Be Ready to Scale (Your Packaging Quickly)

When you started your consumer packaged goods (CPG) brand, you likely started small but dreamed of one day hitting it big. You thought about the day you’d be filling a huge order from a major retail company and how exciting that would be. But now that you’ve been running your business for a little while, that excitement likely co-exists with some anxiety over how to make it all happen. The reality is that scaling a CPG brand is an extremely challenging task, riddled with many potential pitfalls.

While hoping and dreaming for wild success is one thing, planning for it is another. As an aluminum can manufacturer, we have worked with many beverage brands as they’ve scaled to meet demand and have seen many of the challenges that come with this exciting season for a brand. 

We wrote this guide to walk you through the many different factors that you should consider as you think about how you would scale your brand. The goal being to help:

1. Raise awareness of the common pitfalls so they can be planned for/worked through early.
2. Highlight key considerations for scaling and why they matter.
3. Initiate conversation surrounding the impact of each consideration on your brand
4. Add a supplier’s perspective so that upstream factors don’t come as a surprise later on.
5. Identify decisions that can be made day 1 so they don’t become a problem on day 658.

The guide is focused on the beverage industry because that is our expertise, but all of the advice can be applied across the CPG industry, no matter your specific niche.

Having a Plan Matters

Imagine if your beverage brand needs to scale rapidly to fulfill a big order, what would you do? How would you fulfill that order without breaking your budget, causing a lengthy delay in fulfillment, seriously interrupting your day-to-day operations, or risking an out of stock product and upsetting other customers?

If you don’t have an answer to that question, then this guide is for you. Not having a plan for scaling your CPG brand could lead to lost business and potentially devastate or delay your dream. 

Thinking through everything that goes into scaling your brand long before demand dictates will allow you to meet the challenge of scaling with more efficiency and ease. It may sound cliche, but, as in everything, “failing to prepare is preparing to fail.” Like an athlete who trains for years alone, envisioning what he/she would do in the championship game, you should be thinking through what you would do if given the chance to significantly grow. 

This guide addresses the different elements that you’ll need to plan for as you build out a scaling roadmap and then at the end we’ll walk you through the most important principles to keep in mind along the way.

Day 1 Decisions

Having a plan isn’t just about knowing what’s coming, it’s about streamlining decision points. A well defined roadmap will help identify:

• What can and should be prioritized immediately? 
• What will need to be addressed later? 
• What is the trigger point for when each decision needs to be considered/made? 
• What can be incorporated now so that it doesn’t take time or resources to revisit and rework later on?

Make as many decisions now in order to consolidate the number of decisions later. This gives you more time and money so you can focus on what matters – your customers, sales velocity, and product quality.

Trigger Points: A Balance Between Now and Later

In order to focus more on sales and customer experience, it's critical to understand how the capabilities within your supplier/distributor network overlay with the timing and speed of your sales goals.

While Day 1 decisions should be a consideration to avoid painful rework and unnecessary costs, it's also important not to rush ahead. Launching and scaling a CPG brand requires flexibility and the ability to pivot based on consumer feedback and market demand. In this way, failure to plan, and launching too far into the plan too soon can have equally devastating results.

Here’s a quick example how that can play out, and what decisions might be good vs. bad to make early on, especially as it relates to trigger points.

A CPG beverage brand is launching 4 flavors in aluminum cans. To save on can costs, they jump straight to printed cans and order one truckload per SKU, 204,225 cans each. 

On the bright side, to make this jump, the brand had to consider large volume print capabilities for their packaging and likely designed their art in a very scalable way from day 1. That’s great in terms of savings on art setup fees and ensuring that over time, any packaging provider can accommodate their art and its complexity (more on that later). 

What was overlooked is the fact their cash is tied up for months on cans sitting in storage, not going towards marketing or demos or proactive sales measures. Additionally, the cost of the storage space for ~800,000 cans, plus the cost of shipping/touching the cans multiple times to move from can manufacturer to storage to beverage production and so on adds up quickly. That alone should be enough to understand why a trigger point is needed, however we can take it even further.

While can are in storage, feedback is received that requires a tweak in art, ingredients, distribution or production. Now a copy change is needed and the cans in storage may no longer be usable due to outdated artwork. 

What started as a few pennies of savings per can quickly becomes thousands of dollars in unplanned expenses all because a trigger point wasn’t defined to address volume needs and establish a trigger point to outline when it makes sense to source cans from a smaller scale distributor versus a larger order that is manufacturer direct.

Product Availability

One of the most important things to consider when planning to scale is whether the packaging format, size and/or material you are using at a smaller scale is available at larger volume(s). Regardless of how, or from whom, you’re sourcing, you may be shocked to learn that the packaging you currently use or hope to use, isn’t available when you need to scale up. 

A good example from the can packaging world is small format sleek diameter cans. Among many digital printers (which often run lower volumes) 8oz sleek cans are often an option. However, when a brand needs to scale and starts to explore manufacturing direct supply, they often find out that the 8oz sleek can isn’t an available format from multiple can manufacturers. Rather, the more common small format sleek can is 7.5 ounces. 

While a can that is 0.5oz smaller doesn’t sound like a huge deal, there are significant implications to changing packaging size. Some of these include

• Graphics 
• Pricing and promotion structures
• Retailer shelf space

Let’s take the example of graphics and look a little more in depth. A change in packaging sizes, means that artwork proportions and copy regarding labeling laws need to be revised. While sizing alone is often an easy adjustment, this creates a new item with new item setup costs and graphics processing timelines. The addition of up to $4,000 per item and 12-16 weeks, respectively. And then there’s needing to revisit/revise any secondary packaging such as your cartons and its sizing and content. Not to mention verifying whether your packaging provider or equipment can accommodate the new specifications. The difference of even just a few millimeters is often enough to throw everything off. This causes delays, increases costs, and can force you to revisit your entire vendor and/or logistics network.

No matter your product, even if you’re not a beverage brand, everything has to be packaged in something. If that packaging has to change significantly once you scale, you run the risk of a serious change in your product and or operations.

Product Testing / Package Compatibility

It’s not just about packaging size. Many other factors come into play when you think about scaling. For example, larger orders or longer distribution routes may take longer to go from packaging to consumption. Is your packaging equipped to perform as desired for a longer period of time? This includes aroma, flavor, performance, carbonation, and more. 

Retailers and distributors have shelf-life requirements that you may not have dealt with while working at a smaller scale. There are also regulatory requirements for certain beverages that change as you cross state lines (ie deposit labeling laws). Additionally, performance of the material(s) of the packaging itself may differ among manufacturers or within different settings (ie time and temperature in storage). Before you ever consider scaling you should note the logistical variables that change in growing distribution and test your product accordingly to verify what works and what doesn’t.

Design/Decoration

This is where many brands get hung up when they begin scaling. Their initial design was detailed, complex, and eye-popping. It stood out to consumers and became a core part of their brand.

Suddenly they need to scale to a significantly higher volume and they hit a big snag: they are unable to replicate the complex designs on different decorators with potentially different technology. 

Here we go again with the cost and challenges associated with graphics changes. This time, we must also address problems that arise with large-scale orders including:

• Color limits - Designs may be limited to a few colors. In cans, this is often 6 or less.
• Cost increases - Special effects or varnish requirements results in additional costs per unit.
• Missing details - Designs like photo-realistic imaging or complex gradients risk losing consistency and clarity when printed at scale.

What once was a core component of your brand is now suddenly all in question and/or at risk.

Why does this happen? Smaller scale packaging is often best accomplished with digital printing, which, by nature, allows for infinite color selection and detail. Brands want to stand out from the start so they design the coolest, most-eye popping packaging that grabs a consumer's attention. This seems like a smart play in a crowded marketplace.

But then when the time comes to scale, that smart play turns out to be a huge burden. Offset printing is the more common option for large-volume packaging, which by nature, can’t capture the same level of detail, nor color selection as digital printing. It often requires setup of print plates and standardization of colors. Brands are then stuck deciding between a high-cost design that cuts into profit margin or changing the most recognizable part of their product.

This could have been avoided by design for large volume graphics from day 1. Don’t get us wrong, that doesn’t mean you should create boring designs. Offset printing still offers eye-catching capabilities. It does mean researching whether your brand colors, varnish, design elements, and copy style on the cans will hold up to offset printing and any other factors involved in larger-scale production. Plan from your first day for wild success and you won’t be stuck with this tough choice at a key moment in your business journey.

Production

When it comes to scaling, this is where the rubber really meets the road. How are you producing your product and if/how will that need to change should supply need to scale rapidly? There are a few subcategories in this topic: Self-production, co-packing, and multiple locations. 

Self-production

If you are producing or packaging yourself, do you have space in your current building to scale? Would you have to find a new facility if you scaled, or would you need to add on to your current layout? Perhaps you’d need to contract out to another manufacturer to reach the volume necessary. Significant costs come along with most of these situations. Even if you already have the space to scale, is that space actually ready for the production level you’d need? You might need faster machines, increased utilities, storage, or other upgrades. 

Co-Packaging

Is your co-packer ready to scale with you? Can they meet higher volume requirements? Do they have scheduling flexibility, larger shipping and receiving capabilities, and enough storage space? How about  variety packs are new/different variations of production offering? Quality control and documentation can also change with new buyers and volume. 

Co-packers will need to meet all the requirements of the major retailer that you’re hoping to work with, otherwise you could lose important business right as you’re trying to scale. Knowing the right questions to ask a co-packer as you research who to choose, and ensuring they can meet all the requirements, can make a big difference for your brand as you scale.

Multiple Locations

If you are expanding in different markets you might be looking at a host of other things to consider. You could need production or storage in each market, along with multiple co-packers and/or distributors. Ensuring quality across all markets can be a major challenge. Consider the impact your decisions will have on these factors:

• Sourcing - Are any of your ingredients or parts limited to a single supplier? Are they able to scale at your desired pace? Are they able to ship to all of your territories? How close are they to new locations? How does distance impact costs?
• Capabilities - If using a co-manufacturer, what is their sourcing model? Does that change or stay the same as you change or add other co-manufacturers? Does each co-manufacturer have the same packaging capabilities? How will you ensure quality and consistency across locations?
• Logistics - From both an inbound and outbound perspective, how many touchpoints across shipping, production, distribution, and final delivery are there? How close is sourcing to production to distribution to delivery? How many additional steps or facilities are needed to maximize efficiency, minimize cost, and ensure timely processing and delivery.

The more locations you are dealing with the more potential snags your scaling could hit and the higher the costs could soar. 

Supply Chain

Piggybacking off the considerations involving your co-packer would be assessing the entire supply chain involved in scaling your product. Is there a bottleneck in the chain and can it be solved or will it always exist unless there’s a major overhaul in your process?

You also need to know if all of your vendors and distributors can scale alongside you. One way to protect yourself against potential problems is to have multiple suppliers available for your ingredients, packaging, and other vital elements. However, if your product relies on a very specific type of ingredient or something else that can only come from one supplier, plan accordingly. Lack of planning or partnering together well might put you in a position of dependence that comes back to haunt you as you scale. 

Additionally, some vendors may offer certain services at one level but not once you need them at a higher volume. Vet all of your vendors for everything from reliability to product quality to customer service. You need true partners that will help you scale.

Storage

At nearly every turn, storage space is required. From a raw ingredients perspective, this is the point that we see a lot of brands get tripped up. After all, who wants to be paying for things to just sit? But, to scale well, understanding the need for and cost of storage is critical. 

Question to consider: Who is facilitating the storage? How many touchpoints does it add to your supply chain? Does the storage require special capabilities, i.e. refrigerated, food grade, double/triple stacking, etc.? How many shipments can the facility accommodate in/out each day? What is their process/policy for inventory? Do they have experience moving your type of product? How do they document/handle damage claims?

While cheap storage can be enticing, like most other considerations, it can have a snowball effect. 

An example: Your cans have been in storage for 3 months and are now ready to ship to your production facility. On shipping, a trailer of cans is damaged. Not only are cans lost that require a damage claim (often at replacement cost only), the cans potentially now have to be reproduced by your can manufacturer. Given production schedules, the manufacturer may not be able to ship replacements in time for your production date, potentially incurring cancellation or line delay fees at your production facility in addition to the cost of new cans. 

Locations / Logistics

Once your product is produced and packaged, it’s no good if you can’t get it to the locations that are selling it to the consumers. Can your logistics provider scale and ship all the various formats you need with quality, transparency, and reliability?

You’ll need to understand both inbound and outbound shipping requirements. The configurations and requirements are not the same as you scale. You’ll have different packouts, limitations, and costs with larger volume orders.

Route to Market / Distribution Plan

When you first start your business, vendors are rarely knocking down your door to work with you. Often you take the first few that are willing to take a chance on you. However, as you scale, those vendors may not be the right fit anymore. 

Distributors can be similar and a key example. Most brands go through many distributors as they grow. Though loyalty is important, it’s vital to work with people who will enable you to grow. 

You don’t want to be hamstrung just because you want to be loyal. Maybe you started with a specialty food or liquor distributor, but as you grow you switch to a beer-specific distributor. These are the decisions you have to prepare for as you consider scaling. 

Distribution is also very regional in many cases so your strategy will differ based on the locations that you are expanding into. 

Principles for Creating Your Roadmap

As you can see, there are many considerations to scaling. If you have to make all of these decisions (many many more!) after getting an order that could change your business forever, it would be extremely challenging to get everything right in time to meet expectations and demand.

That’s why you need to have a plan. 

It might be years before this plan is ever put into place, but if you’re aware of the decisions and have explored or thought through your options, you’ll be able to scale quickly. 

Here are three guiding principles for you as you create your roadmap.

No. 1 Know Your Trigger Point

This takes some deep analysis, but you need to know at what point this plan will go into place. What level of order or sales volume is going to be too much for your current situation? If you don’t know this number then you will be stuck. 

You’ll fight through unnecessary challenges because you didn’t know that this was the point to start scaling operations. You’ll say no to opportunities because you can’t meet them. Or, on the contrary, you’ll say yes to opportunities because you wrongly believe your current capabilities are fine for that volume. All of these negative outcomes can be avoided with a clear trigger point. 

Brands that jump to scale too early, i.e. before the correct trigger point, end up with too much cash tied up in product or in processes that could end up needing to change due to the factors discussed above – artwork changes, regulatory issues, storage volume, logistics, and more. 

This is a difficult balance to strike and this trigger point varies for everyone, but it’s the most important thing to know when it comes to your scaling roadmap.

No. 2 Keep the Customer at the Forefront

All of these factors aside, the most important thing for any brand is the customer. For CPG brands, consumer preference and value are paramount. The customer does not know or often care about the challenges you overcame to get your product to the shelf where they purchased it. If the product they paid money for isn’t as good as they expected, they may never purchase it again. This is especially true for a new brand expanding into new markets for the first time. There are too many other options available for a customer to give your brand another chance. 

Testing, planning, and constantly improving your product and the packaging should be part of your normal business operations. You could have the best logistics in the world but if your product loses freshness because of the packaging type you chose, then your brand isn’t going to be successful. When creating your scaling roadmap, never forget the importance of the end-user’s experience.

No. 3 Consider the Cost

Issues with any of the factors discussed above can result in significantly increased costs. Everything from the can design to the storage to shipping can add to your costs. Delays in production as you work on scaling operations result in lost revenue as well. Even the inability to focus on the revenue-driving aspects of the business as you work through snarls in your scaling process can cause major headaches. 

These three principles should guide you as you create a plan that considers all of the factors involved in scaling your CPG brand. Don’t wait for a big opportunity to come along and then fumble it because you hadn’t planned for this success. 

American Canning helps CPG brands scale every day, talk to one of our can experts today to learn more about how we can help you as you plan for the success of your brand.