A guide on beverage formulation development for start-ups

    All great beverage companies start with a single, innovative beverage concept. And while great ideas and creativity is abundant out there, very few people actually became successful with their business. One of the major roadblocks that limit their success is the lack of knowledge about creating beverages and the inability to sell that innovative beverage idea in a specific market.

    This is exactly the kind of problem that can be solved by a beverage formulation service. And in this article, we will guide you through everything we know to successfully cooperate with a beverage formulation company.

    beverage formulation

    What is a beverage formulation?

    There are many names that F&B experts use to call a formula of a commercial beverage (beverage formula, beverage formulation, beverage recipe, etc.). For the simplicity of this article, we’ll use beverage formulation to refer to a drink’s recipe.

    It is commonly accepted that a beverage formulation is the list of ingredients inside a commercial beverage product. Even though this is a fairly accurate view, a commercial beverage formula also governs many technical aspects like: packaging requirements, shelf-life, scalability, cost-efficiency, and other unique selling points.

    For instance, we all know that Coca-cola (in a can, perhaps) is not only water and sugar. And to make it profitable and delicious, the people at Coca-cola have to answer these questions:

    • How do I ensure a consistent taste and flavor across all global markets?
    • What packaging material can be used that doesn’t change its flavor?
    • What can I do to keep it fresh as long as possible (without breaking any laws)?
    • How do I manufacture it efficiently on a production line with no issues?

    A good beverage formulation can address all these questions (and many more). It constitutes a successful commercial drink with great profit margin and high customer satisfaction.

    How can you create your own beverage formulation?

    To create a successful commercial beverage, having an idea is simply not enough. You must make sure your beverage will taste good, appeal to the consumers and provide an incentive for retailers to sell your products. Meeting all 3 points requires great market insights, expertise in food science and a profitable supply chain.

    beverage formulation

    From our years of experience developing beverages for customers, we boiled the process down into 3 steps:

    1. Ideation and market research

    A few things to keep in mind during this first, and very important, step:

    • Have a good grasp of your beverage idea: Create a brief with all the things you want to achieve with your beverage, detailing the type of drink, flavor, branding, packaging, etc. All these points will serve as a guideline for your branding and development process later on, so be very meticulous.
    • Search for market gaps: Among all the existing drinks out there, how can you make your product stand out? Maybe with an all-natural branding or just simply with an exotic beverage that none of your competitors have sold (an all-natural electrolyte drink, for example). It’s also important to conduct thorough market research to identify a large enough niche with a decent customer base.
    • Be mindful of the regulation: Depending on the region you want to sell to, there will be a different set of food safety regulations to follow. A drink sold in the UK will definitely be different from the US. So be prepared to consult an expert lawyer for this.

    Without clear market insights, you will lack knowledge to drive the development of your beverage. Then, when you reach the shelf, your beverage will fail to capture the interest of customers.

    2. Recipe development

    Once the beverage is clearly defined, you can start working towards the mass-production recipe. Just remember, everything that goes into a recipe has to convey the selling points of your beverage. Here are a few key points to keep in mind:

    • Taste and flavor: This is what customers value most, and will affect their re-purchase decision. A delicious beverage will surely convince customers to buy more next time. In a drink recipe, each ingredient has a different flavor, and different ratios generate different results. So be sure to play around with different combinations to get the best results.
    • Texture: While not impertinent to the flavor, the texture also influences how customers enjoy your beverage. Fruit nectar, fruit juices and smoothies all feel different on your tongue. One is thicker, while the others have more pulp and some chewy texture to them. A suitable texture will enhance the drink’s taste and flavor.
    • Shelf-life, stabilizers and additives: These may be taboo words to consumers, but without them, our food will spoil very quickly and cost way too much. Don’t be afraid to focus on them, as they are common practices across the food industry. Just be sure to consider regulations and customers’ safety whenever you add them.
    • Packaging: Each type of packaging allows for a different manufacturing process and result. For example, aluminum cans are sterilized at higher temperatures than plastic bottles, so they have a longer shelf life.

    After finalizing your recipe, the final stage is to test it within the industrial settings.

    3. Pilot production and stability testing

    The ultimate goal is to sell millions of units each month, so your recipe has to run smoothly through a production line. Before official operation, you will need to test your beverage recipe inside a production line. No matter how great the recipe, it’s production efficiency and cost-effectiveness that lead to success.

    Then you also have to test for stability over time when your product sits in the warehouse or supermarket shelf. Check for discoloration, flavor changes, sedimentations, etc. A good drink will taste, and look, just like the day it was made, right up to the expiry date.

    It’s really daunting to see all these challenges laid out. And for small start-ups, all these financial and technical barriers can prove fatal. That’s why there are many beverage formulation companies and services out there to help you. Be sure to check them out if you want to develop a beverage of your own.

    Tan Do Beverage – One-stop Care for Your Beverage Brand

    We help beverage start-ups with:

    • Beveverage formulation and development: With our pre-made portfolio of 500+ formula, we cover all trending beverage types in the market.
    • Label and brand development: We help develop brand ideas and design beverage labels, all done in-house.
    • Beverage manufacturing: Our factories run 24/7 with extreme efficiency to deliver products to customers.

    So, by choosing our beverage production service, you can:

    • SAVE thousands of dollars on beverage development cost
    • BUILD your beverage brand quickly (with little recipe development time)
    • DELIVER your products instantly (our recipes are always ready-to-manufacture)

     Learn more about our product portfolio!! 

    What is a beverage formulation company?

    In short, a beverage formulation company helps customers develop a drink formula based on their ideas. Beverage formulation companies typically have a team of food scientists, chemists, industrial engineers and product development experts who work together to create unique, innovative, and scalable beverage formulations.

    They provide advice and consultancy on ingredients, manufacturing processes and material sourcing to create the desired texture, flavor, appearance and other selling points that customers require. They will also consider the scalability and production efficiency of the recipe, to make sure that clients can manufacture these products at reasonable cost while still maintaining quality.

    How can a beverage formulation company help you grow? 

    beverage formulation growthMany people may think beverage development is a straightforward task. They just have to pour their own homemade drinks into a bottle, seal it up, and boom, the next big beverage. But as we discussed above, the beverage industry is a highly competitive one with major roadblocks. You NEED the help of industry experts to fare well in these dangerous waters.

    They help make your drink market-fit

    A beverage formulation company transforms your average beverage idea into a drink that can cater to the diverse tastes and preferences of customers. They use their resources to conduct extensive customer research, collecting all sorts of valuable information about how people enjoy beverages. With this, they can create a beverage with a generic flavor profile, but tastes amazing to people across different demographics.

    For instance, ‘sugar-free’ beverages are all the rage nowadays. Everyone agrees that it’s better for your health. Though, after some surveys, beverage companies discover that many people think they are too bland, but there are also some who love the flavor. So, they decided to tweak the recipe, adding some ingredients that make these drinks taste good without sugar.

    If you are a small beverage company with too little resources for large scale research, it’s highly advisable to use a beverage formulation service, to stay updated with the latest trends.

    They provide great production consultancy services

    How can you source the most affordable ingredients with suitable quality? How can you manufacture the drink with the least cost? How can you optimize the beverage to ensure a profit margin (supply chain management, shelf-life, etc.)?

    The beverage formulation service, with teams of expert engineers, logistics specialists and food scientists, will answer all these questions for you. They allow you to jump right into the production stage, reducing development time while still keeping a quality production line. Not only that, by using their expertise and experience, you can cut unnecessary steps from your production line and supply chain, improving your cost efficiency. (e.g. at our factory, we replaced a manual task by simply repurposing one of our old machines, which saved hundreds of labor hours).

    They help reduce legal compliance risks

    There are so many guidelines on what you can and can’t add into your beverage. That’s just in one country, and if you want to export your product, this problem turns into a nightmare. To further complicate things, it’s very easy for your products to face recalls, if you don’t follow food safety regulations strictly. This is severely damaging to your brand and must be reduced at all costs. In addition, finding a lawyer with a specialty in the FnB industry is not cheap.

    So, before you begin your journey, ask the beverage formulation service to go through all the related regulations. This will save you a lot of trouble in the future.

    What costs are involved in formulation development?

    beverage formulation cost

    It can be difficult to come up with a flat, easy to understand fee for beverage formulation. This is a highly personalized industry, and each beverage start-up will have a different set of requirements. The price range for each beverage can vary drastically, according to the beverage type, specification, ingredients, etc.

    But, from what we have gathered, an average beverage formulation costs between 15,000$ to 50,000$ to develop using a formulation service.

    The vast degree of variation can be attributed to these factors:

    • Recipe development fee: This fee covers the cost of developing a recipe or formula for your product. The fee can vary depending on the complexity of the recipe and the level of customization required. The majority of the cost goes into paying for R&D specialists, focus group testing, market research and lab equipment.
    • Ingredient sourcing and procurement: Depending on the ingredients required for your recipe, there may be additional costs for sourcing and procuring the ingredients. These costs can vary depending on the availability and quality of the ingredients. These companies can also provide quality control and sourcing consultation services as part of a full package.
    • Sensory and analytical testing: Sensory and analytical testing is an important part of the beverage formulation process. This testing can help to evaluate the flavor, aroma, texture, and other properties of the product. The costs for these tests are mostly for focus groups and data analysis later on.
    • Regulatory compliance: Depending on the nature of your product, there may be regulatory requirements that you need to comply with. There may be additional costs for obtaining certifications or approvals, such as organic or non-GMO certifications.
    • Production and commercialization: Once the recipe has been finalized, there may be additional costs for scaling up production and meeting regulatory requirements. If you are a beverage start-up with no factory, the formulation company can also provide a network of reputable manufacturers for you to choose.

    Once you obtain a formulation, you’ll have to spend an additional amount (up to 50,000$ per our estimates for the US market) for pilot production testing. This is a trial run inside a factory production line, to determine whether your formulation can be produced at scale or not.

    Combine all this, with the cost of producing your first orders, it could take well over 100,000$ to produce your first thousand SKUs of beverage.

    Looking for quick and easy beverage development? Contact Tan Do Beverage.

    If you are a small beverage start-up, you will need a formulation of your own to truly compete with others. But as we discussed above, it can cost up to 100,000$ before you can start selling your first cartons. For small start-ups, this is a dangerous problem. That’s why at Tan Do Beverage, we are committed to letting you focus solely on marketing and selling your beverage.

    We help beverage start-ups with:

    • Beveverage formulation and development: With our pre-made portfolio of 500+ formula, we cover all trending beverage types in the market.
    • Label and brand development: We help develop brand ideas and design beverage labels, all done in-house.
    • Beverage manufacturing: Our factories run 24/7 with extreme efficiency to deliver products to customers.

    So, by choosing our beverage production service, you can:

    • SAVE thousands of dollars on beverage development cost
    • BUILD your beverage brand quickly (with little recipe development time)
    • DELIVER your products instantly (our recipes are always ready-to-manufacture)

     Learn more about our product portfolio!! 

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    Hi readers, I'm Richard, F&B marketing executive for Tan Do Beverage - a leading private label manufacturer in the beverage industry. The articles that I write have all been consulted with our professional R&D and Quality Control staff, so that all knowledge shared will be accurate and helpful. Our Blog is designed to provide the best industry insights about general beverage trends, manufacturing knowledge and guides for beverage business operations.

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