Value-Added Products
Adding value-added products for sale into your business plan is a great way to enhance sales to your already thriving food-based business operation or farm sales. Examples of value-added products might be using hot peppers grown on your farm to make your very own signature hot sauce, or as a BBQ food truck, maybe you want to bottle up your award-winning barbecue sauce. Both of these examples add value to your business and create an additional layer of revenue on top of day- to-day operations. Adding value-added products to your business plan involves navigating a (potentially) new space in the food-service industry, which has its own set of legal requirements. This guide will lead you step by step through the process and clarify what is expected of you when adding those neighborhood-famous jams and jellies to your business!
Product Guide
- Decide what to sell: Taking your time on this step is absolutely critical to success in the value-added products market. What do you offer that you excel at? Where are there gaps in the market that you can capitalize on? What do you enjoy making?
- Ingredients & sourcing: As customers become more and more aware of supply chain secrets on how our food is grown, harvested, and produced, it is essential to consider your values around sourcing ingredients, whether that be humane treatment of animals or environmentally-friendly products.
- Product location: Depending on what your value-added product is, you may be able to produce in your home (see Cottage Food), you may have to rent space from a shared kitchen (see Micro-food Business), or if you need specific equipment, you may have to invest in your own space.
- Labeling: Follow the Federal Food and Drug Administration’s Food Labeling Guide.
- Where to sell: As mentioned in the Cottage Food section, you are unable to sell directly from your home as per New Haven zoning law. You can explore different sales avenues such as farmer’s markets, retail, and on an online platform.
Tax requirements for selling wholesale: In order to sell your products to a retail platform for a wholesale price (i.e. with- out tax), you must obtain a Sales & Use Tax Permit with the State of Connecticut Department of Revenue Services. The State has to collect taxes on the sale of goods, so if you are selling to a retailer, it is the retailer who will collect and pay state taxes on those items.