to be considered so if you are in U h t a septic fill those you have to be very very large in order for those costs to make sense they have to their their barriers to entry are very high to begin with right so you have to make sure that that makes sense but to get to your point like when does it make sense there's no good answer for that the question then becomes is the margin that the co man putting into their cost for you right does that starting to impede in your your margins or is it just an ego power play where I'm like well I can take that 40% and put it in there and if that's if that's where you're at that's great that's a wonderful place to be in and there are several brands that I've worked with that are looking like I just want to make sure that this is a product I can sell and then I want to build up my own facility wonderful it's about where the business is and where the where the skill sets of the individuals in that brand are yeah I have met brands that under no situation should they ever run their own facility because they do not have the personality type that it takes to be an operator they're a marketing person and they're a salesperson great go do that have a co man make it for you and if you want to eventually buy that facility as one of our clients recently have okay great good have at it but what at what point does that change it changes at the point where the margins no longer make sense to give away and you want to bring that in house yeah and that will change dramatically based on the the um that'll change dramatically based on what part of the industry you're in yeah and the complexity of the process sure for those ones where it does make may make sense what what I I assume you just don't want to do it cold Turkey and just like immediately shut down their co packing and you know I see what is that kind of a if you had to make a recommendation from a step by step process as an example is it you start maybe sourcing your own ingredients first you get that under your belt and you're sending those to the co packer then maybe you start producing you know 30% of the your overall skew count some certain portion of your skew is in house still keeping some of the co packer and then you eventually transition the rest of them but yeah I'm curious what what does that kind of step by step process look like in your mind we're going to assume in this example that we have to build our own facility right we have to buy a piece of property we have to land the equipment we have to do that that does not happen overnight that's anywhere from one to two to five to 10 years right depending on what exactly you're making realistically two years from start to finish right so how does that process look like first build the business case right run the numbers does it actually make sense how much do how much does each piece of equipment that you're going to cost yeah uh come out to be and that's where catapult would be very useful to a brand like that because we can come in and be like great you're making orange juice you need this machine this machine this machine this machine here are all the costs associated with it here's what line you're looking for here's how much much it's going to cost not to buy the product but or buy the machines but also land it commission it make sure it's good to go here are all the other pieces that you need to have in place so you're looking at a 10 million dollar facility you're looking at 100 million dollar facility right and then the brand would then have to make sure that it is viable for them so the first thing is actually just plan it out all on paper without a without looking for land necessarily or anything like that and then there really isn't a wonderful way of introducing it stepwise right cause once you have the machines you want it running 24 7 because otherwise you just have idle line time and that's just a cost on you so you land the machines you call or you you land the commission them and then you start production you start with whatever makes the most sense to bring it in let's bring in one skew let's run it let's compare the two does the co man still make it better and why or do my does mine and why and then after that it's just a very rapid transition in transitioning ingredient sourcing to you has to be built into that and then where are you going to store it where are you going to produce like all of these things right but yeah I mean it's going to be jumping in very rapidly once you execute the paper exercise the paper exercise is where you figure out whether or not you even want to do it or can do it yeah fair I'm back to IP a little bit you know typical models those kind of joint structure that you see whether it's like you know if they're applying patents is it like you're applying for patents together or they're you know I don't know if there's like royalty structures or like joint venture something along those lines or is it mostly just as simple as you know pay us X dollars and you can keep the formulation in my opinion the right way of doing it is pay us a certain amount of dollars get it done let me own the IP right it might just be my own mentality of like I need to know who owns that IP because tomorrow we might have a problem and I need to go somewhere else so everything else is a derivation of that so do we want to sign a contract you'll give me a deal if I sign a contract and I make a million of these things and you're going to make your money of product development back in that way yeah that's a way to do it that is cheaper but then you're just handcuffing yourself to that co man for a longer and longer uh point of time yeah there is the royalties model where great I'll develop it I'll own it and then I'll license it to you to build the brand around it that's usually the co man talking to the brand yeah absolutely if you want but again you're handcuffing yourself to that co man necessarily because they own the IP the IP is the in my opinion is the only thing that matters at the end so knowing how to do that and how you want to take a less expensive option in the beginning in order to make sure it gets done and gets done well that's all up to the that negotiation but again that should be in the contract right make it black and white and hopefully not in the fine print yeah super clear but that makes a lot of sense but any I just know you and catapult in general you guys have so many conversations with so many different brands and different parts of the CPG space I'm curious any specific brand that you want to mention or just general trends in the CPG space that you're particularly excited about or ones that you're seeing are gaining a lot of traction I always joke with my colleagues in the co man world that for some whatever reason I'll have five or six products that are all very similar trying to come to market at the same time period so I'll reach out to the same commands five or 6 times within 3 4 months and then I'll just go quiet for a year two years even and then before I have another product in that same space it always seems to come in waves interesting so the wave that I'm seeing right now coming through are individuals who are individuals or brands brands generally who are looking to take any all sorts of products right beverages chocolate anything else like that and they're trying to make it a better for you product by including vitamins or probiotics or something like that so that's the trend that I'm seeing on the catapult side and they're kind of all scattered all over the place they might be in the formulation stage they might be in the command stage right all these different things but that's the thing that's going on right now right now and that's very interesting to me for for a variety of reasons six 7 months ago it was a different thing it was puddings for whatever reason so it always comes in waves it's very interesting but products that fall on that really gray area between food and supplement is what's popular right now for my Vantage point that doesn't surprise me at all I definitely seem like that definitely yes yeah the society itself has kind of it goes in different ways and that's how it works so yeah which is great good for you I think I don't think that's a bad thing no not at all well yeah Chris this has been awesome I really appreciate the time I think this has been really valuable for for brands especially you're in this process of you know starting to think about co packers or in co packers or in the middle of one and trying to figure out some challenges so things have been super helpful what's the best way for people to follow along with you and or what's the best place for the people have to follow along with catapult as well sure the easiest way for a lot of people to keep kind of keep in touch with catapult and see what we're up to is actually through LinkedIn um our CEO Jamie has a fairly large following in the food and beverage world and he kind of regularly produces various he produces posts and that sort of thing to kind of keep people abreast of what catapult is up to what he's up to what are the different trends in society ask answering questions that sort of thing I think you and I met originally through startup CPG which is another wonderful organization to kind of keep track of what's going on in the industry and then also catapult has a solid presence there just answering questions hey I'm doing this great here's the general thing and if you want more let's talk about that offline and then of course there's always our website catapult serve.com that people can always look us up and find our immediate contact information and there alright cool that sounds great well yeah Chris really appreciate the time and I hope you have a great day close to capacity with bigger clients not always probably the easiest and fun thing to do and the good contract manufacturers know that once a brand has scaled to a certain scale last question for you this is a very broad question