“I want to create a beverage. What should my budget be?” We get this question all the time and it can be difficult to answer–and for good reason. Getting your dream beverage on store shelves can be expensive and complicated. There are many variables involved in the process that can dramatically shift the needle on costs. Knowing exactly what you’re getting into before you get started can set you up for success and help you estimate a realistic budget and timeline.
If you’re still serious about the dream, then there are two major categories of considerations you should think about: (1) creating your product and (2) selling your product. Each come with their own set of costs. And while it may seem counter-intuitive, but it’s best practice to start with the second set of considerations–selling your product–as this will help you crystalize your beverage concept before you begin development. If you haven’t yet gotten that far, then stop reading and visit our checklist for creating a beverage, here.
Once you understand where you’d like to go with your idea, then it will be easier to focus on the details of bringing your beverage to life–including how much capital it’s going to take to make your vision a reality. Every decision you make about your brand will affect the cost of your finished product–let’s explore some of the variables involved and how they will ultimately impact your budget:
Say you want to create a traditional energy drink–based on our data from similar products, to sweeten with sugar, you should expect to pay around four to five cents per 12-oz. can; but maybe you’ve decided that being “sugar-free” is critical to your brand and your target consumer group. Well, that decision affects cost.
If you plan to use a sugar-free, low-calorie sweetener blend instead, then you would probably pay about 11 to 12 cents per 12-oz. can. Want to make a 16-oz. variant? Now you’re likely looking at about six cents for sugar or 15 cents for a low-calorie sweetener per 16-oz. can.
Keep in mind that these numbers are simply for the sweetener cost per unit, and that every ingredient in your beverage will have its own expense. Depending on how many ingredients you require in your formulation, you can see how this cost alone can quickly eat up your budget.
How Beverage Certifications Affect Costs
Maybe along with (or instead of) being sugar-free, you have determined that you need to capture the segment of the market who prefer to buy Organic-certified products. There is nothing wrong with that strategy, but it will involve formulating and sourcing ingredients accordingly, as well as working with an appropriate co-packing facility.
You might be surprised to learn that Organic-certified beverages can have raw ingredient costs around 50-75% higher, per-unit than products without that certification–it’s up to you to decide if that cost is really worth it. While having certifications like USDA Organic can absolutely open you up to a more specific market, it can also close you off from consumer groups who are more price sensitive.
Of course, you’ll also need to decide on how you want your beverage presented on the shelf; and yes, that will have a cost too.
There are a variety of options–including aluminum cans, glass bottles, plastic bottles, and more–but you’ll have to balance presentation with cost and make sure it’s also compatible with your drink’s unique formulation and processing.
Sticking with our energy drink example, a 12-oz. decorated can will typically run about 15 cents per unit at average introductory order minimums. Your supplier will also need to create a printing plate with your design, so add a few extra thousand dollars in up-front costs to your packaging budget.
If you decide to package your drink in a glass bottle, then you might expect to pay about 40 cents per bottle, plus the expense of creating and printing your product labels.
Once you have all your materials and your final beverage formulation, you can hire a contract manufacturer (also known as a co-packer/contract packer, bottling or canning company) to produce finished cases of your drink–but you can’t just pick anyone. You will need to select a suitable facility for your beverage type. No two manufacturers are alike.
Some drinks will require specific processing (like pasteurization, for example) to ensure a safe and shelf-life stable product. Flavorman can help you determine your needs and recommend reputable, capable facilities specific to your concept; but in general, a good initial estimate to budget for is about 15 cents per unit for the canning or bottling process. And remember, the more complex your formula and processing, the higher your manufacturing costs.
You can cut your per-unit costs by purchasing or producing in higher quantities; however, both options will require a larger amount of capital which you may not have until your business grows. Other tips for reducing your COGS can be found here.
So, How Much Does It Really Cost To Create A Drink?
Though we’ve provided a few estimates, this isn’t a question easily answered. If you haven’t realized it by now, every decision you make will come with cost, logistical, and even branding implications–and we haven’t even gone into every line item!
In addition to ingredient, packaging, and manufacturing costs, you’ll still need to account for the expense of developing your formulation, plus the budget required to distribute, promote, and ultimately sell your drink to the masses.
Luckily, if you’ve done your due diligence in crystalizing your concept, it will be easier to stay aligned with your business goals, make more informed choices, optimize your COGS, and reduce your risks. Of course, working with the right beverage development partner also helps.
With nearly 30 years of beverage development expertise, Flavorman has created almost every kind of beverage imaginable. Not only do we know how different ingredients behave together in solution, but our experts can also provide insights on how the choices you make with your beverage formula may affect costs for you down the road. We’re confident that by partnering with us, you’ll get the information and support you need to have the best chance at success.
“Other development companies or flavor houses will give you a formula and flavor and send you on your way,” says Kristen Wemer, Flavorman’s Director Beverage Architect. “They don’t provide any technical or regulatory support. Flavorman is different. Even after your formulation has been finalized, we continue to be an extension of your team. That’s what makes us so unique and that’s what makes our clients–and their beverages–so successful.”
When you’re ready to change what the world is drinking, give us a call at (502) 273-5214 or get started with this web form.