Hot Cocoa – From Cottage Industry to Regional Favorite

About the Episode

Hot cocoa tends to be considered a seasonal treat. Dean Packingham of Mike & Jen’s Hot Cocoa proves that a small cottage industry can grow into a regional business success year-round. He discusses the power of starting with your passion when developing a new product, the advantages of being in an F&B category with less competition, the value of simplicity as a business model, tips on finding the right co-manufacturer, distributor, and retail partners, and scaling a small business up.

Listen on Apple Podcasts | Listen on Spotify | Listen on Deezer | Listen on Stitcher | Listen on Google Podcasts | Listen on TuneIn

“You have to first be in love with your product, and then the rest should work itself out.”

Dean Packingham

In this Episode

1:59 What are some of the biggest challenges to educating people about hot cocoa?
4:35 What products do Mike and Jen’s Hot Cocoa produce, and where are they sold?
6:18 What is involved in the manufacturing process? What are some tips on selecting a co-manufacturer?
10:03 Lessons learned from launching a new brand and finding the right distribution and retail partners.
12:35 What are the biggest challenges in scaling Mike and Jen’s Hot Cocoa?
18:42 What is the size of the hot cocoa market in the U.S.? And what is the effect of seasonality on the market?
19:28 How did Mike and Jen’s Hot Cocoa get Hormel Foods as a co-packer?
21:14 Why did Mike and Jen’s Hot Cocoa decide to choose simplicity as one of their values?
25:12 Would there be a way to have a single cocoa product formulation and then additional flavors that could be added?
26:20 What are the considerations involved with deciding to stay with one product line versus expanding into additional product lines?
30:20 What was involved in the design and packaging process for Mike and Jen’s Hot Cocoa?
34:51 What’s the difference between cacao and cocoa?
37:33 To what extent is cacao susceptible to changes in climate and weather? What impact can this have on the supply chain for ingredients?
38:11 Advice on entering the food and beverage industry, selecting a product category, and developing a product that might not be attracting too much competition.

Learn More

Resources Mentioned

Listen to Other Episodes

Acronyms or Terms Used in This Episode

  • CPG – consumer packaged goods
  • Co-manufacturer – a term that is short for a contract-manufacturer – a company that contracts to manufacture a product on behalf of the owning company
  • Co-packing – a term that is short for contract-packer – a company that contracts to receive the finished product in bulk from the co-manufacturer and packages it
  • Spray Drying – a method of forming a dry powder from a liquid or slurry by rapidly drying it with a hot gas.
  • Swiss Miss Hot Cocoa Mix – invented by Charles Sanna and sold by food company Conagra Brands
  • Hormel Foods – a Fortune 500 food processing company based in Minnesota

Meet Our Guest

Dean Packingham

Dean Packingham

Founder and CEO of Mike and Jen’s Hot Cocoa

Dean Packingham is the founder and CEO of Mike and Jen’s Hot Cocoa of Duluth, Minnesota. His road to the CPG food space has been quite interesting. Prior to building the hot cocoa company, he was a Senior Meteorologist for the U.S. National Weather Service, with a career spanning nearly 27 years. Late in 2012, he embarked on a family project to try to perfect a hot cocoa mix with his two kids, Mike and Jen. The goal was to create a hot cocoa mix that tasted like it was made with added milk, with only the need to add water. After nearly a year of trial and error, they finally came upon the mix that is still used today.

From 2013 to 2018, they gradually grew from a cottage industry to being carried in 18 stores in the Duluth, Minnesota region. Then, in 2018, they jumped from 18 to 300 stores within a year. Most of these stores were independent gourmet kitchen and gift stores, with the exception of their first grocery chains, Lunds & Byerlys and Kowalski’s.

Based on this success, Dean and his business partner, Amanda Cunningham, decided to quit their jobs as meteorologists to try to grow the business even further. By 2020, Mike and Jen’s was carried in approximately 1,000 stores across the Upper Midwest and Great Lakes. Today, they are carried in more than 1200 stores, including Hy-Vee, Costco Minnesota, Meijer, Lunds and Byerlys, Coborn’s, and soon to be in 114 Target locations.

Location Location: Duluth, Minnesota

Selling Your Business?

Work with an industry leader that gets you results.

We invested over a decade perfecting every step of the process. The result is a method proven to reduce your risk and maximize your price.

View Our Process Now