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How much are you paying for wholesale coffee?

 

Private Label And Contract Roasting

If you’re offering your customers locally roasted craft coffee then you are probably paying $9 to $12 per pound. You already know how that effects your costs and profit margins and, like most of us, you wouldn’t mind one bit if you could get the same quality for less.

How does $6 or $7 per pound sound? Think that would have a positive effect on your margins? You bet it would, big time. Think about that for a minute—what would your business look like if you were able to cut your wholesale bulk coffee cost 30-50% without sacrificing quality. Add in bags of beans with your logo on the label and you’ll see a big bump in whole bean sales, too.

As an experienced coffee roaster and consultant, I will work with you to develop the coffees you want for your coffee shop, café, or restaurant. Whether it’s the ideal espresso blend or single origin coffees, I will deliver an end-to-end private label coffee program designed with your customer in mind.

Together, we will not only reduce your costs, we will build and expand your brand and increase your sales. Get in touch with me today and lets get started.

 
 

How am I able to cut your wholesale coffee cost so much?

The coffee roasting business typically goes like this:

  • The roaster buys large bulk quantities of green coffee on the speculation that she/he will roast and sell that coffee to current and future wholesale customers (cafes, stores, offices) before it goes stale.

  • Each week she/he takes orders from those customers, roasts the amount of coffee needed, delivers it, and gets paid.

  • If she/he has a retail grocery program, coffee is roasted on speculation by estimating how many bags of coffee the stores will sell that week. The stores buy the bags of beans and mark them up and resell them, paying the coffee roaster on terms (net-30).

 

Each step has costs and risk. Add in overhead and labor and you can see why you’re paying $9-12 per pound.

 

When we work together, we’ll do it a little differently. Scroll down to skip to a cost example.

  • I will consult with you to determine the coffees you want for your customers, whether it is blends, single origin, or both.

  • I will research and gather small samples of green coffees that I think match your needs, roast those samples, and we will evaluate them together using a standardized process called cupping.

  • Once we have chosen the coffees, we will determine how much green coffee you need for a specific time period (typically 3-6 months) and I will coordinate purchasing, freight, and local storage.

  • The next step is the one that makes all the difference. Instead of me, the coffee roaster, paying for your 3-6 month supply of green coffee, you buy it by paying the importer directly. I will coordinate the transaction but I won’t be a middleman and nobody will be charging you a markup. You will know exactly how much your green coffee costs, including freight and storage.

  • Each week, I will roast exactly the amount of coffee you expect to sell and serve your customers, package it and deliver it to you, using your green coffee.

  • I invoice you $3 per pound of roasted coffee I deliver. Note that there was never a consulting fee or any other advance fees.

 

Here’s a real-world cost example from a Dave’s Coffee client.

  • Through consultation, research, sampling, and cupping, we chose a blend of 3 different green coffees from Brazil, Sumatra, and Colombia. Together, that blend cost $3.53 per pound, including freight.

  • My client’s coffee shop uses an average of 5 pounds of coffee per day, 7 days a week. That’s 35 pounds of roasted coffee each week times 26 weeks in a 6 month period for 910 pounds of roasted coffee.

  • Green coffee loses weight when it’s roasted. So, to get 35 pounds of roasted coffee we need to use 42 pounds of green coffee each week. To get a 6-month supply of 910 pounds of roasted coffee we bought 1,100 pounds of green coffee.

  • 1,100 pounds of green coffee at $3.53 per pound means a $3,883 green coffee purchase directly from the importer.

  • I know—YIKES! That’s a lot of money! Yes, it is. By buying the green coffee in bulk up front my client cut the wholesale cost of his roasted coffee by almost $3 per pound, roasted on demand weekly to sell to his customers.

  • Each week I deliver 35 pounds of roasted coffee to his coffee shop and he writes me a check for $105 (35 pounds times $3 per pound roasting fee). I include a detailed report of his green coffee inventory, roast yield, and cost analysis.

 

The total cost of his roasted coffee per pound is $7.24. Here’s the breakdown:

 

  • Green coffee: $3.53/lb

  • 42 lbs of green coffee roasted to yield 35 pounds: 42 x $3.53 = $148.26

  • $148.26 divided by the 35 pound yield = $4.24 per pound net green coffee cost

  • Roasting fee: $3 per pound

  • $4.24 net green cost + $3 roasting fee = $7.24 per pound total cost.

  • My client saves $2.76 per pound compared to his previous coffee supplier for an annual savings of $5,023.20 and a margin increase of 27.6%.

 

If writing a $3800 check for green coffee seems a little too much, we can buy in 3-month lots instead of 6 months. The freight cost per pound will be a little higher but the total purchase will be almost half.

 

FAQ

When cupping and evaluating coffee samples, what if we don’t hit the target flavor profile the first time?  Then I’ll keep searching for the perfect coffees for your business. You have to love it and your customers have to love it.

 

How much does the consulting part of your service cost?  Nothing, which makes it all the more appealing. I get paid when I deliver your roasted coffee. Everything else up to that—consulting, greens research, sample roasting, cupping, buying coordination, etc—is free.

 

Is there a contract?  I have a letter of agreement and that’s it. It’s pretty simple and states that you agree to get your newly purchased green coffee roasted by me.

 

Can I hire you just for consulting?  Sure. My rate is $50 an hour.