Calif. HPP Processor Sees Surging Demand for Co-Packing Services

For Susan Ricci, the president of HPP Food Services (HPPFS), thriving demand for her company’s services as a high pressure processor of cold-pressed juices is a clear indication that HPP technology is increasingly viewed as a viable and valued alternative to flash pasteurization.

Yet while HPPFS sees sustained growth in its processing business, a rising number of new and existing customers have begun to eschew capital investment in expensive juicing and pressing equipment in favor of contract production and co-packing services, and as a result, it’s the company’s manufacturing arm that’s attracting an even greater level of interest and demand.

Approximately 18 months ago, HPPFS, which is based in Wilmington, Calif., acquired Calpack Foods, a food and beverage manufacturing facility located 10 miles up the road in nearby Torrance. Although Calpack offers a range of production services for food and beverage companies, Ricci said that the facility’s organic juice business, in which the company offers cold-pressing, juicing and filling services, has been surging, particularly among new entrepreneurs as well as small and mid-sized juice brands that are looking to reduce costs.

“We get a tremendous amount of phone calls from startups, and from entrepreneurs that have a recipe and want to get into [the cold-pressed juice] segment,” Ricci said. “What we’ve found is that most companies have come to us and ended up saving money. We’ve been able to do it cheaper than they have, for sure, because we have all of the equipment and can allocate the overhead among more than one customer. The customers that we have, we’ve achieved better yields than they have, and we’ve been able to achieve a lower labor rate than they have doing it themselves.”

Ricci said that Calpack works with a range of established juice companies as well as entrepreneurs from “rough idea all the way to finished goods and bottled products.” While its customers are responsible for supplying their own recipes as well as sourcing ingredients, bottles and labels, Calpack offers all of them assistance on where to find organic produce suppliers and recommendations on effective packaging. Everything is intended to offer as much transparency and cost reduction as possible to the production process.

“We basically tell them, ‘this is exactly what you need to do and these are the organic suppliers,’ so we even tell them where to order the [raw materials], based on their recipe,” Ricci said. “We work together as a team in the early stages prior to doing a full test run, and then we’ll cost out a full bottle for them, meaning we will say, ‘Because of the raw material costs, this is the cost, this is why and this is how much an out the door bottle will be.’ They know that in advance, before they sign on with us.”

As for the average production cost per bottle, Ricci explained that it depends on a number of factors, including ingredients, processing, bottle size and the number of bottles per run. Ricci gave as an example a 3,000 bottle production run, which, not including raw materials and packaging, would cost a customer roughly $1-1.50 per bottle. The finished bottles are then sent down the road to HPPFS for high pressure processing. Ricci noted that HPPFS, which operates with two Avure-built HPP machines, has plans to add a third machine “when the business dictates.”

While many co-packers require significant production rum minimums, Ricci said that Calpack is flexible in terms of run requirements. She said that for new entrepreneurs, the company will go as low as 1,000 to 1,500 bottles and will sometimes do a run of as little as 500 bottles.

“We recognize that they’re starting out, and we’re very flexible with that, meaning we work with our customers until they get on their feet,” Ricci said.

Ricci noted that Calpack’s facility has the capacity to produce at least 20,000 bottles (in sizes ranging from 8-16 oz.) per day for a very simple process, such as a lemonade. However, she said that pressing equipment is often the biggest bottleneck in production runs, and for recipes that require use of the its Goodnature cold-pressing units, Calpack would only be able to churn out 8,000 bottles per 8-hour shift. And while Calpack is not yet operating seven days a week, Ricci said that the company was now beginning to add as second daily shift in order to increase daily production.

Despite the ever-growing number of cold-pressed juice brands on the market, Ricci believes that there is enough room for new companies to enter the category, noting that Calpack works with a number of companies that utilize various and non-traditional routes to market.

“Not everybody is trying to go into just the retailer, not everybody is focusing on the same goal,” Ricci said. “There’s a whole spectrum:  some are opening their own stores, some are going into Whole Foods and some are approaching Sprouts and Kroger and some are doing e-commerce.”