Payment for Recipe Development

[thebottle]

Recently I have been asked to develop a few recipe's for another business.

I would be developing this recipe starting from raw ingredients, mash, ferment, distilling, proof and then flavor.

The flavoring process is very difficult, for example, creating a cherry pie flavored vodka for them.

My question is what a fair price would be in terms or creating and then selling this recipe?

Once sold to them I can't make the same spirit so I want to make sure I get the value.

 

Thanks in advance

[Jedd Haas]

This is a question where there are far too many unknowns to make any estimation of a dollar amount.

Only you can determine what's fair.

With that said, you might consider a licensing agreement, where the customer pays you based on every bottle produced. You might also make the license non-exclusive, so you can use it yourself or sell it to others.

Or ask them what they think is fair; and ask them to explain how they arrived at their conclusion.

It's probably best to engage in a discussion with them to reach a reasonable conclusion.

But one more thing: based on the minimal information provided, I'm not so sure that "cherry pie flavored vodka" is all that difficult. There are multiple companies in the flavor business that will sell all kinds of flavors. There are likely several companies that have "cherry pie" flavors readily available. So you might look into that aspect as well, and try to determine if you can really create something that's far superior to "off the shelf" offerings.

[Silk City Distillers]

You might be surprised at what some of the big flavor houses charge for R&D and recipe development work, it's not cheap, especially if the end result is a ready-to-use packaged custom flavor.  That also typically includes some fairly advanced analytical services (comparative analysis, batch consistency on the manufacture side, ttb compliance, etc), and likely some level of market research using consumer panel testing.

Recommend you talk to a few flavor houses (include ttb in your google search to cut them down), get a sense for what they might be willing to offer.  Some may offer samples, some may offer you some consultancy around blending their off-the-shelf flavors to get the right profile.  Depending on what you are going for, you may need to test samples from numerous flavor houses to find one that works.  You are basically pre-negotiating this relationship for your client.

 

[SlickFloss]

I've been consulting in med/rec mj for over a decade and I have been doing Bev eth now for a few years. Disclaimer, I am a consultant. Even I have consultants. There are levels to this. My experience is really valuable for certain levels of both industries, it isn't for other levels, and it's different in each industry. But my time is still worth a fixed rate. As a consultant you need to decide what your value and worth is and who your clients are. I work with craft distillers for one rate on setting up distilleries, I work with mj customers at a much much much much much higher rate because I understand my value there differently and those projects are much more time efficient. I set up a lab in a day but its worth more than a days labor to someone. I set up a distillery in a few months because rigging equipment takes time etc but my work and experience is a lot less valuable in that industry, mostly because that industry tends to have less in the budget. More owner operators trying to figure it out etc. Also less compliance liability.

 

Anyways, define your worth and ask for it. for instance I'll do product development on distillates (gin, brandy, etc.) for 1% equity in the project as a whole if I believe in it or an hourly rate that pays for me not to be in my own distillery (only one brand have I actually taken equity on but I have asked for it on several). Thats a lab recipe through scale up into package with an established QC. Connecting people to packagers and distillers is additional cost. Consultants are expensive because they can revolutionize businesses. Make sure you're a worthwhile one.