Custom Packaging on a Mass Scale ** Rewarding and Costly and Risky

[Guest guest]

Hi y'all,

 

This will interest some .. but not others. If you're not interested

then zap it cause its not real short.

 

When it comes to packages, boxes and mastercases, etc., minimum orders

of most printers is somewhere in outer space. And preparation costs

prior to printing are enormous.

 

Take a gander at the Linden Tea at http://www.AV-AT.com/lyndtea.html

That box has 4 colors .. each of them require the casting of one clique

and each box is run through the printing process 4 times .. once for

each of the colors. One clique is around $250.

 

Minimum number of boxes my printer would deal with was 5,000 per type ..

meaning 5,000 X 5 as I have 5 Herbal Teas. Since one mastercase holds

24 boxes, I made it 5,040 boxs and 210 mastercases for each tea.

 

First printing/production of 210 X 5 (1,050 mastercases) sold out by

Spring 2001. The Herbal Teas were selling well .. as I was selling the

mastercases at 40% off many folks bought a mastercase of each type ..

more than once. So for the second printing/production I decided to cut

printing/shipping costs and jacked it to 7,200 boxes and 300 mastercases

for each Herbal Tea .. it now looks like that was a bit too many. ;-p

 

There's no way to mass produce a custom designed brand without sinking a

buncha money into it. In almost ALL cases, the cost of the contents of

custom brand items is 10% to 20% of production cost of the item. Keep

that in mind if you have dreams of seeing your own custom design.

 

For a while I produced salted, roasted, packaged sunflower seeds for a

candy company in San Juan, PR. Brand was SOMY .. Tradmark owner was a

Dr. Negron in San Juan. When Nestle stopped making their famous brand

" David " in Net. Wt. .4 oz (11.3 gr) size .. 15 cents each .. which was

ideal for school kids to carry and munch on .. Negron decided to come up

with SOMY in that size and a friend in San Juan sent him to me.

 

Though Turkey has some of the most tasty sunflower seeds in the world,

they're white and the Dakota type is brown. Negron wanted the Dakota

sunflower seeds .. the same as Nestle offered.

 

Here's where human error is not acceptable .. in calculating costs. I

number crunched and correctly determined I could bring Dakota Sunflower

Seeds to Turkey ... from the USA .. print required packaging, contract

salting, roasting and packaging and send them back to Puerto Rico for a

price that would allow him to sell them for ten cents each .. and with a

profit to me of a cent per package - or around $5,760 per 40' container.

 

I went to Puerto Rico and signed a contract with Negron for two each 40

foot containers per month for 12 months .. each 40' container held 1,000

mastercases .. each mastercase had 16 boxes with 36 ten cent packages in

each box .. 576,000 Sunflower Seed packages per 40 foot container.

 

To see SOMY go to http://www.Bsi-Hq.com click on Products .. then

click on Nuts and Seeds. Bottom right hand corner has SOMY.

 

Another place where honest folks have no room for human error is the

calculation of time required to deliver a product. No way can you put

your finger on the scales and no way can you jump the gun and deliver

early as that causes storage problems. For two containers of 576,000 X

2 packages the printing lead time was 20 days .. packaging time was 7

days .. delivery to Turkish port to offload in San Juan was 30-35 days.

 

This meant that sunflower seeds and packaging must be in place well in

advance. Meant .. I bring in the seeds and print over $11,000 in

packaging for the two containers more than a month prior to their use.

 

After I worked out the many problems caused by a Spanish speaking bank

sending English language Letters of Credit to a Turkish speaking bank I

was leaning forward in the saddle and sending out a fine product. Let

me tell you that not dotting an " i " or not crossing a " t " can cause you

big headaches and loss of money when dealing with Irrevocable, Payable

at Sight of Documents, Confirmed Letters of Credit .. and if you are

gonna deal with a foreigner you don't know well .. or with anyone on a

big money basis, you MUST go that route .. and its not inexpensive.

 

After I had delivered 14 each 40 foot containers Negron was toying with

taking 3 containers a month cause the seeds were selling like crazy.

Nestle saw this and it bothered them .. maybe not from a loss of profit

standpoint but not liking competition methinks. And Nestle didn't get

large enough to try to buy Hershey Chocolate by being stupid. So .. they

started offering David in the same size and price .. of course, brand

identification is one of the biggest psychological effects of marketing.

 

So .. SOMY sales dropped big time .. Negron asked me to lay off a month

on the next two containers .. and I already had $11,000 in packaging in

the warehouse. The sunflower seeds to fill two containers was no big

deal .. 11.3 grams X 576,000 X 2 is 13 tons .. not much money as I was

bringing them in for $220 a ton .. $2,860 for seeds for two containers.

Match that cost against the $11,000 for packaging for two containers.

 

The short of it was .. Negron never ordered more sunflower seeds. The

contract was between an American company and my Turkish company. No

Reciprocal Enforcement Agreement exists between America and Turkey .. or

America and most countries. So to sue, I would have to go to the USA ..

and buying the best form of justice available in Puerto Rico is not

unheard of cause everybody is married to somebody's cousin. This was

advice I got from a Puerto Rican attorney .. he said the only loss was

$11,000 in packaging because the sunflower seeds could be used in other

brands in Turkey .. and if I didn't try to offer them to another company

they would soon become stale as confectionary seeds and only be fit for

oil or animal feed .. so I was obliged to get the lead out and dump them

for a bit less than cost to another company. The custom packaging was

just dumped in the trash!

 

There are many lessons above for folks who might be considering doing

custom packaging of any product on a mass scale. Assuming you have

done your number crunching correctly in the first place .. cause if you

don't, you might find yourself having to deliver at a loss .. or pay as

a judge decides.

 

1. You gonna have to sink a buncha money into the start up costs.

2. You can make a buncha money on a very low profit margin.

3. When dealing with foreigners .. contracts only clarify expectations.

4. You can loose a buncha money on the deal.

 

That's all folks. ;-p

 

Y'all keep smiling, Butch http://www.AV-AT.com