Your idle factory can be a goldmine: how to transform idle capacity into a revenue source
In 2020, a major European food manufacturer faced a challenge. When prioritizing the production of premium products with high added value, part of their basic cookie production line became an idle capacity. The unused space and equipment were generating significant costs — from maintenance to the environmental impact of underutilized resources.
The solution came when the company signed a co-manufacturing contract with an emerging functional snacks brand, which needed to quickly scale production to meet growing demand but lacked its own capacity. This partnership transformed the empty factory problem into a new stable revenue source, helping the emerging brand establish itself in the market.
This example shows how manufacturing idleness can be transformed into strategic opportunity. In this article, we explore how idle capacity can generate new revenue, with insights that can be applied to your production.
The hidden opportunity in idleness
Idle capacity is not rare in the CPG industry. According to a study by the International Journal of Production Economics, food and beverage factories operate at an average of 70% of their total capacity. This means that about 30% of available resources are idle, generating costs without return.
These costs can range from equipment maintenance and energy expenses to accelerated depreciation of idle machines. But with increasing demand for product customization and the expansion of emerging brands seeking production partners, this idleness can be converted into a profitable business model.
How a production becomes an idle capacity
The reasons for idle capacity are diverse. Some factories deal with seasonality – production lines that remain idle outside certain periods of the year (like Easter egg production or ice cream in winter). Others face challenges due to portfolio changes, as in the snack factory example. Additionally, supply chain disruptions or unexpected drops in demand due to changes in consumer behavior also contribute to the problem.
What’s important to highlight here is that, instead of viewing this idle capacity as an operational failure, companies can reinterpret it as an underutilized asset.
The co-manufacturing model as a solution for idle capacity
By renting or outsourcing the use of their idle lines to third parties, companies can transform fixed costs into revenue. This can be done through co-manufacturing (partnerships to produce third-party products) or co-packing (packaging products for other brands), for example.
What’s important to highlight here is that, instead of viewing this idle capacity as an operational failure, companies can reinterpret it as an underutilized asset.
Unilever and natural cosmetics
In 2018, Unilever used part of its idle capacity in a personal care factory in Brazil for a co-manufacturing initiative. With an underutilized conventional shampoo line, the company opened its doors to produce natural shampoos for an emerging startup focused on organic ingredients.
The collaboration generated gains for both sides: Unilever managed to leverage its idle infrastructure and diversify its factory use, while the startup was able to scale its production without the high initial costs of building its own plant.
What benefits can you have?
- Additional revenue source: Each idle line converted to co-manufacturing means money coming in where there were only costs before.
- Economies of scale: Operating the factory at higher capacity reduces fixed costs per unit produced.
- Shared innovation: Partnerships with smaller brands or startups often bring new ideas and possibilities to larger companies.
- Sustainability: Reducing idle capacity decreases energy and resource waste, aligning with ESG (environmental, social, and governance) trends.
Transform your idle capacity into a revenue source
Although the benefits are clear, many companies still don’t know how to structure these opportunities. And here’s the secret: leveraging idle manufacturing requires strategy and operational flexibility. Check out some practical steps to start this process:
- Map your available capacity: Conduct a detailed analysis of your operations to identify where idleness opportunities exist. Is it seasonal? Frequent? In which lines or shifts does it occur?
- Seek strategic partners: The ideal is to look for brands or producers that complement your portfolio, avoiding market conflicts. Emerging or DTC (Direct-to-Consumer) companies are excellent candidates, as they frequently need production capacity to scale.
- Establish clear and flexible contracts: Define minimum volumes, conditions of use, maintenance, and responsibilities of both parties to avoid misunderstandings.
- Invest in technology: Supply chain tracking and optimization systems, like modern ERPs, can help manage co-manufacturing flow and avoid bottlenecks.
A strategic bonus in sustainability and innovation
Beyond financial benefits, utilizing idle capacity is directly aligned with sustainability practices, an increasingly relevant topic in the CPG sector. Less resource waste and greater operational efficiency are pillars of successful ESG strategies — something that consumers and investors deeply value.
A striking example comes from the beverage sector. AB InBev, the world’s largest brewery, used idle lines at one of its Latin American factories to produce canned drinking water during periods of low demand. This initiative not only generated additional revenue but also reinforced the company’s reputation as a player committed to social responsibility.
How GrowinCo. can help
Identifying and leveraging idle capacity requires a partner who understands market dynamics and has access to the right tools to connect companies seeking co-manufacturing solutions. This is where GrowinCo. comes in.
Our expertise in co-manufacturing and new product development allows us to help companies transform their idleness into strategic advantages. We work with a customized model to map your needs, identify partnership opportunities, and structure contracts that generate value for all involved.
Whether you’re a company with available capacity or an emerging brand seeking scale, GrowinCo. can be the bridge to transform challenges into opportunities. Contact us today and discover how we can help your operation grow more intelligently and sustainably.
The future of idle capacity
The competitive landscape of the CPG sector requires creativity to solve old problems. Transforming idle production lines into new revenue streams isn’t just a practical solution – it’s a strategic way to position yourself for the future.
Like the snack factory in the United States, many companies are discovering that idleness isn’t a problem, but a disguised opportunity. The question is: is your company ready to see this potential and act?
Now that you know how to transform idle capacity into profit, how about taking the next step with GrowinCo.? We’re ready to help.
