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pastryani

Wholesaling your wares

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Does anyone here wholesale their chocolate bonbons?

 

If someone asks you to wholesale (and you've never done it before!), what kind of questions should you be asking?  And if they want to buy chocs from you and then label them with their own logo, is that standard practice?  Any reasons not to have them re-label?  Also, what is the standard "wholesale rate" as compared to what you would normally sell them for?  (sorry, that's a lot of Qs but if anyone would know it would be y'all...) :) 

 

 

 

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Bottom line, you're trading volume for margin. You'll have to calculate the time you'll invest (and the impact on your retail sales) against the money you'll make from the wholesale order. When my parents had their bakery, they dabbled in wholesale for about five months before concluding it was just not worth their time. Admittedly there was one specific customer who was a tremendous PITA and that may have accelerated the decision a bit (my father, who was half the man's size, told him if he didn't leave he was going to be thrown out on his ear). 

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I don't sell chocolates, I'm in the pastry/dessert side and we sell to caterers, restaurants, etc and have a small retail (very small) space.  Most "wholesale" clients are asking for 20% off and that depends on the volume they do.  If you want 20% off my retail for a wedding cake and you're only going to order 5 cakes over the course of a year, then no, that doesn't qualify for 20% off.  If that number goes to 100, well then yes, that makes it worthwhile for me to discount the retail price.

When I sell to gourmet shops, I have to consider that their customers may overlap my area and if someone walks into the shop and sees I'm selling a flourless chocolate cake for $38 and the gourmet store wants to sell it for $50 that's a problem. (Mostly for them because I can't control their margin/markup requirements.  You sell for what the market will bear, and your margin on different items is going to be different, which means the markup is going to be different.  I can't get $50 for that cake in the town I'm in; but in a more affluent town, it could very well be considered a bargain at $50!!)

 

Something I've heard other vendors mention is buy-back - if something doesn't sell do you buy it back or not?  How do you handle problems (quality, storage, shelf life, missed deliveries, missed deadlines - meaning they don't get their order in to you on time and now you charge a rush fee to fulfill an order)?

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With bonbons, shelf life is a big issue.  Do they have a cool space for storage?  How often will you be delivering fresh?  Does the customer have refrigeration? (I know, not always ideal, but can be helpful)  Is it a one-time thing or ongoing?

 

My wholesalers all have different mark-ups.  I do 50/50 consignment at one place, had a favorable 60/40 arrangement at a holiday shop last year.  Other retailers don't fully double my prices, but then I have one who wants a 60% margin (i.e. they want to buy chocolate bars from me for $2 and sell them for $5) which I do not agree to.  OTOH, I work with chefs who barely mark things up, my prices for them are more like @JeanneCake's 20% off.  I think for the chefs & caterers I work with, there is a huge convenience factor so they are not as concerned about making profit on the desserts as having the desserts done well by someone else.  They'll make their money on the room rental and alcohol. 

 

Are you making custom or exclusive flavors for them?  I don't see any real harm in letting them put their branding on, but you should definitely have your name on them somewhere.  "Handmade by Ani for XYZ"  There is certain info that all food packaging is supposed to have, like where it is made, net weight, and ingredients.  If you don't already have ingredients labels, they are easily done on sticker sheet or label templates.  Make sure to list all potential allergens - milk, wheat, peanuts, tree nuts, egg, and soy.

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I have been selling my chocolates on a consignment basis in a couple of places in town. I provide boxes of 6 or 12 pieces sealed (not vacuumed) in individual bags and the seller refrigerates these. This means 6 or 12 pieces must be bought at a time. I provide a display card showing what the boxes contain and also a list of ingredients. In one case I provided an extra box opened to display what the sealed boxes look like; when a space is not air conditioned overnight, each night that display box must be refrigerated, at least in the summer.

 

I just learned that the owner of a French bakery about to open is interested in the chocolates. I am trying to get my thoughts together before contacting him. I can imagine that in a bakery situation, where customers are purchasing one item at a time, they might well expect the chocolates to be sold by the piece as well. If that is also the thinking of the baker, I can't imagine how this might work, though obviously there are many chocolate shops where individual pieces are displayed and sold, I assume in low-humidity cases of some sort. I can't see how this would work in the absence of such special display cases. Even if I found decent clear-top boxes holding perhaps 2 pieces, the humidity would almost certainly ruin them.  Has anyone else had experience in a similar situation, and if so, how did you deal with it? Any thoughts will be appreciated.

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For those of you wholesaling your wares or selling on consignment, do you need any special permit or license to do so? I was pondering this sales channel as well and want to make sure I know all the hoops that must be jumped through.

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32 minutes ago, Daniel D said:

For those of you wholesaling your wares or selling on consignment, do you need any special permit or license to do so? I was pondering this sales channel as well and want to make sure I know all the hoops that must be jumped through.

 

If you are in the U.S., it depends on which state you live in.  It also depends on where you are making your product. As I understand it, very few states allow products made in home kitchens to be sold retail (or sold wholesale to be retailed by somebody else). You have to be in a professional kitchen that has been inspected. My state is an exception and I had my kitchen inspected (that is another saga for another day), so I am allowed to sell anywhere. I must include an ingredient list, which also states the net weight of the contents and, of course, an allergen list (the supervisor in my area said, "I know pinenuts are not actually nuts, but you have to list them"). I also had to provide a recipe for every single filling I sell. So-called "cottage food operations" are another matter--no inspection necessary but you have to include a notice that the product was made in a non-inspected kitchen and cannot sell it anywhere except from your home or at a farmers' market. Needless to say, there are also various approvals and licenses required by the city or county in which you operate. As you can see, I have done a lot of research on this topic.

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When I sold to an actual candy shoppe, they had a case refrigerated and humidity controlled - designed for confections. Since I did not supply any packaging, I would give them "wholesale" prices.  SS caramels were  $1.10 to $1.25 each.  They sold them for $2.25ea.    Tipsy Tortoises I'd sell for $3 each; they'd sell for $4.75.   Bon Bons depended on which chocolate, what flavor and size.  But, anywhere from $1.00 to $1.50, which they'd turn around and sell for $2-$3 each.    Its the packaging that kills me on pricing. If a company wants the packaged items...its another story. 

 

As for licensing, I operate under Michigan's cottage food law, so I have to do chem $(18)  and bacteria ($15) tests, get the health department's blessing on my septic system, and then I get the permit after inspection for a lovely $143. Per year.  

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1 hour ago, Daniel D said:

For those of you wholesaling your wares or selling on consignment, do you need any special permit or license to do so?

 

You need your city/state business licenses and and approved kitchen to whatever degree your state requires.  Here in WA we also have the cottage food law, but it specifically says no chocolate.  I don't know why.  Pretty much only dry baked goods can be made in home kitchens here - granola, cookies, bread.  If you sell more than either 25% or 50% (I don't recall) wholesale you're supposed to be licensed by the state dept of Agriculture.  If you sell mostly direct to consumers, the county public health dept licensing is fine.  I have a commissary agreement with a restaurant kitchen, but each company in a commissary is inspected separately.  My permit was $650 this year.  I believe my state's permit is much less expensive, but there is a lot more paperwork, HACCP plan type stuff.  As Jim said, you need to list the ingredients in descending order by weight, the net weight of product, and specify any of the top 8 food allergens (milk, wheat, peanuts, soy, egg, tree nuts (specify), fish, & shellfish) that may be present.  You also need to list the producer's name and location.

 

@Jim D., how close is this guy to opening?  Are there any windows you can peek into and see what kind of display he has?  People who order whole cakes or are looking for locally made gifts may well want a larger box.  If he can't take care of your product or it's not worth selling by the piece, you can always say no.  I had a woman who owned a  French bakery (but was not a baker) who wanted to buy caramels in bulk and pack them in her own bags.   I said no because I hate wrapping caramels, her place is at least 45 minutes drive away, and it seemed like more trouble than it would be worth :P

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@pastrygirl I don't think it will be possible to get a look at the bakery for a while (the owner today mentioned end of July as the current goal--I don't think he is at the installing of display cases yet). We are going to meet as soon as the place is habitable. Wouldn't selling by the piece require a humidity-controlled cabinet? I don't know anything about bakery storage, but I don't imagine humidity is such a concern for bakers as it is for chocolatiers.

 

It's a little insulting that someone wanted to put your caramels in her own packaging. Even I would draw the line at that.

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26 minutes ago, Jim D. said:

@pastrygirl

It's a little insulting that someone wanted to put your caramels in her own packaging. Even I would draw the line at that.

 

I wouldn't view it as insulting.  It could be quite a compliment even though it doesn't align with your goals.  It just depends on your business model and finding partners that compliment that..

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31 minutes ago, Jim D. said:

@pastrygirl I don't think it will be possible to get a look at the bakery for a while (the owner today mentioned end of July as the current goal--I don't think he is at the installing of display cases yet). We are going to meet as soon as the place is habitable. Wouldn't selling by the piece require a humidity-controlled cabinet? I don't know anything about bakery storage, but I don't imagine humidity is such a concern for bakers as it is for chocolatiers.

 

It's a little insulting that someone wanted to put your caramels in her own packaging. Even I would draw the line at that.

 

I'm not sure how people do it.   A lot of chocolate seems to be in relatively open cases, and just the room is air conditioned.  I've had issues with condensation when going from freezer to room temp, but not with regular day-to-day humidity at consistent temp.  It's not as muggy here as East coast summers, though.  How humid would it be inside a bakery?  How about other chocolate shops where you can see what cases they are using?  Let's all do a little industrial espionage for Jim! 

 

Yeah, the woman who wanted the caramels was a little off.  She kept going on about her French candy bags, what, is my packaging not cute enough?  Some customers might make such a proposition worthwhile, just not that one!

 

If you do end up selling by the piece, get a sign with your logo and info to put in the case with the product and a stack of business cards so people will know who made it.

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