Ok, first, thanks for noticing. We do love a fancy pant. Once, on an R&D trip to Istanbul, a client bought our Chief Science Officer, Ali Bouzari, some aquamarine linen trousers. Not saying all of our clients buy us fancy pants, but we're not not saying that either.
Second, great question! We are always the first to tell you when you don't need to be paying us! There are some co-packers who do R&D for their clients, and it's typically free or heavily discounted when they do. In certain circumstances, this is a better option than hiring product developers like us. Here's what to know:
Co-packers are typically expert at co-packing, not cooking, food science, or R&D. In many cases, they don't have a dedicated R&D team. Their expertise is centered around what works best on their line, which is typically what they're already making on their line. If you want to private label a product they already run, then you really don't need any R&D, and working directly with the co-packer is the way to go! If you love a product they make on their line but want a few small modifications like a bit less salt or to add a small amount of cinnamon, then they can probably make that happen. If you're looking for bigger changes that alter how a product fundamentally works, like gluten-free, low sugar, vegan, etc., it's unlikely a co-packer will be able to perform that level of R&D.
If you want a custom product that the co-packer does not currently produce, you are unlikely to achieve your vision without some fancy pants. A co-packer's perspective is, "How do I make things as similar as possible to what I'm already doing?" Your perspective is likely closer to, "How do I make something that no one has made before?" In that case, starting with the co-packer is putting the cart before the horse. We first need to conceptualize and prototype this new, never-before-consumed product and then find the right co-packer to make it.
When co-packers perform the R&D they often own the resultant intellectual property. This is problematic for a few reasons. First, you don't own or control the core assets of your business, which also means you can't sell them. Second, you are beholden to producing your product at this co-packer forever, or until they sell you the rights to take your product elsewhere. Moving without a co-packer's blessing or paying their ransom would require a new formulation, which may cause sensory differences that your consumers will notice and either like or dislike, as well as trigger packaging or UPC changes. Also, if this co-packer changes ownership, goes out of business, or can't handle your volume needs as you grow, you could be stuck with a successful product and no manufacturing. We've been hired a few times by clients who unwittingly ended up in this situation and needed to reverse engineer their own product and find a new co-packer to manufacture it.
In sum, consider co-packer-provided R&D when:
You want to private label or the co-packer already makes something very similar to what you want to make
You are comfortable not owning full intellectual property rights to your formula
You are comfortable granting manufacturing exclusivity to the co-packer