Shivani’s Kitchen
Turning CPG Complexity Into Profitable Growth
We identified hidden packaging costs, corrected SKU-level profitability issues, and refined channel pricing to eliminate negative-margin products and protect contribution margins.
🥫 Elite Engagement · CPG Brand
$210,000 Identified — A Profitable Brand Building on a Broken Foundation
A specialty food CPG brand had crossed $7M with distribution in three national retail channels and a growing DTC component. The problem surfaced when the founder tried to model what the business would look like at $10M. The margin math didn’t work. Even assuming the same gross margin percentage, projected free cash flow at $10M was lower than today. Something was wrong with the foundation.
What We Found
| Layer | Finding | Impact |
|---|---|---|
| L1 — COGS | Packaging redesign 9 months prior added 9% to per-unit manufacturing cost — never reflected in pricing | +$63K/yr |
| L1 — COGS | 3 SKUs: incorrect BOM after formula adjustment — reported COGS 6% below actual | +$28K/yr |
| L2 — Overhead | 3PL contract renewed at prior volume tier — current volume qualified for lower rate | +$19K/yr |
| L3 — Working Capital | 90-day pre-build cycle renegotiated to 60 days — freed $55K in working capital | $55K freed |
| L4 — Pricing | Club channel: 3 SKUs at negative contribution once trade/freight allocated. Repriced 2, exited 1. | +$44K/yr |
| L4 — Pricing | DTC pricing unchanged since launch — hero SKU increase, no measurable conversion impact | +$31K/yr |
| L5 — Growth Tax | Broker commission structure not renegotiated after hitting volume milestone | +$25K/yr |
The Situation
Growing Fast. Building on a Broken Foundation.
Their accounting tracked revenue and COGS at a blended level. When we disaggregated it, we found three of their fourteen SKUs were generating negative contribution margin in the club channel once trade spend, slotting amortization, and per-unit freight were properly allocated.
The packaging redesign alone had been silently costing $63,000 per year for nine months before anyone noticed. And the growth model that previously didn't work at $10M was rebuilt on a foundation projecting $280,000+ in additional free cash flow at that revenue mark.
The exit from one underperforming club SKU freed up co-packer capacity immediately redeployed to their highest-margin retail item.
"I was planning a $150,000 marketing push to get to $10M. Scotty showed me I was building on a broken foundation. We fixed the foundation first — and now the growth actually means something.
— CPG Founder, $7M Revenue