Part 2: Transitioning from Your Kitchen to The CPG Regulated Market
In Part 1, we discussed how to identify your initial product offering by defining your target customer, distribution concept, and pricing model. In this installment, we’ll talk about the regulatory environment you will have to navigate, and begin to understand the difference between recipes and formulas.
The Wholesale Regulatory Environment
Whether you’ve been producing your small-batch recipes in your own restaurant, or just experimenting at home, you hopefully have some basic understanding of your local health code regulations. If you feel you are lacking in this arena, I’d suggest taking the ServSafe® Food Manager Safety Course to get certified. At the very least, you’ll be getting a great crash course in food safety, and there’s also a good chance you (or a team member) will need a Food Manager Safety Card to get your product past inspection before hitting the shelves.
Your regulatory compliance will vary depending on your type of product and distribution concept. Generally speaking, anything made with raw animal product, alcohol, or other controlled substances will require a high degree of regulatory oversight. Similarly, working with a third-party distributor or otherwise distributing across state lines will also introduce new compliance complications.
Your first point of contact should always be your local Board of Health, Sanitarian, or Department of Public Health and Human Services. They will work with you to help you understand the rules you’ll have to follow as your get your product ready for the market.
Let’s take a brief look at some of the regulation types you may have to consider:
Cottage Kitchen Laws
Many states have their own Cottage Kitchen Laws. These are the easiest regulations to pass, and typically apply to products like jams and jellies; baked goods; and dry mixes like those used for cakes or breads.
The United States Department of Agriculture oversees a vast array of products like meat, dairy, eggs, cheese, produce, and more. Many state laws take their cues from Federal USDA regulations, and your state USDA representative will likely check to see that you are in compliance with Federal regulations.
The Food and Drug Administration oversees issues related to the inclusion of alcohol or other controlled substances to your food product; ingredient statements and nutritional claims; packaging requirements; facility safety plans and product recalls; and much more.
Recipes vs. Formulas
Simply put, your home or restaurant-made small-batch product is a recipe. As you begin to enter the CPG world, you will most likely have to convert your recipe to a formula. This term can scare a lot of artisanal producers, as it may connote the use of chemical additives that they intend to avoid.
Really, it’s just the term used by established industry players that reflects the CPG food industry’s reliance on all manner of stabilizers, preservatives, and other ingredients (both natural and artificial) used to increase shelf life across large distribution channels. Importantly, it also reflects your eventual need to translate your recipe proportions to a larger volume of measurement. You’ll no longer be thinking of “1/2 cup of sugar per batch,” but rather “25 lbs. sugar per product run.” More on this in Part 3.
My own experience as a small-volume producer is that while my local Sanitarian and USDA reps are immensely helpful, it is much more difficult to receive clear guidance at the Federal level, because they tend to be slower to respond and don’t seem to have as many “boots on the ground” for small startup companies. This does not mean you should skip their guidelines. Instead, consider reaching out to the USDA and FDA early and often to get the guidance you need before you decide whether to self-produce or co-pack your product, and before you identify your packaging.