6 Things That Keep The Lights On
That super special micro lot that blows your mind (and is also $17 a lb) likely isn’t the thing that offer stability to your coffee roaster. Sure, there are those one off exceptions to the rule, but most roasters will need to diversify their offerings and provide additional items to their lineup that are not coffee in order to stay competitive. These coffee related items help to support the bottom line and also act as a way of serving wholesale and retail buyers and partners.
By offering these products, a roaster is consolidating the number of vendors their wholesale partners need in order to operate their business and thus better supporting them as their partner. The kind of support we are talking about here is providing your accounts with additional items that aren't coffee. Things like tea, cups, lids, merch, and brewing equipment that they can sell in their cafes. It may not seem as interesting to sell these items but they bring in the same thing your fanciest coffee brings in...$$$.
If you aren’t sure where to begin in this process, a good place to start would be to ask your wholesale partners what the hardest item is for them to source, how much they are purchasing it for and seek to find a way to provide that item for them at or below what they are paying for said item. This is what we mean by support. Finding ways to help your wholesale accounts succeed, alleviating their pain points, and making margin along the way.
To get your creative juices flowing, here are 6 (non roasted coffee) things, that we’ve found have helped other roasters gain more financial stability and have boosted that bottom line.
Cold Brew - keeps the lights on
Here’s why:
High volume potential with low roaster touch potential.
Increased unit profit margin with scale.
Expands potential sales channels beyond cafes and gets into D2C, grocery, etc.
Here’s how:
Use a co-packer to produce your cold brew and drop ship directly to the distributor.
As your sell through rate increases, so will your buying power. This increased volume typically reduces your unit cost and thus increases unit profit margin.
Selling RTD cold brew is attractive to specialty groceries, offices, and events.
Merch - keeps the lights on
Here’s why:
Merch doesn’t have a shelf life.
Merch is brand awareness that other people pay you for.
Here’s how:
Invest in well designed merch that is more than just your logo on a hat. Your merch should be something people want to use, wear, and take pictures of to post on their social media. If it’s something folks want to wear, use and be seen in, they’ll buy it, actually use it and post about it. Think of merch as marketing / brand awareness that other people pay for. Additionally, if someone posts on their socials wearing or using your merch and tags your roaster in it, that’s user generated content that you can and should repost. That’s called a 4 WIN.
Win (when they purchased the merch)
Win (when they wear it/use it)
Win (when they post on their socials)
Win (when you get to repost it to your socials)
At Home Equipment - keeps the lights on
Here’s why:
Like merch, brewing equipment doesn’t have a shelf life and typically has good margin.
Requires very little labor to sell & stock.
Here’s how:
Develop reseller relationship with the folks that you already purchase filters, cafiza, and kettles and other products from. This reduces the number of vendors your wholesale clients need to have and also will provide you with better pricing on your equipment.
Large Cafe Equipment - keeps the lights on
Here’s why:
Typically, the more you sell the lower your cost is = the hire your margin will be.
If your margin is 15% on a $10,000 machine and you sell 10 per year that = $15,000 in equipment sales for a product you didn’t stock and cost you $0 upfront.
Here’s how:
There is some hand holding, conversations & logistics / administrative work…beyond that, it’s profit.
*Note, it would make sense to establish a strong relationship with an equipment tech company in your area to install the equipment and maintain it as well.
Tea - keeps the lights on
Here’s why:
Tea has a long shelf life.
Requires very low spatial investment.
Requires little labor to sell & stock.
Your accounts need.
Lightweight and easy to ship D2C online retail purchases.
Here’s how:
Build a wholesale relationship with a reputable tea vendor that you can serve in your cafes (if you have them), that you can offer to your accounts too and sell to your retail online customers as well.
Bonus points if they have chai concentrate that you can stock for your accounts too.
Consumable Products - keeps the lights on
Here’s why:
The products have a long shelf life.
Requires little labor to sell & stock.
Your accounts need them.
Here’s how:
Think through all the products that a cafe uses and seek to build a reseller relationship with a local vendor who sources these products. Then, negotiate pricing that enables you to both make margin & be competitive in your market.
Keeping the lights on in your roaster often requires you to become good at selling things that aren’t fun, experimentally processed, single origin coffees that you and I like to drink. More often, roasters need to add items that won’t replace the sale of your roasted coffee but rather supplement and add to your bottom line profit.
What things have you seen help your bottom line, that aren’t coffee? Would love to hear about it in the comments or send us an email at pomelocoffee@gmail.com.