In-House vs. Outsourced Manufacturing: How to Choose the Right Path for Your Brand

You’re growing, demand is steady, your brand is picking up traction, and the logistics are getting more complex. Now you’re caught between two realities. Do you stay with your co-packer, who’s starting to squeeze you on cost and flexibility, or bring production in-house, which can offer improved control and margin potential but also risk, capital exposure, and operational complexity?

There’s no clean formula to work out whether in-house vs. outsourced manufacturing is best. I’ve run the numbers with founders who were certain they were ready—only to find the real blocker wasn’t capital, but operational appetite. This guide walks you through the trade-offs I often see, including cost structure, volume thresholds, scheduling control, quality risk, and operational load. 

The Case for Outsourcing Production Early On

For early-scale wineries, partnering with a custom crush or co-packer is often the most capital-efficient route. You can focus on refining your product and building demand while leaning on a production partner who’s equipped to handle bottling, compliance, and logistics. Let's look at co-packer pros and cons. 

The core benefits I see time and again include:

• No major outlay for bottling lines, label applicators, tanks, or bonded build-out

• Access to experienced technicians, regulatory compliance support (like TTB COLA reviews), and validated fill-line hygiene

• Flexibility to launch new club SKUs, like a small 500-case rosé, without needing to hit large minimums

• Avoiding team hiring, onboarding, shift management, and training curve entirely

• Built-in certifications, such as SQF or organic, that would be expensive to pursue on your own

That said, co-packers come with trade-offs that are often more pronounced as your volumes increase or your product line diversifies. In my experience, these limitations can start to cause friction:

• Most facilities impose minimum order quantities — up to 5,000 cases per run — which strains experimentation, cash flow, and seasonal bottlings.

• Rigid production schedules mean your brand may shine, but if a larger client books the line, you get bumped.

• There may be hidden charges such as changeover fees, equity asks, setup costs, or testing surcharges for color label conversions or new formats. 

• You may find there’s less transparency on materials sourcing, which can affect sustainability claims.

• If timelines slip, there’s limited recourse, and you may be locked into terms that don’t reflect your scale or urgency. 

Let’s say you import specialized heavy glass bottles from France, and a co-packer handles your lineup. They consolidate international freight, manage label approvals, and let you ship your club-exclusive chardonnay alongside your flagship pinot noir, without you owning a label applicator or worrying about bonded premises.

When Does In-House Production Start to Make Sense?

These are the signals I tell founders to look out for when evaluating the shift:

• Your per-unit cost is rising due to low-volume change-over surcharges.

• You’re running multiple limited-edition SKUs that trigger new MOQs and scheduling clashes.

• Quality variations, such as fill level, label placement, cork compression, or seal torque, are starting to affect customer satisfaction.

• You need tighter control over timing, especially around vintage releases, club prep, or peak harvest flows.

• You're scaling DTC and wholesale simultaneously, and coordination across channels is becoming a bottleneck.

• You’ve outgrown shared space or you're compromising on facility standards to meet another brand’s constraints.

Of course, seeing the signs isn’t the same as being ready. The following must be true before bringing production in-house becomes a viable option:

• You have consistent volume — ideally several thousand cases per month or reliable harvest runs.

• You have stable margins and a cash runway to absorb an upfront $300K to $400K build-out for a 1,000-1,500 square foot bonded facility with fillers, corkers, label applicators, and glycol systems.

• You or your team are primed and ready to oversee TTB COLAs, sampling logs, compliance audits, maintenance schedules, and vendor management.

• You have operational appetite, meaning you're energized by metrics, scheduling, regulatory checks, and equipment decisions, not just brand growth.

• You’re ready to invest in supply chain relationships for glass, labels, and dry goods at scale.

• You’ve hit a margin threshold where reducing third-party fees materially improves cash flow.

Ongoing costs, including payroll, lease payments, utilities, maintenance, and insurance, can push your annual overhead well into the $150K to $200K range. At that point, you need to consistently bottle at least 3,000 cases per month to even begin closing the cost gap with co-packing.

Hybrid Models: A Thoughtful Middle Ground

Some of the most strategic production decisions I’ve seen weren’t binary at all. Hybrid models can let you test and learn, gain control where it counts, and avoid full overhead exposure before you’re ready.

Here’s how brands I’ve worked with have made hybrid models work:

• Running small-batch in-house production for club exclusives or terroir-driven varietals, while outsourcing core SKUs, library bottlings, or canned formats to a custom crush partner

• Starting with alternating proprietorship or shared service kitchens until volume and finances support owning a commercial kitchen

• Negotiating better co-packer terms as volume solidifies, or committing to automation once ROI and process control line up

• Using in-house runs to pilot new SKUs for retail before committing to co-packer volumes

• Splitting production seasonally — bottling fall releases in-house, while outsourcing spring blends that don’t require as much oversight

Cost Modeling Tools: The Real Math Behind Decisions

Whenever a founder asks me, “Should we bring this in-house?”, my answer is always, “Let’s model it.” Not just for next quarter, but for the next 2 years. Here’s a high-level view of how those costs typically break down:

Cost component Co-packer In-house / Bonded Facility

Equipment/build-out None $300K to $400K
Per-unit processing fee $1.25 to $2.50 per case ($5 to $8+ Internal labor cost per case
once you factor in bottles, corks, labels,
and outer packaging)

Freight/logistics Inbound and outbound Inbound and outbound

Maintenance and insurance Included or small surcharge Ongoing: utilities, line maintenance

Regulatory and compliance Included/coordinated Own responsibility

Staffing None At least one full-time operator

Build your own version of this chart. Test scenarios like 3,000 vs. 5,000 cases per month, and calculate your break-even volume. Factor in changeover fees, waste reduction, and club retention. Every brand has a slightly different margin story, but the discipline of modeling creates better decisions, every time.

Operational Complexity: Are You Ready to Be a Manufacturer?

Taking production in-house doesn’t just change your cost structure. It changes your role as a founder. Suddenly, you’re not just running a brand. You’re managing a regulated manufacturing operation.

Here’s what that operational shift usually includes:

• Overseeing scheduling, hiring and training production staff, preventive maintenance, sanitation logs, safety procedures, waste handling, and regulatory recordkeeping

• Managing seasonal harvest peaks, formulator adjustments for changing bottlings, sample testing, and QC every shift

• Building SOPs to pass internal audits and those for retailers or distributors

• Navigating licensing renewals, local fire code inspections, and insurance adjustments

Two founder archetypes:

• I’ve seen founders who thrive on factory floor energy. They track fill-rates hourly, refine labor efficiency, optimize resin liner torque, and even recalibrate daily if needed.

• Others split those tasks off, preferring to focus on wine club growth, branding, partnerships, or hospitality. That’s smart too.

There’s no shame in staying outsourced if the operational details distract from your core strengths, or in building operations if you enjoy that discipline. Know who you are, what your strengths are, and own it.

In-House vs. Outsourced Manufacturing: Match Your Path to Your Growth Stage

Choosing between in-house vs. outsourced manufacturing? The right food brand production decision aligns with your:

• Current and forecasted volume

• Margin structure, cash reserves, and financial runway

• Operational inclination, team structure, and bandwidth

• Comfort with regulatory responsibility, capital exposure, and operational risk in CPG

• Appetite for building long-term infrastructure that supports future growth

• Vision for how you want to lead your business

If you’d like help to develop a manufacturing strategy for CPG brands, building the financial model, vetting a co-packer agreement, or mapping out your production facility investment, I’d be glad to walk through the numbers with you. Get in touch today!

We can make sure your accounting systems and financial strategy support smart scaling, while protecting your cash flow and brand.

Want to learn more? See our article, Why Your Accountant Needs to Be a CPG Expert, which explains why specialized financial guidance matters when working through production transitions and scale-related complexities. Here at BBG, we pull from frameworks such as our Roadmap to Profitability concept.