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March 2017 | Vol. XXX No. 3

S E L B A S O P S I D & S d i L , s p cu



cyclable e R s p u C es Paper k a M g in Lin




Grow Your Business by Becoming an Inbound Organization 14 GETTING PROFITABLE Lesson 3: Controlling “Cost of Goods” 18


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A Dirty Secret

A New Lining Makes Paper Cups Recyclable

12 14 18

Roaster's Rock

A $250,000 Employee for FREE!

Connecting to Customers

Grow Your Business By Becoming an Inbound Organization

Getting Profitable

Lesson 4: Controlling “Cost of Goods” – Part 2

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A Dirty Secret — A New Lining Makes Paper Cups Recyclable

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March 2017


With the affordable G21 packaging machine. The G21 is a fully-equipped vertical form, fill and seal machine that provides a variety of packages for a wide range of roasters at a competitive price. Visit or call 215.721.4600 to learn more about our flexible packaging solutions tailored to the coffee industry.

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Kerri Goodman

orn December 20, 1951 in Boston, John recently passed away at age 65 in his home in San Francisco of heart failure.

John led an illustrious life as coffee professional, independent real estate professional, intrepid businessman, investor, art collector, and photographer. In 1990, John joined Knutsen Coffees, Ltd., in San Francisco, where he met the love of his life, Erna Knutsen, and pursued a 20-year career as CFO until 2010. Knutsen Coffees shuttered their doors in 2014 with an announcement at the annual SCAA Exposition as John’s wife, Erna received the lifetime achievement award. Most recently, John was responsible for the launch of the Erna Knutsen line of single serve coffees in Taiwan.

Those who knew John, knew him to be opinionated, boisterous, intelligent and a personality within the specialty coffee world himself, who per his wife Erna, “never liked to pick up the phone”. Among his many achievements in specialty coffee, John served as an SCAA Board Director from 1998 – 2000, representing Knutsen Coffees at the Roasters Guild as sponsor and participant on the cupping team. John once appeared with Erna in a fund-raising calendar completely nude. John was known as a no-nonsense person with a very quick wit and dry sense of humor and heart as large as his girth. An avid traveler, John loved to travel with Erna, not only in coffee producing countries but also credited to more than 15 cruises and motor home adventures with dear friends. John’s love for Erna is possibly the best characteristic for which he is remembered. Assisting Erna everywhere, with care and devotion. John leaves behind many friends which include many luminaries in the coffee world. John is survived by his wife, Erna Knutsen, 95, who resides in San Francisco.

1952 — 2017

Rest in Peace

Calendar 6

For complete and updated show information visit our online calendar:

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 10-12

Natural Products Expo West, Anaheim, CA USA

March 23-25

NCA Convention 2017, Austin TX USA

March 13-15

Midwest Foodservice Expo, Milwaukee, WI USA

April 19-20

Re;co Symposium, Seattle WA USA

March 16-18

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

April 20-23

SCAA Expo, Seattle WA USA

March 16-18

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

April 23-24

Northwest Foodservice Show, Portland, OR USA

March 2017

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A Dirty Secret A New Lining Makes Paper Cups Recyclable


n a lot of coffeehouses, the trash has a dirty secret.

No matter how ecologically-minded the owners or clientele are, no matter how carefully the paper coffee cups are separated from the rest of the garbage, those cups are destined for a landfill. According to CNN, some 50 billion paper cups are discarded in the United States each year. The vast majority of these are not recycled. The culprit is the interior polyethylene coating that keeps the liquid from leaking. This coating prevents recyclers of fiber-based packaging from processing the cups, because during the initial pulping, it breaks into flakes that clog filters. The problem is so pervasive that recycling facilities typically use optical sorters programmed to remove beverage cups from the waste stream and send them on their way to a landfill. With the lack of paper cup recycling, some coffeehouses have opted to use compostable paper cups. Paper cups are available that are made with a compostable plastic barrier coating, usually plant-based, instead of polyethylene. But these have their own problems. They're substantially more expensive than traditional paper cups coated with polyethylene. In addition, they won’t compost in a home composter. The only reliable way to make sure they're actually composted is to use these cups in communities with municipal facilities that support industrial composting of packaging, which are few and far between.

by Pan Demetrakakes

But a new interior coating material has the potential to render coffee and other beverage cups as recyclable as plain paper. Smart Planet Technologies has developed a new paper cup called the reCUP™, which uses a coating material that can be processed in any existing paper recycling equipment. Called EarthCoating®, it is made from 51% calcium carbonate and 49% polyethylene. In terms of both performance and price, it is no different from a standard all-polyethylene coating. But when it comes to recycling, there's a huge difference. To understand the brilliance of the reCUP solution, it’s important to review the paper recycling process. As with most packaging materials, a major challenge of paper recycling is the removal of foreign material as reliably and efficiently as possible. The first step in recycling waste paper is pulping, which breaks the paper down into a pulp of reusable fiber and undesirable substances, meaning pretty much everything besides the fiber. This includes dirt, grit, clay, product residue and the plastic interior coating, which breaks up into flakes. The pulp passes through coarse screens that let the fiber pass through, as well as the less-dense undesirable material, while rejecting material such as dirt and grit that is heavier than water. cont. on page 10

Coffeehouses in most communities that serve coffee to-go in expensive compostable paper cups may have the best intentions to limit their impact on the environment, but are, in effect, throwing money out the door.

8 March 2017

A Dirty Secret The next step is filtering. The pulp passes through screens that allow the fiber through, as well as small particulates of undesirable material, while keeping out large particulates. The final step is centrifugal cleaning, which sorts the remaining pulp through spinning. The fiber, being lighter than water, is separated into pure pulp, while the heavier-than-water contaminants, even though they're small particulates by this point, get spun out and rejected. This process is highly problematic for conventional polyethylene coatings. The problem is that the coatings tend to break up into relatively large flakes that are lighter than water. Being light, they pass through the coarse pulping screens along with the fiber, and as large flakes, they clog the finer screens in the next step. This disrupts the filtering process to the point that recycling coated paper cups becomes nearly impossible, which is why many paper recyclers set their sorters to reject them automatically. EarthCoating, on the other hand, works perfectly with the conventional pulping process, because it differs from polyethylene coating in two important ways: The coating breaks into much finer particulates, and those particulates are heavier than water. These properties ensure that the coating gets shunted out at two critical points in the process: the initial pulping, where heavy particulates get rejected, and the centrifuging, where any remaining heavy particulates get spun out. In between, the coating particulates are fine enough to make it through the filtering screens without clogging. This coating can be used in any of the many packaging applications that feature coated paperboard, corrugated or other fiber-based material. So you can improve the recyclability of other coated paperboards in your coffeehouse as well, including coated paper liners and paperboard trays for food items. Your packaging distributor can provide reCUPs from paper cup manufacturers that have licensed the reCUP from Smart Planet Technologies. "Our coating is applicable to any kind of plastic coating that's being used on a package," says Will Lorenzi, president of Smart Planet Technologies. "Our coating works just as well, looks the same, and costs the same. The only difference is that the coating won’t interfere in the recycling, and therefore cups become a valuable material to collect, instead of sending to the landfill.” The cups come in the standard coffee-cup sizes: 8, 10, 12, 16 and 20 ounces with matching lids. They are available in single and double-wall versions; the latter are recommended for use with cold beverages, because they cope better with outer-wall condensation. In both single and double-wall versions, these cups have the same potential for printing as a conventional cup. Indeed, for all practical purposes, they are indistinguishable from regular paper coffee cups; the only difference is that they can be recycled as easily as any other fiber-based packaging. One of the U.S. customers for the reCUP is Kéan Coffee, with two locations in Southern California. Kéan Coffee is owned by Martin Diedrich, founder of Diedrich Coffee and a prominent figure in the specialty coffee world. “At Kéan Coffee, we believe that businesses large and small bear a responsibility to support issues and model practices that promote greater well-being for the local community and the global community,” said Martin. “We are thrilled to introduce an innovation in paper cups that provides the recycling industry with a better cup to recycle.” Other reCUP users include Ellefson Coffee Co., Jackson, Minn., owned by David Ellefson, of the rock band Megadeth; and Orange Coast College, a community college in Costa Mesa, Calif. The cafeteria at Orange Coast College serves coffee in reCUPs, and a student-run operation collects the cups and turns them over to a recycler. The Orange Coast College setup points out a paradox about the practicalities of recycling reCUPs.

In theory, they could be included in a load with any recyclable paper or fiber-based packaging, because they pass through the recycling process as easily as uncoated paper. But because virtually all recyclers reject paper beverage cups, for reCUPs to be recycled for now, they have to be collected as a segregated load and taken to a recycler who knows what they are and that they can be processed normally. Since the paper cups process as easily as uncoated paper, the paper cups are valuable to recycle, providing a new revenue stream for the recycling industry. As an example, Orange Coast College is funding a college scholarship with the profits that have come from recycling their reCUPs. "The first step in solving the paper cup recycling problem is to provide the recycling industry with a paper cup worth recycling,” says Lorenzi. Theoretically, if all paper coffee and other beverage cups were made with EarthCoating lining, recyclers could all be included in regular recycling streams. Lorenzi, of course, dreams of that day. He points out that most of the bleached-board cup stock in the United States is produced by only a handful of paper mill groups. “If the mills switched over, the whole [cup production] would switch over, and recyclers would know that every paper cup is potentially recyclable, profitably," he says. "That's where we'd like to get to someday. In the meantime, we're going to have to collect the cups separately, but because they're a valuable material to collect, it can offset the costs for the service." A new service called Replenysh offers a way to collect reCUPs on a wider scale. Replenysh, a startup based in Southern California, is a phone app for drivers of trucks that collect recyclable materials. It can tell them that a given location has a load of reCUPs ready for pickup and delivery to a participating paper recycler. The United Kingdom is ahead of the U.S. when it comes to collecting coffee cups. Simply Cups, a partnership established in 2014 between Closed Loop Environmental Solutions and Simply Waste Solutions, exists to collect paper beverage cups from restaurants and other institutions and turn them into recycled fiber-based packaging material. Almost all the cups that Simply Cups collects have conventional plastic interior coatings; Simply Cups takes them to two British recycling facilities that have special equipment and processes designed to separate the coating. However, there are great advantages to a cup that can be processed more profitably through traditional processes. Simply Cups recently entered a relationship with Smart Planet Technologies to collect reCUPs as separate loads, which can be resold more profitably since the reCUP can be processed with traditional recycling equipment. One of Simply Cups's members is Costa Coffee, the largest coffee chain in the UK. Costa is currently conducting a trial of reCUPs. Recycling has a special resonance for coffeehouses—certain ones, at any rate. Many coffeehouses cater to a younger clientele that tends to be aware of ecological issues. This is one of the reasons behind the popularity of things like fair trade coffee. A coffeehouse that uses reCUPs and educates its customers about the advantages of doing so can score points with the ecologically conscious. Smart Planet Technologies is working with the Sustainable Packaging Coalition to obtain the optimal recyclability marks for packaging with EarthCoating within its How2Recycle [http://www.] program. In addition, in areas where collection drivers use the Replenysh app, coffeehouses and other retailers will have the option of using Replenysh's logo, adding to the green cachet. Stay tuned for the April issue of Coffee Talk Magazine for an article about other packaging applications for EarthCoating linings that are relevant to coffeehouses.

10 March 2017

Roasters Rock



common desire and a passionate line of questions always seems to come up in introduction to roasting classes. They will ask, “How can I get started with Direct Trade?”

The answer is usually pretty clear: DON’T! That may sound a bit harsh, but it may be the advice that saves their business. They would then ask a follow up question, “But I want to help change the life of a farmer and tell their story to my customers. Why shouldn’t I do that?” The answer is usually pretty clear: YOU SHOULD! These are not contradictory answers, they are uninformed questions. This article, I hope, will explain the best way for a roaster to meet the goal of helping farmers, telling their story, and remaining profitable so they can continue to do it more than once! If you take a distant view of the supply chain it looks pretty straightforward: Farmer – Mill – Exporter – Importer – Roaster – Retailer. With this simplistic view it would be easy to jump to the conclusion that if one were to get on a plane, fly over to the farm, shake hands, write a contract and bring the coffee home, you could cut out all of the expense of those greedy guys in the middle. The problem is twofold: First, it doesn’t actually work that way. Second, it will cost you 10 times more to do it that way! A closer look at the supply chain presents an inefficient, convoluted, confusing array of tribal relationships, border and customs laws, and bad roads. And yet, over the decades, there IS a system, and it works for each area the way it needs to for their circumstances. An Example: In North Sumatra around Lake Toba, five groups of farmers were asked if they could describe what happens in order to get their coffee to the exporter in Medan. There were five different answers and none of them made really any sense at all to someone trying to find efficiencies in a system. The ‘average’ answer went something like this. “First, we pulp the coffee at the farm. Sometimes we ferment the coffee in buckets. The coffee is put in a bag and placed by the road where someone will come collect it. Sometimes that is the same day, sometimes not. Then the coffee is sold to a company that has a big truck, and my coffee is mixed with many others. The truck people sell it to the collector, who is buying several trucks worth of coffee and then they start drying it on the patio. The coffee gets to about 14-18% moisture content and then it is put through the huller to get the wet parchment off. That company puts it in a really big truck and then sells it to an exporter in Medan. The entire process usually takes a couple weeks. The exporter finishes drying the coffee, sorting it, and gets it ready for sale on the open market.” When asked why they don’t just take it to the collector themselves the answer was usually something like, “The guy that owns the truck is my cousins husband.” And there ends the attempt at finding efficiencies in the system. The question that needs to be asked here is how would a direct trade work? Do you now drive up to the farm and get wet parchment? What do you do with that? If you buy from the collector, how do you trace the coffee back to a farmer to pay him more and tell his story? You can’t.

Rocky Rhodes

This example may seem extreme, but it plays out similarly all over the world. MOST farmers pick cherries and either sell cherries or parchment. They don’t sell green beans and therefore that ‘Direct Trade’ has to be defined differently. You won’t know the circumstances until you go there and find out. This can be expensive to do! Let’s assume for a moment you are committed to this Direct Trade concept. Here is what you are in for: 1) Hire a dedicated employee that won’t get divorced because she is flying all over the world and on the road 45-50 weeks in the first year and more than 20 weeks per year thereafter. 2) Travel expenses for being on the road 45-50 weeks per year travelling to 20 different countries. 3) Cash to buy 12 month supplies on-the-spot from the farmers. 4) Money to air freight the coffee out and another ½ time employee to deal with government regulations and insurance to bring the coffee on shore. 5) A warehouse space to store a year supply of coffee or rent space from another warehouse. You get the idea. The average assumed cost for each origin is 2 weeks of time and $10,000. If you have 25 origins that is $250,000. OR YOU COULD BUILD A RELATIONSHIP WITH AN IMPORTER! Importers have a staff of people that deal with this on a daily basis, cover all the growing areas of the world, AND they will have both samples and stories available for you to use. When you have enough people to split up the work and cover more countries, areas, and farms, you will end up with opportunities not remotely possible to you even with a dedicated employee. This is not even the highest value for you. Possibly the best thing they do for you is to absorb the risk and hassle of moving coffee from origin to you. They deal with the coffee that gets in the container that doesn’t match what was supposed to be in it. They deal with the insurance claims due to a ship that sinks in transport. They deal with the Port Authority and homeland security that rip open the bags looking for drugs and bombs. You don’t realize any of this because they are doing it for you. They are your most valuable employee and you don’t even realize it. They save you $250,000 per year. Is this a direct trade? Not really. Can you know who the farmer is and tell their story? Yes. Is the farmer going to get rewarded for this? Yes. Your offthe-books-employee will make sure of it! 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 Photo by Trish Rothgeb

12 March 2017

NEW ITEMS FOR SPRING 2017! We invite you to check out our programs: 1





Connecting to Customers Grow Your Business By Becoming an Inbound Organization


s your business more or less competitive in 2017? Hah! Welcome to 2017. Is that even a question? If Amazon, Google or Facebook isn’t directly competing with you, just wait a few more months. We thought so.

The question is, how do you create a competitive advantage to hold onto your current customers and scale new customers in a predictable manner? Actually, the answer isn’t hard to find, but it is hard to achieve. What many companies need is a streamlined way to build relationships. The reality is: in the age of lots of competition, it is more about HOW YOU ENGAGE your target buyer than how you CLOSE them. Many companies think they can adopt a tactic like content marketing or social media, or buy an ad or list and immediately reverse sluggish sales or lagging market adoption. And they can. But don’t participate in those activities and expect any meaningful change. Adopting a few new digital tactics for your marketing and sales efforts will not help you match the changes in buyer behavior that are the root cause of the problem. The reason this piecemeal approach fails is that it doesn’t address the fundamental problem - buyers and the buying process have changed

by Todd Hockenberry

considerably. They are constantly evolving. So not only must marketing and selling change, but entire organizations must adapt. Help Everyone Attitude - What Inbound Organizations Do In a high-supply, high-competition world with flat demand for many products and services, you better be the most helpful option in your market. Companies that take a proactive approach to solving people’s problems shine. A helping company does not wait for someone to call and then ask them ‘what do you want?’ A helping company figures out the issues people have and figures out how to solve them using their products, services, and support. A recent study showed that 74% of sales go to the first company that was helpful. We just had an A/C unit die, so I asked some friends for a recommendation of a good company to talk to about a new one. I took the best referral and gave them call. This small business owner gave me four options, and also supplied content that answered all of my questions about them. He also sent links to the power company where I could get a rebate if I upgraded to a more efficient unit. He also showed me how the unit we had was not draining properly, and used a video to show me how he would fix it. He then added in

a UV light to kill any organic stuff that would get in the ducts, afterwards directing me to an article talking about why this was important, at no charge! Do you think I even considered asking anyone for a second quote? There was no reason to check anyplace else. The owner hit all my buttons. He started with being knowledgeable, then he listened, then he demonstrated competency, then he HELPED me, then I bought. I could have gone to Amazon (yes they have A/C units on Amazon) but it wouldn’t be worth it. Our interaction was win (he made his company, even his entire profession looks good) - win (he made the referrer look good) - win (I was super happy) - win (he was happy to have gained a lifelong customer) - win (the world now has one more efficient A/C unit). People 1st Mindset - How Inbound Organizations Think People first is more than a clichÊ, and it is super hard to implement at scale. Understanding that the organization must constantly change, and then supporting the team with people who can make smart decisions on their own, requires a process where you attract and train the right type of people. Smart organizations realize that they must put people first. Buyers are not prey for the hunter. They are people that are overworked, busy, stuck in their smart phones, doing more with less in a downsized and outsourced world, and you need their consent to market to them. And you better be all about them, and not your features and products. cont. on page 16

Connecting Do not target marketing to them by thinking they care about outdated demographic segmentation. Target the social-media connected communities that share the common problems you best solve, which they are waiting anxiously for you to solve. In an age of tough competition, a broad-based marketing “shotgun” approach does not address the problems people have. Putting people first aligns you with their outcomes and their results. Online Engagement Drives the Buyer Journey - How Inbound Organizations Get Found 93% of all B2B purchases start with an Internet search. 84% of all buyers engage in online information consumption and education. This idea should not be shocking. Can the right people find you when they are looking for answers online? And if they do find you, what do they see? Perhaps a catalog of products or answers to their questions? Marketing fluff content? Or do they find answers to questions about pricing, competition, comparisons, ratings, reviews, how-to’s, what-to-do’s, and ROI calculations?

info at the right time, and help them manage the convoluted buying journey they are on. In the past, an extraordinary customer experience was only for those that bought luxury items or went to the best places. People now expect this level of experience in everything. Part of this is driven by increased competition, part of this is driven by our short attention span (probably driven by our phones). Part of this is driven by the technology that provides an easy way to deliver a better solution. Your Biggest Risk Understanding the underlying PACE of change in the 21st century creates a challenge for business leaders. In the old days (1990’s), trying new technologies was frequently viewed as a risk. Today, standing pat is your biggest threat. Your competition pales in comparison to the threat of completely missing your audience, losing the opportunity to help, and delaying your entry into the new world. Are they moving, changing, asking new questions, searching in new places, looking for new answers, and you don’t even know it? Probably. Will that change this year? Most definitely. Will you be prepared? It depends.

If you are not building an online portal centered on your website you are missing the most-active, lowest-cost, highest-return marketing going. Your online presence allows you to build a conversation, drive engagement, and meet people where they want to be met, with the answers they want to find.

I would challenge you to ask these two questions:

Once again, this isn’t controversial as a stand-alone fact. Everyone wants a good website. But making your website the best salesperson in your company and putting time, effort, and money and making your digital strategy the foundation of your SMarketing is not insignificant, but it is the only way to scale.

Are Amazon, Google, Apple, Facebook, or another disrupter looking to enter your industry? And if the answer to this question right now is no, then the next question is - when will they be?

Differentiation by Customer Experience - How Inbound Organizations Innovate A help everyone attitude with a people first mindset enabled by online engagement allows companies to deliver a truly outstanding customer experience and create lasting differentiation through marketing innovation. Customer success is driven by the alignment of all customer-facing people with the helping strategy. Everyone must buy in. And one bad experience for the customer ruins it for the entire organization when people buy your products and services at Internet speed. Create an experience that puts them at the center. Self-service is good service. Let the customer choose the pace and the process. Your job is to give them the right

Is your industry more competitive over last 5 years, and do you think that will fundamentally change over the next 5 years?

You may have heard of Inbound Marketing and maybe even Inbound Sales, but to succeed today and beyond, becoming an Inbound Organization will set you apart in the eyes that matter the most; the person that needs your help and will be buying from you. In the next installment of the Inbound Organization, we will discuss the steps you can take to make your website an online portal for actively helping your target audience. Todd Hockenberry is the owner of Top Line Results, a marketing and sales consulting company specializing in helping companies answer the question "How do we grow our business in an age of changing buyer behavior, digital disruption, and tough competition".

16 March 2017


Getting Profitable Lesson 4: Controlling “Cost of Goods” – Part 2


n last month’s article we talked about: 1. damaged product, 2. overportioning, and 3. spoilage, and how those things can negatively impact your cost of goods (COG).

In this article we’ll cover the remaining variables, which are: 4. Excessive waste occurring during production 5. Losing product due to theft 6. Losing money due to theft (which may be inflating your cost) 7. Clerical errors 4. Excessive waste during production Waste created during beverage and food production is THE variable that can have the greatest impact on your COG. Is every bit of usable product being used during production, or are significant amounts being wasted? Beverage cost can be impacted if your baristas make frequent mistakes and have to throw away drinks. Discarding the milk remaining in the steaming pitcher upon the completion of making each drink can also be costly. Remember, to the vast majority of Health Departments, adding new milk to a small amount of leftover milk in the pitchers is totally acceptable, as long as the pitcher is being returned to the refrigerator immediately upon the conclusion of preparation.

by Ed Arvidson

5. Losing product due to theft Even if you pay and treat your employees well, theft happens. To minimize the occurrences of product theft, you should remove the temptations that encourage it. First, don’t let your employees store their jackets, backpacks, or purses in areas close to where product is stored. This will make it more difficult for an employee to stash product in their backpack or purse and carry it out the door. Second, keep your back door locked and the key under management control at all times. If your back door is an emergency exit, then install an alarmed exit bar. Management supervision of all people leaving through the back door will prevent employees from simply carrying product out to their car, or hiding it somewhere until it can be recovered at a later time. 6. Losing money due to theft, (which is inflating your cost) The most common way an employee will steal money from you is by “building a bank;” your cashier taking payment from a customer, but the sale isn’t rung up. This leaves money in your cash register that’s unaccounted for. When no one is looking, the cashier simply removes this money and pockets it. At the end of their shift, their cash drawer still balances within acceptable limits. This can be very difficult to catch. And, since product was used to fulfill the customer’s order, but the sale was not recorded and the income was stolen, it will inflate your cost of goods. If your cashier has obscured the cash register display from your customer’s view, or they are not shutting the cash drawer between transactions, or if there are an excessive number of unexplained “no sale” descriptors on your cash register detail tape, then beware! These can be indicators that your cashier is building a bank.

Food cost can also be affected by waste in production. When processing lettuce for salads, is the maximum amount of each head being used, or, are useable leaves being thrown away? When slicing meats and cheese for sandwiches, is all the meat and cheese being used, or are ends and irregular slices being discarded?

6. Clerical Errors Clerical errors made during COG calculations can distort your costs. Inaccurate inventory counts, or counting the wrong units, or not using updated item prices will distort the value of the products on your shelves. Likewise, making mistakes on recording invoices will also affect your cost. You can’t be too careful when doing your cost calculations, so be sure to check and double check your numbers!

To understand how waste in production might be impacting your cost, you should occasionally rummage through your trashcans to see what’s going on. If the thought of digging through the garbage repulses you, then think of it like this: If you knew that you might possibly find five and ten dollar bills in your trash each day, would you check then? Wasting usable product it just like throwing away cash. You need to make sure that your employees aren’t throwing away hundreds of dollars of product each month. Of course, when you discover discarded usable product, you’ll need to address that waste with your employees so it won’t happen again.

Actively manage the 7-areas that affect your cost of goods, and you might be surprised how much your cost will improve! 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.”

18 March 2017





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(641) 673-8451 Cablevey is a registered trademark of Intraco, Inc. 03/2017



Ken Shea


n the world of Coffee Service, there are two primary methods of serving one’s accounts. The first, precalling or pre-selling, involves either a telemarketing call or a live visit to one’s customers at a predetermined interval for the purpose of writing an order which would be delivered within a day or so by a delivery person. The second method, route selling, is a service model in which the route person establishes par inventory levels at each brew site at a location and replenishes the inventory to the par level, hopefully selling something new along the way and increasing revenue. Route selling is the predominant method of service in general. Pre-selling is more popular in large metro areas such as New York, Chicago and Atlanta.

varieties of snacks…. none of which were carried at his branch. You see, some select, tenured route professionals were given company credit cards along with permission to use generic code numbers to purchase products ad hoc to help them build the ticket. The original purpose was for key account emergency one-offs. Billy added approximately two hours of shopping time for the first service. Four missed delivery calls that same day. And to make matters worse, volume never warranted bringing those products into the branch warehouse. While this example is an isolated incident of good ideas gone bad, there were many more examples that our company experienced before we tightened up our policies and behaviors regarding menu management and became more corporate-centric in our selling decisions.

For this review, we will focus on menu management in the route sales model. An effective route operations manager will have two primary goals. The first is serving every customer on every route, on time, every time. The second objective is to drive same-account sales, which is achieved most of the time by adding new products or upgrading existing offerings. Herein is both the opportunity and the problem. The delivery day typically begins with a load plan for each route person built around a fixed route where supply needs are calculated from the past history of those customers’ purchases. Usually a modest cushion amount is added onto the load to account for northward movement spikes. Hopefully, there is a weekly or quarterly promotion that might influence which “other” products are added to the load. If not, it is then left up to the discretion of the route person as to what “new” product offerings should be added onto his or her load. This decision can have a measurable impact upon the route’s relative future success or lack thereof. The clearest example that I can provide of good intent gone bad is a story from the 1990’s during my first tour of duty as an operator. We had a very good route professional that we will call “Billy” in the Denver market who was most effective in building the ticket. His manager proudly reported one day that Billy had secured the foam cup, paper towel and tissue business at a large office complex with about a dozen brew sites. This new business would yield 40% GP and approximately 200 cases of additional product on a monthly basis, beamed our manager. Knowing that Billy served his customers from a Ford Econoline van, I knew the mess we had just written ourselves into. These higher cube, lower cost and revenue yield products would never provide profits that would come close to covering the incremental service costs to Billy’s route.


Not wanting to take the wind out of the sails of either our route pro or manager, I thanked them for their proactive selling efforts and planned a market trip to Denver for later that quarter for a menu management counseling session. However, before I could get to Denver, Billy reported another “success”. At the same account he reported that he would now be selling approximately a dozen new SKUs of sodas and juices and several

these considerations: • • • •

From my short list of helpful hints regarding menu management, I offer

Stay abreast, even in front of, market trends. Building the ticket is a good thing. Increasing same account revenue is more doable now than at any time in my experience. Encourage your route professionals to sell, but guide them with a well thought-out menu of offerings and a game plan for success. Listen to your route professional and include them in the decisionmaking process. They are the primary touch points to your customers. They will respond well to being recognized for their value. Consider the impact of selling by the square foot. Adding high cube, low revenue yield SKUs can be a killer for your warehouse and your delivery vehicle. Yes, avoiding some products can open the door for others to get into your accounts, so you must be careful in your decision making. SKU rationalization is a must and this is not a project. It is an on-going process. Do you really need 7 fractional pack Colombian Coffees? Do your seasonal offerings need remain in your book year long?

There is much more to effective menu management than efficient SKU selection and elimination. Proper receiving and shipping protocols are critical. Product storage, rotation, and handling is a must. Periodic cycle counting and full inventories are vital at your facilities and vehicles. I appreciate your past emails and comments. Please contact me at for your feedback and suggestions for future articles. Thank you! Ken March 2017

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


Please Make Sure to Visit these NCA Exhibitors Buhler Inc (905) 754-8389 Bühler covers the entire range of coffee production from green coffee handling and cleaning to advanced color and foreign material sorting to roasting and grinding. See our ad on page #25

Cablevey Conveyors (641) 673-8451 Cablevey Conveyors produces best-inclass tubular cable & disc conveyors for gentle conveying of green beans & roasted whole bean coffee with minimal breakage, reliably, since 1971! See our ad on page #19

Fres-co System USA, Inc. (215) 799-8032 Fres-co’s is synonymous with quality and reliability in flexible coffee packaging. Visit www., or call 215-721-4600 for more information on machinery and individual components. See our ad on page #5

Plitek (847) 827-6680 PLITEK provides Complete Solutions for In-Package Degassing including: One-way degassing valves for a range of packaging sizes and types, Semi automatic and high speed valve applicator systems, Testing and quality assurance systems, System design, install See our ad on page #9

Texpak Inc | Scolari Engineering (856) 988-5533 Technologically advanced coffee roasting and grinding machinery as well as a well developed factory control program developed specifically for coffee factories. Also silos and transports. See our ad on page #28

Please Make Sure to Visit these Coffee Fest Exhibitors Aerobie, Inc. (650) 493-3050 The AeroPress coffee maker utilizes a breakthrough in the coffee brewing process to yield the smoothest, richest coffee that you have ever tasted. See our ad on page #19 Brewista (307) 222-6086 As a collaboration of engineers, designers, coffee aficionados and roasters with decades of experience, Brewista designs, manufactures and distributes the finest brewed beverage products available. See our ad on page #26 Coffee Holding Company (800) 458-2233 From one bag to a full truck, Coffee Holding Company provides green coffee solutions to specialty roasters including exclusive Daterra Estate and Organic Certified coffees. See our ad on page #3 Curtis (800) 421-6150 A leader in the industry for over 70 years, the Wilbur Curtis Company is a premier manufacturer of state-of-the-art specialty coffee and tea brewing equipment. See our ad on page #7

iFill Cup | United Home Technologies, LLC (360) 574-7737 iFill Cups™ and the iFill Series™ Filling Machines have revolutionized the way single serve coffee/tea is perceived. Easy to operate, fast, and a superior product. See our ad on page #26

JoeTap (855) 456-3827 JoeTap is the world’s ONLY on-demand Nitro Cold Brew Coffee solution. JoeTap delivers either still or nitro coffee, perfectly, consistently and deliciously with every pour. See our ad on page #2

Java House (317) 566-9750 Introducing Java House Authentic Cold Brew Coffee from Heartland Food Products Group: setting the small batch standard on a big scale. See our ad on page #11

Vessel Drinkware (855) 833-7735 oneVessel by Vessel Drinkware provides retailers with high-quality, reusable drinkware featuring lifestyle driven artwork to capture the attention of your customers. Please visit us at, or call (206) 763-0366 See our ad on page #13

Java Jacket (800) 208-4128 The Original Green Coffee Sleeve. Comes in 100% Recycled Natural Kraft or White. Can be custom printed with your design. See our ad on page #13, 26

Westrock Coffee Company (501) 975-1514 Here at Westrock Coffee, our drive is to be a catalyst for real change in the lives of farmers and their families, through honest, direct trade with transparency at every stage in the supply chain, from crop to cup. See our ad on page #24

Women Care Certified Producer: Cooagronevada | Cooagronevada, Sierra NevadaSanta Marta | Colombia Interesting Fact

This cooperative was started by individuals that served as Forest Rangers and many members are indigenous of the area.

About the Producer

Women Care Certified, the certification empowering women in coffee farming, developed by the International Women Coffee Alliance (IWCA – Costa Rica Chapter) is proud to announce and welcome its newest member: COOAGRONEVADA. Located in the Sierra Nevada of Santa Marta, North Eastern region of Colombia, Cooagronevada has 72 members of which 21 are women. In an area affected by the internal conflicts of Guerilla warfare, growing certified organic coffee under the shade of the Sierra Nevada forest has provided a path to improve quality of life for the women of Cooagronevada and their families. As a group, they produce over 121.000 kilos of coffee in farms ranging in elevations from 900 to 1600 masl. Wet milled and dried in their own farms, Castillo, Caturra, and Geisha varieties are processed in honey, natural and washed and then consolidated at the coop facilities for sales and export.

Region Sierra Nevada-Santa Marta

Arabica Variety Caturra, Castillo and Geisha

Processing Method Honey, Natural, Washed

Certifications Women Care Certified, Fair Trade and Organic

More Information

22 March 2017








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Sanitary High Lift Box Dumper With Vibratory Bin Feeder TIP-TITE® Bulk Transfer System from Flexicon moves material from boxes into a mobile bin with vibratory feeder that services downstream processes. All stainless steel construction allows handling of corrosive materials and/or wash down between runs of contaminationsensitive food, nutraceutical, and beverage products. Casters mounted at the base of the bin allow it to be rolled away from processing areas for wash down. Boxes measuring 36 to 48 in. on a side and 39 to 44 in. in height are loaded at floor level and raised hydraulically, then elevated and tipped, mating the spout of the discharge hood to a gasketed receiving ring installed on the lid of the mobile bin. The dust-tight connection allows opening of a pneumatically-actuated slide gate and discharging of material into the bin with no contamination of the product or plant environment, while permitting partially-empty boxes to be returned to the plant floor with no dusting. For further information, contact


Astoria At Tirreno Ct: Second Show Of The Year For Core600 From February 19 to 22, Astoria Macchine per Caffè will be engaged with Tirreno CT, the central Italy reference trade show with over 50 thousand qualified operators present, from abroad as well. For Astoria this is the second trade show this year at which Core600 will be introduced, a unique and inimitable combination of design, functionality and technology in which simple and modern lines go hand-in-hand with user-friendly interactivity, made possible by various innovative features. Core600 will be featured in the two-unit version with display and will be capturing attention with its innovative backlit, Sensitive Touch Buttons (STB) keypad which, with just a light touch, allows the bartender to easily select the coffee to be dispensed, avoiding any risk of lost screen sensitivity due to moist fingers, coffee dust or impurities. For further information, contact

tea extraction and AeroPress Championship Primera Introduces flavor. The G3 circuit. The World LX2000 Color Label Narrow Hot Water Championship will be held in Printer Dispenser couldn’t Seoul, Korea in November. Primera be easier to use. The buzz around the WAC Technology, It includes a large has been building for years. At Inc., one of LED display with a 2016's event, attendees enjoyed the world’s water temperature the party-like atmosphere of the leading indicator, colorcompetition in Dublin, Ireland. manufacturers of specialty coded buttons and Filip Kucharczyk of Poland printers, announces its new ready lights for all functions. triumphed over competitors LX2000 Color Label Printer. Curtis’ famed G3 Digital from 49 other countries. LX2000 is Primera’s fastestControl Module lets staff easily The WAC, now heading into ever desktop color printer. It its tenth year, is a grassroots produces labels at speeds of up regulate temperature and aeration. Onboard diagnostics event which has grown to to 6” per second – about 25% include dozens of national faster than Primera’s best-selling continuously sense water level competitions worldwide. Past LX900 Color Label Printer (for and temperature for simpler operation while common parts Championships have taken comparable print quality). and a side-access maintenance place in Dublin, Seattle, Rimini, Large, separate ink cartridges door make servicing the unit a Melbourne, Portland, London, for cyan, magenta, yellow snap. For more information, Milan, and Oslo (twice). The and black keep the cost per 800/421-6150 Championship was founded in label low. Other features 2008 by world-famous coffee include pigment-based ink for experts Tim Wendelboe and stronger resistance to UV light, Dozens of Countries Gearing up for 10th Tim Varney in Oslo, Norway. chemicals and water, built in Annual World AeroPress® To learn more about the “pizza-wheel” cutter, viewing Championships, visit www. window to see label stock levels Championship Dozens of worldaeropresschampionship. and wired Ethernet or USB countries com. For information about 2.0 and wireless connection around the the AeroPress coffee maker, options. LX2000 is priced at visit, email $3995 (MSRP) in the USA and world are planning national AeroPress championships in, or call Canada. It is available now preparation for the 2017 World 1-650-493-3050 from Primera’s resellers and distributors worldwide. More information about Primera and its products is available on the Internet at www. or by calling 1-800Enjoy Coffee n' Cream Ice 797-2772 (USA and Chips Candy With You On Canada). E-mail to Your Daily Grind sales@primeralabel. Looking com. for another refreshing Curtis Turns on way to invite the Heat with the flavor its New G3 5 of coffee n’ Gallon Narrow cream in your daily grind? Hot Water Try sugar-free Ice Chips Dispenser Candy in Coffee n’ Cream With its slender flavor on-the-go! Perk up your base and featuretastebuds any time of day packed design, thanks to Bev Vines-Haines and the Curtis G3 Five Charlotte Clary of Washington! Gallon Narrow Hot These lovely entrepreneurs are Water Dispenser also Grandma’s to 41 Grandkids with Aeration is the and are running full speed perfect source for ahead with the continued your operation. Bringing release of Ice Chips Candy in This versatile unique flavors! Ice Chips Candy unit dispenses keeps your smile bright, breath all the hot water to your home or office fresh, and teeth healthier. Allow needed thanks to Ice Chips to dissolve slowly an automatic refill in your mouth, coating your system for hot water teeth. Dentists recommend 4 on demand — with to 8 servings a day to receive a programmable the full oral health benefits of temperature Birchwood Xylitol. range between Coffee 6 pack: http://www. 140°F to 210°F. also features candy-trays/ice-chips-coffee-n- an automatic cream-xylitol-mints aeration setting to help improve Shore Model 920 Portable Moisture Tester Designed for Coffee The Shore Model 920 Moisture Tester provides quick, accurate moisture results for a variety of coffee commodities. Utilizing the tester helps roasters choose the correct roasting profile, avoid shrink or quality issues and save roasting energy. The Model 920 uses a pre-weighed sample and a reliable sample loading mechanism to ensure accurate, repeatable results. It uses proven measurement principles and a cell design that makes it one of the most consistently accurate and economical moisture testers on the market. All results are displayed directly without the need for moisture or temperature conversion tables. Sample tests take between 5 to 35 seconds, depending on the sample temperature. The unit is able to test samples ranging in temperatures from 22- to 160-degrees Fahrenheit, and can read moisture levels between 6 and 40 percent. For further information, contact Susan Hight or Larry Cripe, ctb@, 574-658-4191.

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March 2017

March 2017  

INFORMATION IS POWER - Do you know as much as your competition? Do NOT give them the competitive advantage! CoffeeTalk makes it easy to stay...

March 2017  

INFORMATION IS POWER - Do you know as much as your competition? Do NOT give them the competitive advantage! CoffeeTalk makes it easy to stay...