Business World

Tea & Coffee's Business Classifieds!
Free Ukers Guide!
Festival Kawi
Coffee Tea Business Mag
When Coffee Speaks


Private Label in the Year 2000

José Gaviña, also of F. Gaviña & Sons, Inc., differentiates private label clients into two distinct groups, “One, they’re looking for price and not quality and then the other type are looking for quality that no one else has. The smarter ones are looking for the quality. But that is a lot harder now with the price of Robustas being so low, less than 40¢/ lb., it is just too tempting for guys that have to pay attention to the bottom line, at least on the short term basis; they have to switch over to lower quality, they don’t think of what this does to their customer’s experience or what it does to the industry. In fact there was a guy who came to us yesterday, he was looking for a single use brick pack package and he said that he didn’t care what was in there as long as it was cheap. I told him I had a responsibility to put a coffee in that package that the end user could at least enjoy. If, as a consumer, you are given a coffee and it does not taste good you may decide to have a soft drink, or an orange juice or even water next time. As an industry, we should be thinking that we are competing with orange juice and Coke, not that we should be taking business from the other roaster down the street.”

“It is much better,” José Gaviña continued, “When you have a customer who comes to you with a private label project and he wants to have a product no one else has, one that is better than the competition. We had an experience that proved to me that this approach is better business. Several years ago we started selling several of our products within the Vietnamese community here in Los Angeles. Although we knew that most Vietnamese grew up drinking Robusta coffees we decided we would sell only Arabica blends, but with the somewhat darker roast that is traditional in Vietnam. When the community here grew to the extent that it could support its own coffee roasters we assumed that we would lose some business to the new Vietnamese roasters. But they all used Vietnamese Robustas and our customers had gotten used to Arabica blends. Consequently, we kept most of the business. Now, even in Italy they are starting to use Robustas. They argue that it improves the crema. We’ve been around for a long time, and I hope we’ll be around for a longer time, and we certainly don’t plan to start using Robustas."

“I think it is much harder to take someone’s business away when they are selling a high quality product.” José Gaviña pointed out that with the coffee market being low, there is now an excellent opportunity to encourage wholesale clients to improve the quality of coffee they are using. “People should think of upgrading, now that coffee is so inexpensive. All the major roasters are declining in their sales and their poundage. The key in not joining this decline is to serve a better cup of coffee. You don’t have to be a genius to blend and brew a decent cup of coffee, and it doesn’t have be the very best you can obtain, just decent, freshly roasted and correctly brewed.”

“I don’t think people who manage foodservice really consider how profitable coffee can be compared to all the other beverages they serve.” Gaviña concluded, “Airlines in particular, they are giving away drinks all day, coffee has to be the cheapest drink for them, yet they seldom bother to serve a great cup of coffee, one that any coffee drinker would prefer to any other drink. And one that would cost the airline less.”

Gaviña’s comments lead to the question whether the foodservice industry does not bear actual antipathy toward coffee and whether, despite the lower cost of coffee, foodservice managers and executives would prefer that it wasn’t on their menus at all. The labor component of coffee is much higher than for any other beverage and the labor variable also means that coffee can never be as consistent as fountain or bottled beverages. Coffee is a management problem and an annoyance from the foodservice management perspective and the consistent abuse it is subject to at the hands of the restaurant industry couldn’t be a more effective way of discouraging consumption. For proof, just order a cup of coffee at the average restaurant-even one charging $25 and up for entrees!

Allann Brothers Coffee Company, Inc., a regional roaster in both wholesale and retail in Albany, Oregon also reports that their private label business is growing. “We’ve been in private label for some time, but I have never really addressed private label, it just grew itself.” Noted Allan Stuart, president of the company, “About 10 years ago it started to really expand. Some of our clients are in allied products, some are roasters who could bring in more roasting equipment but who have found it is easier to let us roast their overflow. But for most of the people who are using our services, coffee is a small portion of their total business. We’ve also found that as the big roasters either close down, get sold or become too unwieldy for their clients we are called upon to replace them.”

Stuart notes that his company is involved in a wide variety of private label activities, from bulk roasting by the truckload to office coffee service contracts. “We can package coffee in a wide variety of ways, from the simplest to the most complex. Our office coffee service customers require creamer stir sticks and napkins along with custom packed two-ounce bags of custom roasted, custom ground coffee. We also private label our proprietary brand of coffee extract which we also market ourselves under the brand name Java Juice. It’s a 100% coffee concentrate - we’ll pack it in one half, one five and fifty-five gallon sizes. We’re also looking at putting the extract in totes as well.”

Stuart’s experience highlights that there is no template for success or growth for a wholesale roaster, much less for one looking to succeed in private label. What does become clear, however, is that private label is increasingly becoming an essential component in the mix of activities in which regional specialty roasters are engaged.

Further, and additionally, the functions of procurement, roasting and packaging on the one hand, and those of marketing, merchandising and delivery to the end user on the other, are two very different areas of expertise. Sometimes these two separate sets of functions are best conducted by distinctly different entities.

Increasingly the lines between a roaster’s mainline business activities and their private label segment are blurring. Additionally, private label activities are increasingly becoming partnerships between the roaster and the client. Finally, to a certain extent, the best wholesale roasters understand that all their customers should feel like private label clients and that every delivery was roasted and packaged exclusively for them.

Companies cited: Gavina; Allann Brothers Coffee Company, Inc., Distant Lands Coffee Roaster in Tyler, TX, Mountanos Bros. Coffee Co.

Tea & Coffee - August/September 2000

Theta Ridge Coffee

Tea & Coffee Trade Journal is published monthly by Lockwood Publications, Inc., 3743 Crescent St., 2nd Floor, Long Island City, NY 11101 U.S.A., Tel: (212) 391-2060. Fax: (1)(212) 827-0945. HTML production and Copyright © 2000 - 2013 by Keys Technologies and Tea & Coffee Trade Journal.

Terms and Conditions of Website Use.         Privacy Policy.

HTML Copyright © 2000 by Keys Technologies and Tea & Coffee Trade Journal. All rights reserved.