How To Create A Beverage: A Checklist

We get the question all the time-what does it take to launch a new beverage? Although it may seem like a straightforward inquiry, the answer almost never is-and for good reason. There are just too many variables involved that can dramatically shift the needle on the outcome, especially when you're just in the early stages. That being said, there are a few essential items on the checklist that may help as you consider what it would actually take to make your dream drink a reality.

1. Know What to Expect

Getting your dream beverage on store shelves can be expensive and complicated. 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.

Do some research on your own first-are you ready for the commitment? Do you have a budget? If you've checked off these two tasks, then congratulations! You can now graduate to exploring your concept further.

You're serious about the dream-that's great! But there are two major categories of considerations you'll need to think about to make it real: (1) creating your product and (2) selling your product. That brings us to #2.

2. Start With The Sell!

You've got a great idea and you're feeling inspired-but what's your end game?

It may seem counter intuitive, but it's actually best practice to start by thinking through your distribution and sales strategy before you start to develop your product. Remember-the clock will start ticking as soon as your drink comes off the assembly line; so how are you going to make sure it moves?

Don't give up just yet! Instead, ask yourself some of these questions:

• What kind of drink do I want to make? And what flavors and ingredients will I want?
• Who is my target consumer?
• What are my brand's goals and values?
• How will my product stand out against similar products on the market?

Answering these 4 questions will help you work backwards as you discover a clearer path from development to manufacturing to distribution, giving you the best chance at success.

Use your answers to come up with goals and a business plan for your concept. Maybe even develop a draft for your marketing deck and sales materials. Once you understand where you'd like to go with your idea, then it will be that much easier to iron out the details of bringing your beverage to life.

3. Nail Down Your Beverage Blueprint

Now that you've brought your vision into focus, it's time to make it real. You'll need a few partners for this step.

First, you'll need a reputable beverage development company who can create your commercial beverage formula. At Flavorman, we work with our clients to create custom beverage formulations that fit their unique concept and requirements. Drawing from your business plan and goals, we'll collaborate to bring your idea to life in our lab, following your specifications. The reason those brand goals are so important is that every decision you make will affect the cost of your finished product (but more on that later).

Through a series of sampling and tastings, Flavorman moves quickly through the development process. Your first set of samples will be shipped to you in 10 business days so you can provide feedback to your team. We'll repeat this process until we get it right.

Once we've perfected your unique formula and flavors (which, by the way, no one else will have access to!), our team will get it finalized and ready for your first production. We'll scale up your formula and create your blending instructions (basically your drink's commercial recipe), complete label reviews, and submit your regulatory paperwork. We'll also provide 100 units of your drink for marketing, distributor meetings, and more. In the meantime, we'll also conduct quality and shelf-life testing so you know how your drink will hold up on the shelf.

Whew-that's a lot! But remember: the development process is only one part of bringing your beverage to life. You'll also need to consider what it takes to manufacture, package and distribute, promote, and ultimately sell your drink to the masses. To do that, you'll need to know the expectations associated with each, which brings us to our last consideration-understanding your costs.

4. Understand Your Beverage Product Costs

On the production side of your business, your budget will be determined by four cost categories: development (that's where Flavorman comes in), ingredients, packaging materials, and manufacturing, which covers the cost of blending up your liquid and putting it into its packaging.

Each of these cost categories has an impact on your Cost of Goods Sold (COGS) which, in turn, affects your gross profit. COGS refer to any direct costs, including labor, that are associated with the production of goods sold by a company-in this case, your drink!

We've provided some estimates below to help you think through your production costs:

Beverage Ingredients

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 4 to 5 cents per 12-oz. can. But maybe you've decided that being "sugar-free" is critical to your brand, and that capturing the "sugar-free" consumer group is critical to your success. 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 looking at about 6 cents for sugar or 15 cents for a low-calorie sweetener per 16-oz. can.

Keep in mind that these numbers are simply an estimate for the sweetener cost per unit, and that every ingredient in your beverage-flavor, color, acid, preservatives, etc.-will have its own expense.

Packaging

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. 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.

Manufacturing

Once you have all your materials and your final 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 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.

Putting It All Together…

If you haven't realized it by now, every decision you make will come with cost, logistical, and even branding implications. Let's say you want to certify your drink as USDA Organic; well, this involves formulating and sourcing ingredients accordingly, as well as working with an appropriate co-packing facility. All said and done, Organic-certified beverages can have around a 50-75% higher ingredient cost than products without that certification-it's up to you to decide if that cost is really worth it.

Yes, having this certification may open you up to a more specific market, but it can also close you off from consumer groups who are more price sensitive. Luckily, if you've done your due diligence in crystalizing your concept and business plan, that won't be nearly as difficult a decision to make.

Follow this checklist and it will be easier to stay aligned with your goals, make more informed choices, and ultimately reduce your risks. Of course, working with the right beverage development partner also helps!

Flavorman can set you and your product up for success. With nearly 30 years in the business, Flavorman has created almost every kind of drink imaginable-and we're confident that we can perfect your dream beverage, too.

"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 talk about your beverage idea, give us a call at (502) 273-5214 or get started with this web form.