Coffee Roasting Business Plan: For the Roaster Retailer It’s Just 7 Words

coffee roasting business plan
Posted in: Strategy
By Mike Ferguson
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Coffee Roasting Business Plan: For the Roaster Retailer It’s Just 7 Words

Fifty years ago, when most people in the U.S. could name only three or four coffee brands, large national companies competed with each other primarily on price and through advertising. For most people, the ground coffees from large roasters were nearly indistinguishable from each other. If the mega-roaster of that era had a seven-word coffee roasting business plan to support retailers, it might have been: “Listen to our jingle and compare prices.” Because they could not necessarily depend on the differentiating quality of their product at the time, roasters relied on surprisingly similar advertising.

Different, But the Same: Why Coffee Roasting Business Plans Were All Eerily Similar

It seems like every large coffee company, at one time or another, had a kind elderly character pitching their product. There was Cora, who owned a small general store where only one brand of coffee was on the shelf, and it was not only “good to the last drop,” but in the '50s and '60s it could apparently cause a coffee percolator to play a tune. There was a gray haired, mustachioed coffee bean buyer pitching a coffee that had a wide variety of jingles and tag lines over the years, but most frequently consumers were encouraged to “head for the hills,” because the coffee was “richer, stronger, outlast longer.” There is nothing in the record to explain what that means. Perhaps the queen of elderly coffee pitch women was Mrs. Olson, everyone’s Swedish neighbor, who rescued countless housewives by instructing them to serve coffee that was mountain grown, which everybody knows is the richest kind and, “the best part of waking up.”

For decades, the apparent centerpiece of the coffee retail and coffee roasting business plan was advertising aimed at housewives. Sometimes hapless, sometimes cunning, sometimes keeping her eye on the Joneses, always loving and eager to please even the most critical and whinny husband, the housewives featured in coffee advertising wanted nothing more than to make a good cup of coffee and everybody happy at the same time.   

While these ads may seem as quaint to us now as advertising from 1917 might have looked to the “Mad Men” of 1967, these brands remain strong and are still a significant presence in the coffee world.  Aside from the outdated social norms depicted in these ads and commercials, what stands out is how hard they were all working to sell coffee in the same way, using the same words and scenarios. The coffee was always “rich.” This seems so foreign to today’s specialty coffee roasters because they recognize there are many ways to differentiate one company from another apart from price and a clever jingle. Even the large coffee brands who gave us all those fretting housewives years ago have invested in quality and diversification within their product lines, to the extent that one can no longer say the only thing distinguishing one big company from another is their tag line and the color of their packaging.

Today, Roasters are Differentiating Beyond the Packaging

It has taken years for the idea to take root in the public mind, but even the most uninterested coffee drinker now knows that coffee is not a commodity that varies only slightly from brand to brand, but a highly differentiated product. Along with this increased awareness among consumers, and not unrelated to it, has come an increase in the number of companies roasting coffee over the 30 years since Mrs. Olson retired from giving neighborly advice, and most dramatically over the last 15 years. Even as the roasting industry experiences some consolidation and relatively smallish roasters become part of larger beverage companies, their brands and operations remain intact as part of a diversified coffee universe.

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With so many companies roasting coffee in a retail setting, seemingly one in every neighborhood in some cities, how can they compete, especially in a market where an increase in overall consumption is apparently driven primarily by population growth, at least in the United States? In 1966, the year Mrs. Olson first knocked on our door with the ever-present can of coffee in her bag, 109 million adults were drinking coffee on any given day - about 72% of the adult population. Today, 205 million adults drink coffee on any given day, or 62% of the adult population. If we had not lost 10% of the population as regular coffee drinkers, the number of adults drinking coffee on any given day would be 238 million today. That’s approximately 70 million more cups a day at the current daily cups per capita.

The good news is, the specialty coffee sector can be credited with bringing coffee consumption out of a deep valley. In the 40 years between 1954 and 1994, regular coffee consumption among adults dropped from 78% to 47%, but then began to climb again, albeit with some volatility due to a variety of economic conditions and changes in research methodology.

Due in large part to the rise of the specialty coffee roasting and retail sectors, we understand that coffee quality (and so, coffee marketing) is not an “us or them” proposition. There are not only many different coffees between good enough coffee and amazing coffee,but there are also many different coffee drinkers and each coffee drinker may have different preferences at different times and places. Every coffee has a market, the saying goes. And every market requires coffee that meets its needs and therefore roasters who can serve some or many segments of the coffee quality continuum.

Nevertheless, this fanning out of coffee consumption niches, and the stunning growth of coffee retail, continues to create more and more coffee roasters. For some, the answer to competing in this environment is to be unique, different from all the rest, to rise above using every tactic imaginable, from clever graphics to unique and oblique coffee taste descriptors. Roast darker. Roast lighter. Offer discounts on equipment. Supply no equipment whatsoever. Buy award winning green coffee. Buy coffee from farms nobody else buys from or countries nobody knew grew coffee. Roast a wide variety of coffee at a wide variety of price points. Roast only a small selection of expensive coffees that score above 90.

All of these decisions and others like them matter at some level and yet it would be difficult in most instances to draw a straight line from any one of them to business growth. As necessary as all these tactical business and branding decisions are, a specialty coffee roaster has no business trying to hang their hat on any of them.

The 7-Word Coffee Shopping Business Plan

The strategy, the seven-word coffee shop plan for roasters that can inform and inspire these decisions and a dozen others, from the mundane to the most complex, every single day, is simple. But first, the boring stuff. For those who are just starting out we should touch some business basics, actionable steps you can take when creating your coffee roasting business plan, and those include:

  • 1. Plan your business. Create a business plan and consider all factors such as costs/budget, target market, ongoing expenses, profitability, etc.
  • 2. Take care of the legal and tax stuff. This includes setting up your business structure (are you a sole proprietorship? LLC? Partnership?) as well as applying for an EIN for state and federal taxes.
  • 3. Get your finances in order. Open a business banking account and apply for a business credit card. This will make it easy to stay organized come tax time.
  • 4. You’ll need proper permits and licenses, too. The health department keeps a close eye on food and beverage-related businesses.
  • 5. Make sure you have business insurance. This is required to legally operate your business
  • 6. Advertise and market your business! Tell people who you are, what you do, and why they should believe in your business by building a top-notch website, frequently updating social media channels, getting good reviews on sites like Google and Yelp, and taking out digital and print ads.

Now, back to the seven-word coffee roasting business plan, which is …

“Meet our people and taste our coffee.”

There are many things to get right as a specialty coffee roaster retailer, but those who make every effort to ensure these two experiences are memorable before everything else are working at an advantage above those who seek uniqueness for uniqueness sake. You can have an award winning logo, hire Don Draper to make a coffee pot sing, but if your coffee and your people aren’t right, it won’t matter, not in specialty coffee.

Moreover, your people are the only part of your business that is guaranteed to be always and utterly unique. Nobody else has them. That’s why, at Olam Specialty Coffee, we value every variety — and every customer. Our seven-word business plan depends on it.

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10 months ago
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