CoPak Solutions: Doubling Down
June 1, 2011
by Shane Whitaker
When CoPak Solutions, Inc. started operations nearly a decade ago, it had only one customer. The Conover, NC-based co-packer produced tortilla chips and drink mixes for a major supplier that distributes Southwestern/Mexican foods and drink mixes under a well-known brand in the US and internationally.
Larry Deal, CoPak’s founder and president, admitted that it was a risky proposition to start a co-packing operation relying on the business of one customer with whom he had made a handshake deal. But it’s a bet that’s paid off. And anyway, Mr. Deal likens himself to be a bit of a gambler.
Today the company produces tortilla chips for about 14 customers and has introduced its own brand of better-for-you tortilla chips. Also, CoPak recently expanded into making pellet snacks and plans to invest in a larger pellet frying line later this year.
After several years of exclusively co-packing tortilla chips, CoPak launched its own brand in the value tortilla chip segment, but the company didn’t have much success with this product, according to Mr. Deal, who has spent more than three decades in the food business. A lot of products already competed in that particular part of the tortilla chip category, making it difficult to build sales in such a crowded market. As a result, he decided that CoPak would be better off serving a different niche: organic and better-for-you tortilla chips.
He contacted an old friend, Craig Bair, PhD, president of Food Solutions, Inc., a Greensboro, NC-based food consulting business that focuses on organic, natural and wellness foods and beverages. “I said to him, ‘I want to steer the company in a bit of a different direction. I want to stay with doing co-packing, but I also want to get a label out. I want it to be really healthy, and I want to go the organic route,’ ” Mr. Deal recalled. “Then, we sat down one evening and came up with three products we wanted to do.”
In 2005, CoPak introduced the Mother’s Farms brand with three varieties of organic tortilla chips: Blue Sesame, White Quinoa and Multigrain. The company also offered to private-label these tortilla chip varieties, if requested.
Mr. Deal decided to make organic chips because not many companies were competing in that segment. He knew that if he could make great-tasting products, people would purchase them. “I wanted to get it out there at a great price, where people could buy it,” he added. “That is our motivation here. We want to make excellent-quality products that people think should be $6 or $7 a bag while it’s really only $3.99, but it is still just as good at that $7.99 bag.”
CoPak is currently preparing to introduce three all-natural tortilla chip varieties under the Mother’s Farms brand, including Seven Seeds & Honey, Veggie and Toasted Cheddar. Mother’s Farms products use a proprietary production method, according to Mr. Deal.
Currently, no product on the market competes directly with its new Toasted Cheddar variety, he said. As a point of differentiation, CoPak doesn’t use topical seasonings to flavor its Mother’s Farms chips. “We did a lot of research, and one of the complaints people have is that when they eat something like a Dorito they get that yellow on their lips, orange on their tongues and dust all over their clothes,” he said. “So we’ve decided to do things a little differently.”
In addition, the new Veggie tortilla chips contain one-quarter cup of vegetables in each 1-oz serving. “It took a long time to develop that product, but we are very happy with it,” Mr. Deal noted.
He said he believes healthier snacks are here to stay. “But at the same time, you have to make healthy taste great,” Mr. Deal stressed. “You can’t just throw something out there and say, ‘It’s good for you. It’s healthy.’ When they open that bag, you want them to keep putting their hand down in there.
“And that is why it takes us so long to get some products on the market because we want to be very sure they taste great,” he continued. “We will not release anything that we do not approve of first and think is going to catch fire. And we have made many products that we’ve actually put back on the R&D shelf. It is difficult to get that exact flavor and crunch. But once we have the right ingredients and get the right taste and texture, then we can take it places.”
CoPak distributes Mother’s Farms chips through brokers, and the brand can be found in many regions around the country. In North Carolina and surrounding states, the chips are sold in The Fresh Market supermarkets, and in the Midwest, people can pick up a 20-oz bag of the White Quinoa variety at Costco. Also, the brand is popular in the Northeast, according to Mr. Deal.
In addition to tortilla chips, CoPak began making pellet-based snacks in February. Mr. Deal purchased a pellet fryer more than three years ago from a friend who makes country hams. “He happened to have this equipment sitting on a truck and called me one day out of the blue wanting to know if I would be interested in it,” he said. “He’d made pork rinds with it — pork skins are actually pellets. And that is how I got interested in [pellet snacks]. I asked him why he was getting out of it, and he said he was a country ham producer, not a pork rind manufacturer, and didn’t need to be in that business. So we bought it from him for a steal.”
The equipment was moved to CoPak’s bone yard inside its warehouse, where it sat until late last year. “I knew someday I would probably use that equipment; I just didn’t know when,” Mr. Deal added.
Then one Friday night last May, he was working late when he received a phone call from someone inquiring about pellet snacks. He began investigating the snacks even further, seeing what the demands were and looking at various pellet products at trade shows. “I decided this was probably a pretty good thing to do,” Mr. Deal said. “It doesn’t cost a whole lot to get into it. In fact, it’s a lot cheaper than getting into tortilla chips because the equipment is not as expensive. You don’t need to have such a large fryer, so the equipment doesn’t take up as much space in your building.”
To make pellet products, the company needed a feeder at the front end, a fryer, a seasoning system for applying topical seasonings and a bagger. “Pellets don’t have to be cooled like tortilla chips, and the frying time is a lot less,” Mr. Deal noted. “You can really produce a lot and get them out the door easier. They bag better and allow faster runs.”
CoPak had virtually all the equipment to start making pellet snacks. All it was missing was a bagger and a buyer. “But I just knew something would be coming down the pike,” he said. “Pellet snacks are very popular, and you can do a lot of things with a pellet. There are many different styles and flavors. And they just have a good crunch and taste for snackers.”
Pellet snacks have been extremely popular in Europe for years, but Mr. Deal said they are just catching on in the US. “There is a lot of business out there for pellets,” he added. “I think we are going to see more pellet snacks in the US.”
As the pellet snack business grows, Mr. Deal noted, it very well could double the company’s revenues, projected at $14 million this year.
“Our goal this summer is to inform people that we are in the pellet business and looking for business,” he said. “We’ll put it out there and see how it goes.” In fact, Mr. Deal has already received inquires about making pellet snacks, as some folks were already aware that the company was getting into making these products.
Consequently, CoPak already plans to upgrade its pellet line and is reviewing new lines from several different vendors. The company intends to install a line capable of making 1,200 lb per hour vs. the 400-lb-per-hour line it currently uses, and it plans to install this new line before the end of the third quarter.
INCREASING THE WAGER.
CoPak recently purchased a new J.C. Ford hopper, presheeter and sheeter for its tortilla chip line. “We’ve got a lot more business coming on, and we have to get more efficient,” Mr. Deal said. “And to do that, we needed a whole new front end for this line. It should bring efficiencies up at least 25 to 30%.”
Following this installation, the company expects to produce approximately 120,000 lb of tortilla chips weekly, operating 24/6. “You can’t really run 24/7 in a tortilla chip plant,” he explained. “These lines can only run so many hours before they have to be cleaned.”
CoPak employs 52 people to staff two 12-hour shifts daily. Currently, its pellet snack line operates one shift per day, but Mr. Deal said he hopes to build that business to also run 24/6.
The company operates in an 84,000-sq-ft facility, and the majority of its plant, nearly 57,000 sq ft, is dedicated to warehousing. Production and packaging take place in a 25,000-sq-ft space, and its lines are designed to be straight runs.
Production for the tortilla chip line begins in a Peerless 600-lb double-sigma horizontal mixer. The masa is then loaded into the hopper, and a presheeter and sheeter form the masa to its proper thickness before going through the die that cuts the tortilla chips to shape. CoPak has a dozen dies that it can attach to the line to make different sizes and shapes of tortilla chips.
After being formed, the chips travel up an inclined conveyor and make three passes on a wire cooling conveyor. The chips fall into the hot oil where they fry for 40 to 60 seconds, depending on the thickness of the chips. On the other hand, pellets require only 16 to 18 seconds of frying.
CoPak uses three different frying oils. For its organic products, the company uses nonhydrogenated organic soy oil. Some of its higher-end chips are fried in high-oleic sunflower oil, and the majority of its chips are made using corn oil. In general, tortilla chips absorb 24 to 26% oil, depending on the variety.
After frying, chips cool on a conveyor, and bucket elevators transfer them to weigh hoppers above the Hayssen bagger. Bags of chips are then manually loaded into cases and onto pallets.
Although CoPak has introduced its own brand of chips, Mr. Deal said he expects the company to continue co-packing products for many more years. “That is where we started, and I will not forget that,” he added.
Co-packing also is important, according to Mr. Deal, because it gives entrepreneurs, who have a great idea for a new product but not the capital to start up his or her own operation, an opportunity to have those products produced. “That is what I like, is those people to come to me with their ideas,” he said. “I am a gambler at heart. If I like what I hear, I’m going to put my efforts behind it and do all I can to get their products on the market.”