Contract food production, 7-saz product development center

The first step for anyone thinking of starting a food brand is a realistic feasibility study, 7Saz Center provides this initial review for free.

According to the commercial report of Safir Arjan, on the shelves of every chain store, dozens of brands of beans, spices, tea, saffron and honey are arranged together. The general impression is that behind each of these brands stands a big factory; But the reality of the market is something else. A significant part of these products are produced in factories that do not own the brand. The name of this model is contract production and in recent years it has become one of the most popular ways to enter the Iranian food industry.

The capacity that was left unused

Iran's food industry is facing a contradiction. On the one hand, many production units have part of their capacity unused; A production line that is shut down for part of the year, while the factory's fixed costs, from labor salaries to equipment depreciation, are paid every day. On the other hand, many entrepreneurs and businesses have an idea, a customer and a sales network, but they don't have tens of billions of capital to build a factory.

Contract manufacturing brings exactly these two parties together. The brand owner determines the product formula or specifications, and manufacturing takes place in a licensed factory. The factory turns its empty capacity into income, and the brand owner has a legal product ready for sale without buying land, sheds and machines.

Why do brands contract instead of factories?

Building a food production unit, even on a small scale, involves buying or renting land, building a shed, importing or buying equipment, obtaining an operating license, and hiring a technical officer. This path usually takes several years and requires capital that is locked up in fixed assets; Money that does not make any sales for months and sometimes years.

In the contractual model, this equation is reversed. The capital of the brand owner is directly spent on raw materials, packaging, branding and marketing; The same sectors that bring income. If the product is successful in the market, increasing the production only means a bigger order, not building a new shed. And if there was a need to change the route, the cost of correcting it is much lower than the owner of a factory.

Two ways: proprietary formula or private label

Contract manufacturing usually takes two forms. In the first form, the owner of the brand has the formula and specific specifications of the product and the factory produces exactly the same; A suitable path for someone who is looking for a distinctive product. In the second form, which is known as private label, ready and tested formulas are used and only the name, label and packaging belong to the brand. Private label is the fastest and least risky way to test the market, and many brands start their work here.

The constant question of those who get to know this model for the first time is how to get health permits and health apples without a factory. The answer is that the license is issued on the basis of production in a licensed unit, not on the basis of ownership of that unit. In this way, the brand product goes to the market with official licenses, and the brand name and its ownership remain completely owned by the brand owner. This is the mechanism that makes it possible for new brands to enter chain stores, marketplaces and even export markets.

Despite all the advantages, contract manufacturing has a serious challenge: fragmentation. The brand owner must coordinate the supply of raw materials, formulation, selection of the appropriate factory, packaging design, printing, licensing and finally entering the market. Any loop that doesn't work properly brings the whole project to a halt. Packaging that doesn't read according to label specifications and needs to be reprinted, or a factory whose license doesn't match the product category, are some of the most common causes of delays and hidden costs down the road.

For this reason, centers have been formed in recent years that manage this entire chain under one roof. One of these groups is the product development and contract production center of 7saz, which with a network of 32 factories active in different categories of food, starts from the feasibility of the idea and continues until product design and packaging, obtaining healthy apples and registering the brand, production and entering the market. The details of this model are introduced on the food contract production page.

Who benefits from this model?

Market experience shows that a few groups benefit from contract manufacturing more than others: online sellers and Instagram pages that have an audience but do not have an exclusive product; Stores and broadcasters who want to have their own brand instead of selling others' brands; exporters looking for branded and licensed products for foreign markets; And investors who want to get into an industry with less risk that demand never dies.

Categories such as beans and grains, spices, saffron, coffee and tea, dates, honey and dried fruit are the most common starting point for these brands due to their well-known production process and high shelf life.

The future: from intermediation to production ecosystem

Experts in this field believe that the future of contract manufacturing in Iran is beyond a simple contract between a brand and a factory. Networks that bring together the raw material supplier, the printer, the manufacturing unit, the licensing consultant and the distribution company can both activate the empty capacity of the industry and shorten the entrepreneurial path for the new generation of business owners. 7saz, with more than 20 years of experience in production and branding and a track record of producing more than 100 products, is one of the collections that moves in the same direction.

The first step for anyone thinking of starting a food brand is a realistic feasibility study: what product, for what market and with what budget. 7Saz Center will do this initial review for free and then provide a detailed route, suitable cooperation model and cost estimate. Those interested can call 09125000500 or visit website 7 for advice. The head office and factory of this group is located in Tehran, Quds city.

More information about factory-free production and services of this collection is available on the 7saz website.

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