Do you remember going to the grocery store when you were little with your parents? Did you ever want something in a small package to snack on but find that your mom or dad would grab the big box? Well if you ever experienced this you probably also experienced them showing you the price per ounce for both and comparing to teach you the difference and help pick the best option for the price.
I'm sure many of us can say we have memories like this. And adults, whether grocery shopping or working for our company, if we want a lower priced item for the same exact ingredient, the best way to do this is to purchase a larger packaging size.
This article aims to take a closer look at the most common packaging debate young food manufacturers seem to have: 55-gallon drums vs. 275-gallon totes and how much you can expect to save by purchasing in larger bulk sizes.
To compare apples to apples, we will only compare packaging sizes from the same type of supplier. For full cost analysis, it is also helpful to compare prices from a local distributor vs. larger direct suppliers.
How Much Will You Save?
Every supplier is different, but usually savings are around $0.05 - $0.10 /Lb for switching from drums to totes. This means a savings of around $100 - $200 per pallet, so it can definitely add up.
However, you need to understand the other ways this packaging swap will affect your team before making a final decision.
How Will Your Production and Warehouse Be Affected?
Something you have to think about as you are changing from drums to totes is that they don't just affect the final cost. It also can have an affect on many different areas of your warehouse and production. Your job then becomes to decide which size will work best and if the switch is truly worth it for those that are hands-on in production, working with the oil daily.
The Packaging You Choose Will Effect
Storage and how you move your oil: Will you need a forklift to move the drums and totes around? Do you have a 5’x5’ floor space to store the drums or tote? Do you have a loading dock for arrival?
If you are renting a commercial kitchen we don't suggest totes or drums unless they have a permanent storage space on site. In this case, we would suggest looking at the smaller 35 Lb. Containers. A facility that has a pallet jack or forklift is highly recommended for both drums and totes.
How does production use it: Will you need to bring the oil into a “clean room” to do production? Many companies don’t have the space to bring totes into their clean rooms, and go with drums instead (which can be brought in individually). Alternatively, if your oil production is plumbed in, some people pull the oil from a tote outside their clean room using oil-only plumbing lines.
How to get your oil out: Do you find that you need a drum pump for your 55-gallon drum or a gravity drain system for a tote? Do you have a certain pump you would want? You’ll need to plan ahead how you are going to get the oil out of these larger industrial sizes.
The Type Of Supplier You Buy From Also Affects Prices
The entire packaging conversation is skewed by the fact that many different levels of suppliers can sell the same kind of packaging. A manufacturer or direct supplier that packages edible oils is going to have lower prices than a distributor or a re-seller would. However, places like food service distributors may have distribution systems in place that help reduce costs and could have prices close to the manufacturers.
It’s easiest to make a decision about your packaging first and then look at which type of supplier you will purchase from as a separate discussion. If you want help deciding which type of supplier is a good fit for your business we suggest, Where Is The Best Place To Buy Olive Oil In Bulk?
The Potential Savings That Make Switching Worth While
The most important question is not how much will you save but are the savings worthwhile for your business to make the switch? In my opinion, it's better to look at not just the savings you'll see but also the ease of use you'll get by switching to totes.
If 275 gallon totes are going to be much more challenging for your team to use and you see that transition being a challenging one, it's probably not worth making the switch.