One of the most crucial decisions you’ll have to make as a roaster is how you’ll sell your coffee. Be it through online subscriptions, on eCommerce sites like Amazon, or direct to coffee houses, you must ensure that the approach you pick works for your company and your customers.
Sales can be categorized into two, namely wholesale and retail. Wholesale refers to the distribution of large amounts of coffee to retailers at low costs, whereas retail refers to the sale of coffee directly to customers at a profit. While both can be equally productive, determining the best option depending on your objectives is the key to a successful, long-term business strategy.
Wholesale coffee is basically the mass distribution of coffee from the roaster to the retailer. The retailers include grocery stores and cafes who then operate as the middlemen, selling the coffee to customers at a higher price. Following this route provides a variety of benefits for roasters, especially startups. It provides access to a vast and diversified set of consumers by tapping into the retailer’s market while offering a very high-profit margin.
The Lev Co. is a branding and marketing agency operated by Luke Waite, who runs Pomelo Coffee Consulting, a coffee consulting firm. He says that in addition to having a broader reach, another primary benefit is that it helps to prepare roasters for the future.
He states that the main advantages of wholesaling are gaining exposure, stability, and recurring revenue. “Once you land a wholesale client, you have a rough idea of how much they’re going to purchase and an understanding of how much revenue you’re bringing in. That helps you budget internally for various things like hiring,” he goes on.
Still, Luke is quick to note that while being a wholesaler gives you a chance to develop your company rapidly, you can’t just sit back and leave the retailers to do all the work for you. A significant amount of effort and time is usually necessary to establish a long-term connection.
“You have to truly manage the connection and understand how you, as a coffee roaster, take care of your consumers and satisfy their demands,” he adds. “It takes a lot of effort.”
Furthermore, selling coffee in bulk means lower costs for roasters and, as a result, lesser profits than other sales channels. This is because retailers must make a profit on the coffee they sell.
It also means that roasters have little influence over how their coffee is presented to buyers, and this includes everything from shelf location to brewing procedure.
The sale of items directly to customers is referred to as retail. While the transaction can take place anywhere, including a physical store, an internet store, or a kiosk, the primary advantage of selling through a retail channel is the direct relationship between roasters and consumers.
If you actually decide to become a retailer, you will have total control over the product, from special promotions and discounts to how it is presented.
“You can produce marketing materials around that and teach your personnel in-house on how to offer it to customers. Telling stories offers customers something special to remember – and that’s significant. It builds and strengthens trust between you and your clientele while driving repeat purchases.”
“Ultimately, the relationship and trust you get to create with the end consumer are the key rewards of retail,” Luke explains.
However, selling coffee directly to the consumer, like wholesale, has drawbacks.
For one thing, a retail environment does not give the same level of financial security as a frequent bulk customer. This implies that one month might seem very different from the next based on various factors.
Retail also implies that the roaster is solely responsible for marketing, branding, and creating trust, which can pile a lot of pressure on resources. This can, in certain situations, wipe out the higher prices at which the coffee is sold.
Determining the Right Sales Channel For Your Coffee Roasting Business
When choosing a marketing channel, the most crucial consideration is that it is strategically linked with your business goals.
Luke advises taking a step back and focusing on two fundamental questions: why your firm exists and what you aim to accomplish as a business.
He notes that roasters that seek corporate growth would use a different distribution approach than those who want to emphasize the stories of farmers, for example. Roasters who want to increase and expand fast will typically choose a wholesale approach.
Another essential element to consider is the availability of resources. In other words, do you have the financial resources to grow operations and fulfill high-volume orders efficiently? If you sell wholesale, you may be required to reach particular monthly quotas, which might place a burden on your resources. Retail, on the other hand, offers a little more leeway.
That doesn’t mean you can’t do both. Some roasters distribute their coffee both retail and wholesale, balancing the two with effective time management and judicious resource distribution.
Once you’ve decided on your sales channels, you need to consider how your coffee packaging will fit in. How you execute your packaging design sets up the first contact point that should satisfy both B2B and B2C customers, and your packaging should line up with your “why.”
Creating packaging as a vehicle to serve information about your goals and reason for being can be cleverly condensed into a QR code.
Over to You
A good packaging design that communicates a brand’s narrative, on the other hand, helps people to build meaningful relationships with the brand. According to a recent study, packaging that incorporates a brief brand narrative encourages good customer reactions to the brand.
It’s also critical to understand the distinctions between wholesale and retail customers. A wholesale partner, for example, is likely to enjoy packaging that fits well on shelves, but a retail buyer may be drawn to packaging that has clear labeling and information such as origin, roast profile, and weight.
For roasters, having a thorough grasp of your company’s purpose and capability can help you strategize and choose the ideal distribution route for your company. However, it is equally critical to employ marketing tactics like packaging to increase sales and build brand awareness.