February 2017

February 2017 | Vol. XXX No. 2 www.coffeetalk.com

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D N A R B L U F TH S S E C C U S A S I WHAT H IS MONT

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ecogn R o t w o And H

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ds" st of Goo o "C g in ll : Contro Lesson 4

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ROASTERS ROCK In Times of Turmoil — Turn to Quality 12

of Colombian Coffee Growers 19

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Calendar

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The View

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What Is A Successful Brand? ... And How To Recognize It!

Contents

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10

Tap Into Profits

11

Tales From Origin

A Honduran-American Dream

12

Roaster's Rock

In Times of Turmoil – Turn to Quality

14 15 16

SLIDE!

Getting Profitable

Lesson 4: Controlling “Cost of Goods” – Part 1

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“Innovation” – NCA’s 2017 Convention

Profit Maintenance in an Expanding Route Operation

Preserving the Environmental Legacy of Colombian Coffee Growers

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NewsBites

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Advertiser Index

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February 2017

THE VIEW T Kerri Goodman

A HUGE THANK YOU TO SIGEP AND THE ITALIAN TRADE COMMISSION Check out the video: https://youtu.be/sTa8ew4bRI4

hanks to SIGEP and the Italian Trade Commission for hosting CoffeeTalk at their incredible conference last month in Rimini, Italy. Now in its 38th year, the event confirms its undisputed international leadership as the gathering for professional operators all over the world in the artisan gelato, pastry, baking, and, of course, coffee. With more than 208,470 trade visitors, this year’s show saw increases in both overall and foreign attendance including 41,827 from 170 countries.

Calendar 6

For complete and updated show information visit our online calendar: http://coffeetalk.com/industry-calendar/

February 14-15

Beyond theBean: UK Barista Championship & Brewers Cup Southern Heats, Bristol UK

March 16-18

4th Sweets & Bakes Asia 2017, Marina Bay Sands, Singapore

March 3-5

India International Tea & Coffee Expo, Kolkata India

March 17-19

Coffee Fest Nashville, TN USA

March 8-12

Engredea, Anaheim CA USA

March 22-23

Expovending and OCS, Sao Paulo Brazil

March 13-15

Midwest Foodservice Expo, Milwaukee, WI USA

March 23-25

NCA Convention 2017, Austin TX USA

March 16-18

5th Café Asia, 5th International Coffee & Tea (ICT) Industry Expo, Marina Bay Sands, Singapore

April 19-20

Re;co Symposium, Seattle WA USA

February 2017

What Is A Successful Brand? ... And How To Recognize It!

by Melanie Boehme Founder of Simel.Coffee and host of 'adding some flavor | a coffee marketing podcast'

I

know you want to be visible. You want to be known and you want to raise awareness among potential customers with your business. This only works if your brand is built for success, if your brand is strong. A strong brand has more potential to attract new customers. A strong brand adds value to your business and builds a lasting relationship with your customers by earning customer loyalty, which means more regulars for your daily business. A strong brand is visible and can be seen everywhere you’re present. Nowadays a strong brand has to be visible online as well: on your website or online shop, and on social media. Be consistent with it, especially online. Make sure you can be seen with the same branding, using the same logo or at least variations of your logo, and the same fonts. If you don’t, it is not only confusing for everyone, but it will also make the impression to your followers that you don’t really know what your brand is about. On social media, make sure your header photo is in line with your branding, as well. It is the first thing your online community sees when heading to your fan page. You want to be seen and remembered, right?

If you can afford it, invest in a branding kit. Work together with a graphic designer who can help you communicate the essence and values of your brand. Investing in a graphic designer is not cheap, but the value you get out of it is worth the investment.

What can you do to be visible for your (potential) customers? Put yourself in the shoes of your customer when creating your visual branding – is it recognizable and easy to remember? Are your customers and your online

community able to easily connect with your brand; is it accessible to them? Don’t use a visual branding that doesn’t fit what you and your brand represent. Make your visual branding about the vision and philosophy you have in mind. Your customer connects not only visually to your brand, but also emotionally. Also, it is crucial that you know exactly what your customer and your online community needs and wants. Make sure to provide what he or she wants repeatedly, not just the first time, they enter your shop or when having the first contact with you online. If you can manage to provide great service and quality with everything you do over and over again, your customer/fan/follower will remember and keep you in mind when thinking about their next purchase and they likely will tell others about their experience with your brand. This is a great way of getting recommendations. A strong brand always includes a well-done job by yourself and your staff; providing quality with your products, your coffee, your food and the customer experience in your business. That means you must train your baristas, your staff and other team members accordingly, so they can provide the same quality and service every day and with every customer. Your customers are more likely to tell about a bad experience.

Provide consistent quality. It is always good to know where the strengths & weaknesses of your brand are. In what areas do your strengths lie? What needs improvement? Connect with your customers, whenever possible. Try to be approachable. Offer your new beverage/ product to regulars. Let them take part

8 February 2017

in events or other business-related activities by sharing photos and videos on your social media accounts. Be active in the local community! A strong brand helps everyone understand what you stand for with your business, including your employees. It is absolutely crucial that everyone involved with your brand identifies with your values and your philosophy. So, first find out about your WHY and what your brand represents. What is your business about?

What are your values? What are your goals? What niche do you want to focus on with your brand? Is there anything you want to be known for when someone is talking about your business?

Know your customer. This is the most crucial aspect of building a strong brand. If you don’t know to whom you want to serve your coffee, or sell your product, or provide your service, everything else you do will be a shot in the dark. So, no guessing, no assuming. You have to get a crystal clear image of your ideal customer in mind when building your brand. This will help you to know exactly where to fit in the local market or wherever your brand is active and visible. Remember, your brand is not for everyone! If you’re trying to serve everyone, you actually serve no one – you won’t be recognized because you probably offer what tons of other businesses out there offer, too. Find out everything about him or her: What are their preferences? When do they visit your cafe, coffee shop, online shop, etc.? What do they drink and/or purchase? The more you can find out, the better! Try to find benefits that your ideal customer not yet knows he or she needs, something that is surprising and no other brand offers. Once you offer it, it is going to be the reason they will come back and purchase again. Check out your competition as well, just to have an idea what other businesses are doing and how they are doing things. Check out at least 3 competitors close by! Who are they? What do they offer? What do they NOT offer? Who are their customers? When you create a strong brand for your business, you will be able to differentiate from your competition on the local market. If you know what your brand stands for, and if your brand is recognizable on a visual level, it will be easier for your customers and for your business to set yourself apart.

Melanie Boehme, founder of Simel.Coffee and host of 'adding some flavor | a coffee marketing podcast' http://simel.coffee/

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Tap Into Profits

by Randy Anderson Cold Brew Coffee Consultant

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t is clear that cold brew coffee is beyond trending. The question now is not whether or not to offer cold brew but how to profit from it. For those brewing in-store, there are a plethora of brewing and dispense methods available in print and online. In short, this is most of what you need to know in less than a hundred words.

stores and QSR (quick service restaurants) nitro does it better than any other method of serving cold brew... as long as you don’t run out.

So why is nitro so important to consider? It sells. Nitrogenating cold brew adds texture without compromising flavor. In fact, nitro adds an element of creaminess and perceived sweetness without adding any ingredients except gas.

Additionally, nitro has virtually no added prep time as compared to many iced drinks like frappes, iced lattes and smoothies. For business owners, the real profit comes from speed of service. Nitro coffee is delivered on tap and takes approximately 10-12 seconds to pour.

Compare that to the minute plus drink prep time for most iced drinks.

A busy traffic line can move pretty quickly when pouring nitro coffee on tap. A differentiating menu item like nitro cold brew creates marketability as well as profitability. Again, as long as you have a continuous stream of nitro cold brew, business is good.

Step 1. Purchase a brewing system from Toddy, Brewista, Filtron, etc. and follow the directions.

Step 2. Experiment with different coffees, grinds, brew times and filtration. The Internet is chock full of helpful articles, guides and Youtube videos to help you. You will even find some secrets to making nitro cold brew.

Step 3. Do some research and learn how to install/convert an under counter refrigerator to a kegerator or purchase a new kegerator for cold brew coffee dispense. It looks hard but it isn’t.

Step 4 Do in-store marketing and sell your product.

Let’s look at the product side first.

Brewing your own in-store is enjoyable and is a great revenue stream. From a business perspective however, you may consider not brewing your own for a lot of reasons. In-store brewing can actually be more costly versus buying a concentrate. Brewing your own means labor costs and long brew time (12-20 hours), refrigerated storage of low ratio concentrate (1:1) and low yield costs (cost per drink being close to $1 per drink) are all considerations that many business owners miss. Many commercial cold brew concentrate makers offer concentrates that cost far less per ounce than what it costs to brew your own. Additionally, more cold brew can be stored since they have a higher concentration. A bottle or bag-in-box with an 8:1 concentration takes up a fraction of the space that in-store brewed cold brew does at 1:1. Some are even shelf stable and don’t require refrigeration until opened.

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Now it’s time to ensure that your cold brew sells. Whether you brew your own or buy a concentrate, your coffee needs to appeal to your customers. Flat or “still” cold brew sells moderately well. However, stores that sell both still and nitro are seeing explosive growth of nitro over still. Nitro on tap has led the way in making cold brew something more than just cold coffee – it is, without a doubt, the most talked about and profitable category and defines this “white space”. More and more customers (especially millennials) are looking for premiumized cold coffee beverages. In coffee retail, as well as convenience

While some smaller shops have been experimenting with forced nitrogenating, this method is laborious and limiting. The cold brew itself takes a full day to brew and then the cold brew is placed in a keg at high pressure for up to 3 days to nitrogenate. There are issues with dispense with force nitrogenation – heavy nitro in the beginning and progressively lower nitro pours without constant adjustment to the system. There are some systems that allow for instant nitro infusion. This solves the problem of waiting for a keg to infuse with nitrogen as well as worry free operation. These systems require a keg of ready to drink cold brew as well as tanks of nitrogen.

One new technology is the JoeTap CT (the CT is short for countertop) and is the evolution of the original JoeTap. This countertop model allows bag-in-box (BIB) concentrates to be used with mixing ratios up to 16:1. The concentrate is mixed with water immediately before the point of dispense. The JoeTap CT comes with on board nitrogen generation alleviating the need for nitrogen tanks. Easy BIB changes means a small footprint and no downtime for the operator. It is as simple as using a post-mix BIB soda system – change the BIB, pour more cold brew coffee Randy Anderson drinks.

Cold Brew Coffee Consultant Randy@coldbrewconsulting.com February 2017

Tales From Origin A Honduran-American Dream

by Jens Brynestad

market where he tried coffees from various specialty roasters in the New York area. When he was initially unable to get his foot in the door with a big-name roaster, Lesly decided to start from the ground up, literally. He had the idea while walking home in the snow one night in Sunset Park. He had just spent his last cash on a small coffee from a bodega and was brainstorming how he could work his way into the industry. "I'll just buy a coffee farm!" he thought.

How hard could it be? (Surprisingly to me, Lesly actually did make it sound easy). Three months later, Lesly had saved enough money to buy a 120 acre farm in Honduras for $5000 (I know it sounds crazy. I had to double check with him on the price myself). The farm is only an hour away from where he was born.

After making the purchase, Lesly did not see his land for another year. He used some of the money left over to study agronomy and coffee production with some acquaintances in the Dominican Republic and Nicaragua. He studied varieties he wanted to plant and the infrastructure he would build for specific processing methods. His dream was starting to take shape.

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esly Bronfield's dream to produce his own coffee did not start with any amount of money, any plot of land, or any substantial experience in the coffee world. This dream simply started with Lesly's appreciation for the beverage and his love for his home, the beautiful Cortes region of Honduras. I would have said that the realization of his dream was unlikely, but I would have said that before meeting Lesly. We became friends while working as baristas at Brooklyn Roasting Company in the Dumbo neighborhood. Lesly stood out from other new hires because he didn't just like being a barista. He was there to learn about the industry and to work his way into the competitive world of specialty coffee.

Lesly's story starts when he was 19, fresh out of high school and short on money for college. He started bartending and working at the Brooklyn flea

When he was 20 years old Lesly finally went to see his farm. He brought two pounds each of Bourbon, Catimor, and Caturra, varieties of green coffee beans (seeds) to plant. He also hauled in materials to build a nursery for the new plants and to build a small bunk house with a stove and running water.

This was for the farm manager and workers who are now tending to the farm while he is in New York. Lesly later recounted to me that the first night he spent on his land, he slept on the ground between a tree and a small campfire.

He woke up in the middle of the night and felt the happiest he has ever felt in his whole life. I imagine that’s the feeling of realizing that you can create your own success. Today Lesly works two jobs in New York to support his farm.

A few months ago I had the chance to visit the farm from where I was working in Costa Rica. Two buses, a car, a truck, a horse ride, and a hike later I arrived at the farm, “Far Away Down.” All along the way Lesly’s story came to life in a whole new way. Each part of his journey seemed more difficult after seeing the trek first-hand. And his uncle made sure to remind me what a big project it was. “Lesly did this part on foot.” “Lesly carried in all these materials himself.” “Lesly planted this whole hectare and carried in all the seeds for the nursery.” After the visit, I spoke with Lesly on the phone about how shocked I was that he put all that together. He just laughed and said, “That place is my baby.”

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Roasters Rock

IN TIMES OF TURMOIL – TURN TO QUALITY

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rexit – Trump – ISIS – Syria – Poverty – Legalization of Drugs - Global Warming – SCAA/SCAE merger.

We are getting so much information and are asked to care about so many things that it is easy to stagnate and not know where to start. It is also easy to get discouraged because it does not feel like you are doing enough to make a real difference. It is even easier to get angry at ‘the other guy’, who you can easily blame for the problems you can’t fix on your own.

If you watch the media, you would think every problem is the end of the world and that every issue must contain a villain. It is hard not to get caught up in the often manufactured drama that sells commercials. This creates a reality all its own, where any opposing viewpoint is dismissed as ‘stupid’, ‘irresponsible’, and the person who said it must be EVIL! My fellow coffee professional, to you I say: RELAX! Even before the 24-hour news cycle and social media, the world survived without a lot of our help. The reason for it is simple: People figured out what was most important to them and concentrated on making that better. People found their passions and exerted massive effort in pursuing them. The best among us found balance in life by being healthy, learning something new, being a good neighbor, taking care of finances, and finding peace in a relationship with a ‘higher power’.

Exporters / Importers: We ask them to source coffee from responsible growers and pay a premium they deserve, to transport it leaving the smallest carbon footprint, and to absorb the risk of ownership knowing that the coffee could be refused for any number of reasons. They do all of this while we try to get one more penny off the price. And they do it because it is the right thing to do. They lead by example for other industries on how to be great partners without exploiting producers and in the end they (usually) get rewarded for it by roasters paying for the responsible service and quality coffee.

Roasters: We ask that they craft the raw product into a beautiful bean worthy of an extraordinary price. We ask that they pay the importer well enough and take it on faith that the importer will in turn reward the grower. We demand that they reduce the amount of greenhouse gasses produced, pay above minimum wage to staff, and provide benefits so employees can support a family. We beat them up on the wholesale price and demand more and more services. And they do it because they understand that with their product the retailers will be successful.

Roasters are (most of the time) rewarded with prices well above a commercial rate because the product and service deserve it. They lead by example to their customers that quality deserves a premium.

Baristas: The shop they work for is being asked to sort their trash, use compostable products, less harmful detergents, and pay a living wage. We ask the ‘front line’ to perfect the art of extraction and presentation so they can look a customer in the eye and know that when they ask for an 800% mark up over the cost of goods, it is an appropriate price to pay. It allows not only the retailer to keep their doors open and people employed, but to also reward the rest of the supply chain by paying a little more for the wholesale coffee.

In short, the world improves when people lead quality lives because those people rub off on the rest of us. They influence change not by shouting or getting angry, but by example.

This simple premise will move the world forward – improving quality improves lives. As part of their life balance, coffee professionals find passion in waking up and making great coffee. This simple act of pursuing quality every day in your part of the coffee supply chain makes the industry better for all of us.

Quality is the purest form of a sustainable project. The pursuit of quality in coffee is a noble endeavor that will start to address all of the problems mentioned above. ALL of them!

Here is how it works: When you pursue quality, you add value. When you add value, you increase profits. When there are more profits, efforts are made to keep the momentum going. Jobs get created, assisting to end poverty. Social and planetary responsibility emerge as inextricably related. Your effort just to do ‘your part’ helps to ensure a solid supply of coffee as well as a healthy planet and healthy customers.

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Changing the world with Quality in the Supply Chain Growers: We ask the impossible from them. Please improve the quality of your coffee, grow with a care for the earth, pay your pickers a fair wage, and do all of this without a guarantee of a price premium. And you know what?

They do it! They take a risk because it is the right thing to do. They lead by example for their neighbors. In the end (most of the time) they are rewarded with a price premium because they deserve it and there is a market for it.

Rocky Rhodes

It does not, in the day-to-day pursuit of our passions, matter who the next president is, whether ISIS will attack again, or if the SCAA SCAE merger goes well. Yes they are factors, but know that there are people that find their passion in dealing with these things and they are more likely than not going to get it right because they are driven to do so.

They are just like you, my fellow coffee professional: adding quality where they can and nudging the world forward a bit and leading by example. You may not like they example set by others, but you combat that by leading in your own way in your day-to-day activities.

Add quality to your product, your life, and lead by example and the world will tumble along just fine. We as an industry are leading the world by example, and for that you can be proud!

Rocky Rhodes is an 18 year coffee veteran, roaster, and Q-Grader Instructor, and his mission now is to transform the coffee supply chain and make sweeping differences in the lives of those that produce the green coffee. Rocky can be reached at rocky@INTLcoffeeConsulting.com

February 2017

Photo by Trish Rothgeb

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SLIDE!

by Donald Schoenholt

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n October 8, 1939, at Crosley Field in Cincinnati, a fellow named DiMaggio put on a display of footwork that is still talked about. In the tenth inning of that fourth game of the World Series, Joe DiMaggio slid safely home to win the game and The Series for New York. The event took the sting away from the headlines about Russia and Germany finishing off Poland, and focused the country’s attention on what was really important to Americans that fall: baseball.

The man who introduced America to the Mr. Coffee machine was a phenomenal base runner, as his 1939 World Series feat illustrates. And I thought about him and that slide as I have been watching the market slide safely home this past month.

Agrimoney.com, the UK-based agricultural business internet news source, reports that the ICO believes that Arabica supply will increase about 1% in 2017, while the Robusta supply will shrink by 6%. That should keep Robusta prices high and push Arabicas even higher, if the numbers prove real and there are no other intervening factors in the marketplace, and there are always other factors to be considered. The ICO thinks that consumption may fall off in 2017, which should act as a release valve on prices. Respected American soft commodities analyst, Judith Gaines Chase, doesn’t think so. Smucker, who previously, and perhaps precipitously, lowered their prices earlier in the year, have decided that now is the right time to correct their price course, and have announced an increase of 6%, which may embolden the bulls. But, remember fellows; they got it wrong last time. Maybe the market just oversold after overheating.

Maybe it’s just that simple.

I, like every other small roaster, was on my feet with anxiety as the “C” passed $1.75 and looked like it was heading toward $2.00 as we rounded November.

Then everything changed, and in just a few weeks the market slid into the 130’s. I wrote about the run-up in Do What You Can with What You Have in December 2016 CoffeeTalk, p.22, and now within a short time after penning that piece the market has changed. The Inside Baseball on what’s going on is noteworthy.

Independent small roasters, and roasting retailers should, of course, ignore all this if they can. Tend to your business. Slurp, spit, and buy the beans you choose as your needs require, trying as best you can to ignore the storm outside. Adjust your prices as you must, put your courage in a sticking place, and play long ball. The game is to the fellow who stays the course, and not to the smart aleck who behaves like he knows something you don’t. W.P Kinsella had it right. Go the distance.

According to data provided to SCAA by Mintel, the market research firm, the number of US coffee shops should be about 32-thousand now, which says that the growth rate for the number of domestic outlets is at about three-tofour percent; far below the twenty-five to thirty percent rate of twenty years ago, when the number of stores was surging to fill unserved consumer desire for a better cup, offered from more interesting retailers, than those who sold coffee at that time. Even with Starbucks amounting to between 20-25% of the total, the US market for independent retailers is growing sustainably, but this is not stirring to those who focus on the money that an enthusing market can generate. Not when the international coffee market is gushing with growth.

The market is rallying as I am writing; moving above its 200 day and 100 day moving average since it appeared to bottom in December. The market doesn’t seem to want to grant us a slide that sticks. So, what is a fellow to think? One thing every fellow knows is that you can always rely on your mother. I don’t think my Mom ever saw Joe D play ball. She did go to Richmond Hill High School with Phil Rizzuto, a Yankee shortstop of distinction, who stole 149 bases in his career; a good many of them by sliding in safe. So, the question lingers, is it time for a slide?

As a youngster, when I’d ask my Mom for something she didn’t want to grant, Dellie would say, “We’ll see,” and that is the case here. We’ll see.

I saw The Yankee Clipper play once. My father took me to a game at The Stadium. There is only one “Stadium” spelled with a capital letter in New York; then as now it meant a ball field in the Bronx. It was 1951, I was five, and Jolting’ Joe was playing in his last season. Pop said I would always remember that I saw Mr. DiMaggio play, and he was right.

Those ever-enticing international markets, particularly those in Asia and the middle East, continue to grow in the same pattern and just a bit slower (expected to be up 25% by 2020) than we saw domestically in the last quarter of the twentieth century. It is no wonder that those in the power seats of the former US specialty trade association have deployed their assets to face East, and the new opportunities, rather than to support the US home market members. These people are very smart. They are anticipating that their cups will shortly runneth over.

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May 2016. Among other factors, the large Arabica green coffee demand and diminished Robusta availability pushed the market upward in recent months, only to stumble badly toward the end of the year. Will the market continue its recovery, or hit resistance and slump back toward the 120’s?

In the last weeks of 2016 the Arabica markets gave back much of their earlierin-the-year gains, which the folks at the mammoth US roaster J.M Smucker must have anticipated as they lowered their roast coffee prices by 6% in

Specialty coffee pathfinder, Donald Schoenholt, has been roasting coffee, and writing about his love for the stuff, and his fellow roasters since 1963. He can be found at coffeeman@gilliescoffee.com

February 2017

Getting Profitable Lesson 4: Controlling “Cost of Goods” – Part 1

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ast month we talked about how to calculate an actual cost of goods (COG) and an ideal cost, so you can evaluate both as a percentage of sales to determine if you have a cost control problem. In this and the next article we’ll discuss why your cost might be high (1½% higher or more than your ideal cost), and how to fix it.

There are only 7 reasons why your actual cost might be significantly higher than your ideal cost, they are: 1. Product has become damaged so that it is unusable 2. Menu items are being over-portioned 3. Losing product to spoilage 4. Excessive waste is occurring during production 5. Losing product due to theft 6. Losing money due to theft, which is inflating your cost 7. You are making clerical errors 1. Unusable damaged product This is when product has become damaged to the extent that it can’t be used, for example: a bag of coffee beans that has burst open and spilled on the floor, a cheese cake that gets smashed because a heavy box was placed on top of it in the refrigerator, or cups that get flattened because the case was accidentally dropped and was partially crushed.

If you determine that the product came damaged from your purveyor, then of course you should return it and request an exchange or full credit.

However, if you can’t determine how or where the product got damaged, then you should at least have your employees inform you when they come across damaged product. This will allow you to assess the value of the product lost, so that when you do your month end COG calculations, you’ll be able to understand how that lost product impacted your numbers. It will also give you an opportunity to remind your employees about proper handling and storage procedures.

2. Over-portioning menu items Your ideal COG calculations are based upon the portions specified in your recipes. If your employees aren’t following your recipes, and they are using portions greater than what you have specified, then your COG will become inflated.

If your employees have accurate recipe sheets, and the tools necessary to measure your specified portions, then there is absolutely no excuse for overportioning. After all, your bank wouldn’t tolerate a teller that gave away and extra $10 each day, and likewise, you shouldn’t tolerate an employee who gives away extra product!

by Ed Arvidson

The only way to know if your employees are over-portioning is to watch them and check their portions. On a regular basis, you should watch your baristas work to make sure they are using the proper portions. You should also check your food prep cook by weighing the meat and cheese they use in sandwiches, and the lettuce they use in salads. Of course, if you catch them over-portioning you’ll need to give them a stern warning! Little portioning overages can add up to hundreds of dollars each month.

3. Product lost to spoilage Spoilage can occur from a number of reasons. Over-ordering or overproduction, buying or preparing more product than can be used before it spoils, is one reason. Improper product rotation (using new product before old) can also contribute to loss.

Cold or hot items that are not held at the proper temperature, or that are left out at room temperature for an extended period of time, will grow bacteria rapidly and spoil. A malfunctioning refrigerator that can’t hold a temperature of 40°F or less can also be a source of this problem.

Finally, crosscontamination, bacteria transferred to food from unsanitary hands, a cutting board, knife, food storage container, or some other work surface, can also result in premature spoilage.

To find out if spoilage might be occurring in your operation, you should mandate that your employees inform you whenever they come across spoiled product. You should also inspect all of the perishable products in your store each morning. Look at flavored syrups to make sure they aren’t growing mold or have turned cloudy. Taste a spoonful of whipped cream from each dispenser to verify that it hasn’t soured. Go through your food prep refrigerators to smell and taste meats, cheeses, sauces, and other condiments. Be sure to address any issues that might be contributing to loss when you come across spoiled items.

Next month will touch upon the remaining causes that can negatively affect your cost of goods.

Ed Arvidson is a 25-year veteran consultant to the Specialty Coffee industry, and President of E&C Consulting. Elements of this article are from his new book, “How to Get Profitable in the Coffee Business.” www.coffeebizhelp.com

15

“Innovation” – NCA’s 2017 Convention

by Joe DeRupo

T

he NCA’s 2017 Convention will focus on innovation, an imperative in the rapidly changing U.S. coffee industry. The meeting will feature keynote speakers who used innovative thinking and techniques to spearhead change in their professional endeavors. Innovation also suffuses the Convention’s extensive educational and networking programming. The meeting will take place on March 23-25, 2017 at the JW Marriott in Austin, Texas’s capital city. A pre-meeting training seminar – March 21-23 – will certify participants as Preventive Controls Qualified Individuals (PCQI) under the Food Safety Modernization Act (FSMA).

Keynoters • Derreck Kayongo is a Top 10 CNN Hero who pioneered the Global Soap Project, which delivers re-processed soap otherwise discarded by hotels, helping thousands in the third world maintain disease-fighting hygiene. A refugee from the Ugandan genocide, Kayongo, CEO of the National Center for Civil and Human Rights, galvanizes audiences in TEDx talks by showing how the power of observation can identify and overcome challenges.

• Scott Dikkers Scott Dikkers is the founder of renowned, farcical digital media company, The Onion, and one of Time magazine’s “Top 50 Cyber Elite.”

He is known to captivate audiences with his cybernetic rags-to-riches story of turning a fake newspaper into one of the world’s most popular

humor destinations. His books and films have earned him the Thurber Prize for American Humor, a Peabody, and 30+ Webby Awards.

• Scott Stratten Scott Stratten is known for his disruptive technique of “UnSelling” to “engage” rather than “sell” to audiences. He speaks passionately to convince audiences to embrace the “age of disruption” and navigate viral and social media. Named one of America’s 10 Marketing Gurus by Business Review USA, he has written four best-selling books, including 1-800-CEOREAD’s “Sales Book of the Year.”

Programming and Events The Convention also offers educational programs that dig deeply into current topics and issues confronting the industry. Special events also deliver quality networking, social and community service opportunities. First-time events include an all-attendee networking luncheon and special events for new members and young professionals. The Convention also houses a tabletop exhibition that combines the visibility of a trade show with an intimate setting conducive to one-on-one meetings with coffee executives.

Registration To register for the 2017 NCA Convention, and to secure your accommodations at the special event rate, visit www.ncausa.org. For more information, contact Thrisha Andrews at tcandrews@ncausa.org.

16 February 2017

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Coffee Service Corner

PROFIT MAINTENANCE IN AN EXPANDING ROUTE OPERATION

• • • • •

T

raditional Key Performance Indicator focus is always an appropriate starting point to improve execution and thereby drive company profits. Greater service consistency helps ensure account retention, historically my most important operator metric. Growing same account sales was a close second to account retention in the KPI hierarchy in the operator’s quest for a more robust P&L statement. But when an operator considers expansion, focus can be diluted if the plan is not well-developed and short and long-term profit will be affected.

From my days as a distributor and operator and through current times, I interact with many operators and we discuss route optimization, menu management, and every topic under the sun. Most of these interactions involve discussing our fragmented industry and what the future landscape may look like. That begets the questions, “Should I add routes and expand my territory, or can I continue to be successful within my current footprint?”

To Grow or not To Grow My customer base as a distributor mimicked the Coffee Service Industry in that I served small, medium and large operators on a national footprint. The large operators had already made the commitment to growth, be it organic and/or through acquisitions and understood the financial necessities and implications. Interestingly, after many years of aggressive roll up activities, the top five Coffee Service operators control only approximately 25% market share. There is much more potential for acquisition activity.

Many small and medium-sized Coffee Service operators seemed to be in a perpetual quandary regarding the question of whether to add routes or remain in a holding pattern. For most, it was a matter of funding the growth and belief that a commitment to adding a route(s) came with a fixed amount of additional personnel and expense coupled, with a timeline that they believed would only yield more cost and diminished profits.

Many operators have experienced success through aggressive organic and/ or acquisition growth strategies. Some operators have new account activities centered only on replacing lost accounts, with only modest objectives regarding adding accretive business.

18

Adding routes – Some do’s and don’ts Then there are those operators that decided to add route(s) and that have had limited success. I share some common missteps that I have observed: • Deciding to add new route(s) organically while there was existing route capacity

Ken Shea

Adding additional route professionals and having the new hire “help with warehouse work” rather than having a well-thought plan regarding other job activities Adding new dedicated salespersons too hastily Considering acquisition candidates without performing efficient due diligence Marginalizing employees coming from the acquisition.

Shifting key person roles too far away from core management and leadership activities towards the expansion efforts

I admit that at various stages of my career as an operator, I made more than one of these missteps. And from these missteps, I share some helpful hints that might impact your growth-driven results: • Do a complete needs analysis of your existing route and customer base: ☐ Understand your footprint. Where are my accounts? ☐ What is the volume per machine on location? ☐ Does my route person(s) have capacity? Do they spend time doing non-route activities? ☐ While you’re at it, look at product penetration reports. Do you have a need to focus first on adding new items at existing accounts?

• When doing your personnel needs analysis, consider hiring a “hybrid” sales/ops type of person. Locating a pro that can efficiently sell as well as one that enjoys route work and install/service duty is a solution that can fast-track the account-adding process and morph into a full-time position either as a route professional or a sales pro.

• Do not short-cut your due diligence. There are critical areas where you must know the answers: ☐ Will efficiencies be gained and capacity created by melding the new routes with my existing routes? ☐ How will cost of goods be affected through this acquisition? ☐ Are too many eggs in one basket with disproportionately large accounts? Do we have binding contracts?

• Understand which of the employees in the new business own the relationships with the customers. Nurture them.

• Do not be too hasty to eliminate personnel at any level. We all have the inclination to protect and keep our current team intact, but there are usually some gems in an acquisition that might have redundant titles with your team. Give them consideration.

• Map out your product conversion and SKU rationalization process patiently. A plan that is too rapid might expose you to account loss.

An Evolving Industry The toughest competitors that I encountered as an operator were most often the local and regional operators. The owners were engaged with their customer base and owned the relationships. Frequently, when some of these operators were bought out, the owners did not remain for long and those that did, more times than not, became custodial managers with much less interest in the business.

Not to say that the large companies are not capable and formidable. They are!

While I foresee more acquisition activity over the next five or so years, I do believe that a small or midsize operator can thrive. Growth plans need not be grand, but growth should always be a part of route business process. And there are methods to preserve short term profits and build toward even higher long term profits.

Until next time!

Ken

February 2017

Ken is President of Ken Shea and Associates and also serves as V.P. of Coffee Service for G&J Marketing and Sales

Preserving the Environmental Legacy of Colombian Coffee Growers

by John Rivera, Media Relations Manager, Lutheran World Relief

C

offee grower Oscar Morales Ospina proudly cultivates his crop on a five-acre farm left in his care a decade ago by his late father. The beans he grows near the town of Marulanda in central Colombia support his family and provide someone somewhere with a satisfying morning cup of joe.

“I was born on the farm,” says Don Oscar, who is in his early 40s. “Everyone in this region is a coffee grower. It is a family legacy.”

He had fond memories of working alongside his father.

“We helped our father plant, weed and harvest coffee,” he says. “We have lived the entire process, from planting seedlings to filling bags and seeing the coffee grow.”

But as time went on, he and his neighboring farmers faced a dilemma. Their livelihood was taking a toll on the precious Guarinó River watershed. It was Oscar Morales Ospina stands beside his new difficult enough to preserve soil and water resources coffee washing tub. in the steep slopes of this mountainous region, already prone to erosion. Intensive cultivation of the single crop was depleting and degrading the soil, and the wastewater from processing the coffee beans was polluting the river. The effects of climate change were exacerbating the deteriorating conditions.

This environmental degradation was a present threat not only to the livelihoods of the farmers in this community, but also to farmers downstream who depend on these natural resources. There was a danger that a point of no recovery was approaching.

A coffee farmer participating in the Pro-Café project shows off his depulping equipment.

Pinpointing the Problem, Finding the Solution In an effort to protect the ecosystem and reverse the environmental damage, Lutheran World Relief teamed with a partner who knows a few things about coffee: The Starbucks Foundation. With the foundation’s support, along with local partner Programa de Desarollo y Paz del Magdalena Centro, LWR is working with the farmers and local communities in a project called Pro-Café, which seeks to protect and preserve ecosystems for sustainable coffee livelihoods.

It was not difficult to pinpoint two major sources of water pollution: household sewage and the nutrient-rich wastewater left over from processing the coffee beans. Luckily, solutions weren’t difficult either.

To prevent contamination from human waste, farm families have received basic household sanitation systems to contain the household sewage that was leeching into the rivers through runoff. Some families had existing sanitation systems that were repaired, and some received more hygienic bathrooms and showers in their homes.

Addressing the wastewater from coffee processing required new equipment that makes the process more efficient and uses less water. In the wet method of processing, the coffee bean is separated from the fruit that surrounds it. Traditionally, this step in wet milling used a significant amount of water.

After de-pulping, the beans were fermented for 8-12 hours, and then washed to remove any remaining mucilage, another step that required a lot of water.

At the end of the processing, the water that contained mucilage and other organic matter, was often returned to waterways, a step in the process that was responsible for the death of many waterways in Latin America.

Reducing Environmental Impact Newer de-pulping equipment that has been introduced greatly reduces the amount of water needed in this step, and requires little, if any fermentation or washing. Any effluent is then collected in wastewater treatment systems to reduce the organic pollutants before being released again to the river – often cleaner than when it was first removed for wet milling. Procafé is providing farmers with modern processing equipment to replace the traditional wet mills they used to process the coffee, and has reduced water usage by close to fifty percent.

As an added benefit, the pulp, mucilage and other organic matter that is left over is placed in an LWRprovided biodigester, a device that uses bacteria to break down organic matter.

The methane gas that results from this process provides between four to eight hours of cooking fuel daily, and the leftover compost makes an excellent fertilizer.

This biodigester breaks down organic matter and produces gas that can be used in homes as cooking fuel.

Don Oscar says he is pleased with the new coffee processing system. Not only does it protect the environment where he and his family live, but he believes it also improves the quality of his coffee.

“The coffee washing tanks do not make the coffee taste sour like traditional cement tanks,” he says. “There is no bad odor, there is not so much waste and the coffee looks very nice. It is whiter and better washed.

“I realize that I am taking better coffee to the market and I am getting a better price.”

19

NewsBites

Darrin Daniel to Assume Executive Director Role at Alliance for Coffee Excellence, Inc Darrin replaces the interim director and founder of the organization, Susie Spindler who returned in mid 2016 at the request of the ACE Board. “He brings an incredible understanding and enthusiasm for coffee farmers, high quality coffee and the global specialty coffee sector. All three are at the center of the work of Cup of Excellence, ACE’s premier program,” says Spindler, who will remain as an advisor.

Daniel, who has supported the Cup of Excellence program both as a judge and a buyer is excited to take the helm.

“It is with great honor that I assume the role of Executive Director for the Alliance for Coffee Excellence. Since my first experience as an International Judge in Honduras in 2005, Cup of Excellence has had a special place in my heart and coffee career. I am overjoyed to be able to lead and guide this wonderful organization’s future as we move towards expanding the original 1999 vision.” For further information, contact Darrin@ cupofexcellence.org.

20

the world’s most esteemed chefs including Ferran Adrià, Massimo Bottura and Carlo Cracco. Press Contact: Harrison & Shriftman Liz Santillanes / esantillanes@ hs-pr.com; 917.351.8626

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74th Annual Golden Globe Awards as Official Coffee to AVOCA Coffee Roasters & celebrate the best in motion Rahr & Sons Brewing Co. pictures and television. On Release Coffee January 8th, 2017, Lavazza Beer Iron Joe had a presence within the AVOCA Coffee Golden Globe Awards Lounge Roasters and Rahr at The Beverly Hilton, where & Sons Brewing the internationally-renowned Co. will release Iron ceremony takes place. Before, Joe, a coffee beer, during and immediately following the awards, a pop-up in cans for the first time in early February around Lavazza café was featured Dallas-Fort Worth. Iron Joe, a and fully operative within variation of Rahr & Sons’ Iron the Lounge. Designed with a Thistle strong Scotch-style ale, typically Italian contemporary is brewed with AVOCA’s Noir eye, the café offered Golden cold brew coffee and aged in Globe winners, nominees, American oak barrels for three industry leaders and other months, which results in a guests traditional Lavazza beer that is dark in color with coffee experiences including a rich, robust flavor, a creamy the signature Coffeetail No. tan head and coffee nose. Part 51 (a cocktail made with of the limited-edition Den of Lavazza cold-brew coffee, Sin series, Iron Joe will be the vodka and ginger ale), and the first 4-pack of canned craft beer famed Coffee Caviar, which from Rahr & Sons. The pearl is part of a long list of coffee white cans will be accented with design specialties created in gold and silver design elements collaboration with some of

and feature metallic gold can toppers.

are protecting the endangered Connecting Smallholder species and Cloud Forrest Coffee Farmers with habitat while supporting The Market: 3rd Coffee Matt Anderson Joins local schools and livelihoods.

Quality Competition Server Products Wendra’s coffee creations Celebrating High-Quality Server Products in jewelry and prints of her Coffee in Brazil is pleased to paintings help to support the There is a announce the program. They are available huge divide hiring of Matt on T-shirts, coffee scented between Anderson as notecards, coasters, coffee smallholder Engineering mugs, necklaces, earrings, and farming Project bracelets at the Woodland families and Application Manager.

Park Zoo gift shop in Seattle. their business partners at the As Project Application Manager, Her work is also available at end of the value chain. Farmer’s Matt will lead Server’s efforts www.ByWendra.com and at lack access to information on in field and laboratory testing, www.Drippinghotdesigns. how their product sells – and regulatory approvals, and com. To learn more about the thereby the potential to improve customer engineering support. Tree Kangaroo Conservation their coffee quality and increase Prior to joining Server Products, program: their income. The International Matt was head of food-service www.TreeKangaroo.org Coffee Partners support -in equipment and supplies, and cooperation with the Intercommercial support systems for Great Novelties At The American Development Bank, the Zaxby’s restaurant franchise. Sigep 2017 Astoria Stand! the Lavazza Foundation and Matt holds a master’s degree For over thirty S&D Coffee and Tea- a project, in industrial distribution from years Sigep has in which smallholder coffee Texas A&M’s Dwight Look been proving farmers receive technical College of Engineering, and a itself to be one training to improve both the bachelor’s degree in business of the Italian quality as well as the quantity administration from the trade shows with of their produce. They also have University of Georgia. the most international flair. the opportunity to participate in Long recognized as a leader in From January 21 to 25, the 2017 the “Concurso de Qualidade”, a portion controlled dispensing edition was held in Rimini, Coffee Quality Competition. In and point-of-use holding of and proposed a rich program October 2016, this event took ambient, chilled and heated of competitions, seminars and place for the third time. Marcelo products, Server Products has meetings that complemented Vieira, a coffee farmer from a complete line of innovative the features of interest at the Santa Margarida in the region dispensing and holding trade fair’s various stands. One Matas de Minas, won the first solutions perfect for any in particular, the distinctive place in the category natural operation. red and white stand belonged processing. About International For more information, visit to Astoria, and was happy to Coffee Partners GmbH: www.server-products.com or delight all visitors alike with International Coffee Partners call 1.800.558.8722. an excellent espresso, made GmbH (ICP) is an initiative with some of the most reliable, founded by five leading Artist Wendra-Lynne technological and innovative European coffee companies, The Turns Canvases into coffee machines. Plus 4 vision is to make smallholder Caffeinated Works about Champions, Sabrina, HYbrid, coffee farming more competitive Conservation. and last but by no means least, to improve the living conditions Wendra paints with the new Core600. And yet for the farmers and their coffee about coffee. another big surprise was in families through concrete She is inspired by store for all Sigep participants. projects with a strong local coffee's rich tones, At the Astoria stand in fact, ownership. More information is it's intoxicating aroma and it's as an absolute preview, the available at comforting warmth. Wendra latest entry in coffee machines www.coffee-partners.org. paints the many ways in which was introduced: Drive6000. coffee connects communities With inquiries email, on a global scale, nourishes comunicazione@astoria.com. businesses and personal relationships, and brings people together throughout the world. Her Bringing paintings for the Tree Kangaroo to your home or office Conservation Program bring awareness to the partnership between coffee growing communities in Papua New Guinea and The Tree Kangaroo Conservation program. mandalaybaycoffee.com Together they February 2017

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