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Hello

New here! I am interested in starting a chocolate business. I have a few questions I hope some one on this forum can help answer.

What is the margin differences in making your own vs private labeling someone else's?

I am more interested in the private labeling side because I am by no means a chocolatier nor do I have the money for equipment.

Please help name some companies that do wholesale / private label high quality chocolates.

What kinds of licensing in CA will I need for consumable goods, making my own chocolates and selling them?

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Replies to This Discussion

Anyone?

I too would be interested in the licensing aspect in CA.

Vinh,

Doesn't look like many people in this forum like to share information, or they don't read this blog.

I recommend joining the LinkedIn Group:  Chocolatiers and Confectionery Business Professionals.  There is more sharing on this forum.

Margins are much higher if you produce your own product.  However, it takes time, talent, equipment, space and many other considerations.

There are several companies that will private label for you.  Consider Torn Ranch in Petaluma, CA;  Bridge Chocolates in San Francisco.  Research chocolatiers in your local area and see if they're big enough to do private labeling.  Your margins will be less.  How much less would be determined on who you're selling to, where and how.

You need a business license and resale license wherever you sell your goods.  Business license is from your local government (city) and resale license from your local California State Department office.

If you produce your own product, then you'll need to be certified by the State Department of Health, local office. 

If you deal only in chocolate with no perishable inclusions, like bars with nuts or dried fruits, then you can make your own bars in a home kitchen that is certified by the State.  See Cottage Industry regulations with your local State Health Department.  Packaging label requirements will be spelled out in the regulation.

If you want to make truffles that use cream, butter, etc (perishables), then you'll need to use a commercial kitchen that is inspected at a more detailed level.

Whether you make or resell, you need to determine your venue for sales: brick n mortar, farmer's markets, online, pop-up, wholesale placement in specialty stores, etc.  Each have their own pros / cons / limitations.

Good luck.

- Lynn Wong

  Viva Cocolat

Hi Lynn,

Thank you so much for this reply. It is very helpful and I will join the group mentioned.

-Jonathan

I don't think dumping on this group is productive at all. Sometimes it just takes time or the right person reading he question to get the answer that you are looking for.

I agree with Diane on that one.

Also, in response to the comment above, In California they do allow nut inclusions in chocolate, as a part of the Cottage Food Operators Permit. 

California has options as far as licensing goes.  In order to sell consumable goods in ca you need a health permit, which means that you either need to:

1. Set up your own kitchen,

2. Rent space in a kitchen.  Often there are places where you can rent hourly.  Some options include large churches, if they are permitted, or banquet halls, community rooms etc.  I found this idea to be cumbersome as chocolate can take a long time and can be expensive, especially in the learning stages. 

3. Get a Cottage Food License(CFO), which allows you to license your home kitchen for the production of chocolate for direct or indirect sales.

I would recommend contacting your county's Environmental Health office to see what options are best for you.  I live in a small county, so you may find that it is different in yours, by our Environmental Health office is extremely helpful and directed me to all the right places.  Another valuable resources is the Small Business Association. 

As an aside, you dont generally need a seller's permit, with a CFO as chocolate is generally non-taxable.  Unless you are planning on selling it to be consumed on-site.

That is very interesting. It would be great to not have to worry about collecting tax. I will definitely look into that. Thank you for pointing it out.

Vinh:

Another thing to consider with the delay in the response is that the question is too huge to answer.

What are the margin differences between making your own and private labeling? That's a question that can't be answered (satisfactorily) in less than several thousand words. You have to start with COGs and work through cost of distribution and more. 

On the request for recommendations for private label producers it helps to know what kinds of products you want to produce and what scale you want to start out at. Torn Ranch and Bridge (another would be Marich) all do private label production - but they may demand minimums that are beyond what you can afford to start out with.

Are there companies that do runs of 500 pieces with a powder milk?

Jonathan:

500 pieces of what?

You will not get a large producer to do this as their minimums are likely to be thousands of pieces. However, you might find a local confectionery business to do a job this size. If you're talking chocolate bars, that might be more difficult as it will require some recipe development if they're not already making chocolate from the bean.

Hi Vinh

It's hard to tell what the margins would be like unless you do the homework. Different Private labels will require a high volume to make margins reasonable. You will probably be limited to what they will make for you, you give up a lot of control with a co-packer to do private label.

If you can move a lot of product then this could be good, if not, well making it on your own has it's own things to consider. Time, materials and equipment. Could make higher margins but you need to invest in a whole different direction. Production and staffing which comes with it's own headaches. 

 

It takes a lot of research to see what will fit with your vision. Google chocolate manufacturers in your area like someone else suggested. Good luck

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