A coffee roasting business is a business that roasts green coffee beans to light (city), medium (full city) and dark (full city+) roast levels so that they can be brewed. These businesses may decide to sell their roasted coffee directly to individuals, or through coffee shops, grocers and other retailers.
Anyone looking to start this business is expected to be creative, and also passionate about coffee. Creativity helps when coming up with new blends, which requires combining different coffees in unique ways and also inventing blend names. Also, to-be roasters should be comfortable with basic scientific concepts.
Roasters don’t need a formal degree in science, but they should be comfortable with biology, physics and chemistry because roasting coffee involves each of these fields. For instance, choosing good coffees requires a knowledge of growing conditions, cultivars and varieties of coffee beans (biology).
Choosing and setting up a roaster requires an appreciation for thermodynamics (physics), knowing the exact roast profile that suits each coffee requires an understanding of how the heat applied in roasting affects the chemical structure of coffee beans (chemistry).
It’s also helpful if roasters are comfortable multitasking. Roasting a single batch of coffee takes between 10 and 15 minutes. In order to maximize efficiency, roasters often complete other tasks while batches are roasting – but they must still keep an eye on any coffee that’s roasting to ensure it’s roasted properly.
In this business, you’ll spend a lot of time roasting and packaging coffee. In a typical day, you may: Sort and weigh green (unroasted) coffee out into batches (often 5 to 20 pounds), roast batches of coffee, sort and weigh roasted coffee into retail and wholesale packages (often 12-ounce and 5-pound bags), accept and fulfill orders, clean the roaster and deliver to wholesale customers.
At least monthly, and perhaps more often, you’ll receive shipments of green coffee and send invoices to wholesale customers.
RELATED Frozen Yogurt Business Plan [Sample Template]According to industry reports, the coffee roaster market is expected to register a CAGR of 3.2 percent, during the forecast period (2019 – 2024). Meanwhile, roasting coffee transforms the chemical and physical properties of green coffee beans into roasted coffee products.
The roasting process is what produces the characteristic flavour of coffee by causing the green coffee beans to expand and to change colour, taste, smell, and density. Green coffee is more stable than roasted, so the roasting process tends to take place close to where it will be consumed. It reduces the time that roasted coffee spends in distribution, giving it longer shelf life.
Note that innovation and do-it-on your own are trending concepts in coffee; for instance, nitrogen-infused coffee is cold coffee brew (similar to beer). Companies like Starbucks are experimenting with nitrogen-infused coffee in the United States and the concept is gaining popularity in the United Kingdom as well.
According to reports, the key driver for the coffee roaster market is the consumer preference for fresh, flavourful, and aromatic coffee. The vast majority of coffee is roasted commercially on a large scale, but small-scale commercial roasting has grown significantly with the trend toward single-origin coffees served at specialty shops.
The restraints for coffee roaster industry are the low shelf-life of roasted coffee, as it loses the flavour due to the onset of staleness. Moreover, wide usage of instant coffee powders limits the market growth, as they reduce the time of roasting and grinding.
Opportunities in the coffee roaster market include the introduction of new blends of coffee flavours by global brands and advancement in the coffee equipment technology. Coffee roasters have a wide opportunity in houses/drive thru/espresso carts, restaurants, grocery stores, etc.
Coffee beans are a global commodity. There are many different types of beans, distinctive in the genre of plant that the bean comes from, as well as the region that the bean is grown. Note that blending different types of beans makes huge differences.
While the coffee industry as a whole has been stagnated for a while, the high-end gourmet coffee market is still growing. This can be attributed to a number of factors, including the maturing and increased sophistication.
Green Coffee, LLC is a coffee roasting and distributor business that will offer green and roasted coffee to clients and customers in Honolulu, Hawaii. By specializing on high-quality, organic, and fair- trade green Coffee, we at Green Coffee will strive to ensure the best coffee reaches the cups of consumers.
We also offer a platform for smaller roasting operations to be able to afford a constant flow of beans by being able to negotiate fair prices and provide coffee to roasters with contracts for deferred payment or contract roasting.
By contract roasting, we can sell coffee roasted by the same experts to which we are selling our green coffee. We believe that our small scale contract roasting agreements will help us appeal to a wide variety of consumers while also keeping costs operation minimal.
The benefits will not only extend to us. We also hope to position our distribution centres to help decrease lead times for the roasters and allow them to move capital out of inventory and decrease their need for space by buying green coffee from us as needed.
At Green Coffee, we hope to make it easier for established small scale roasters to grow by assisting in negotiating lower prices and helping to advertise for them. Coffee is something that should be shared, and if a business can support roasters, importers, and farmers that agree with the mission of sustainability, then it makes sense for us to support them.
Green Coffee is being led by Lincoln Danby. Lincoln possess a strong educational background and a wealth of applicable industry experience. He received his Bachelor degree and MBA from the University of Hawaii at Mānoa. He has worked at several coffee shops, and also as a coffee roaster under the wing of a master roaster.
Through a combination of a solid Business model, strong educational credentials, and proprietary coffee roasting techniques, Lincoln possesses the requisite skills and knowledge to build Green Coffee into a significant market player in the high-end coffee market.
Sales for year two are forecasted to be $2,187,000 rising to $3,556,000 in year three. Net profit is projected to be 7.09 percent for year two and will jump to 9.21 percent in year three. The company will be structured as a Limited Liability Company and registered for Business in the state of Hawaii. The management will be composed of a single member for the time being, and the entity will be treated as a sole proprietorship under federal taxation.
At Green Coffee, we will offer a wide range of specially blended and roasted coffees. Our products are made up of two segments one is green coffee and the other is roasted coffee. Each coffee will be available in one pound and five pound packages, in both whole bean and ground versions.
Every product we produce will compete as the best in its respective product category based on quality and taste. The key to a wonderful bag of roasted beans is the blending of different coffee beans. Coffee beans are a global commodity.
There are many different types of beans, distinctive in the genre of plant that the bean comes from as well as the region that the bean is grown. Beyond these distinctions, beans are still a commodity. We also believe that blending different types of beans make huge differences and the roasting technique also plays a role in the taste of the coffee. Our product line will include;
Our Business Structure
Lincoln Danby, the founder and driving force of Green Coffee will be the main component of the management team. Lincoln received his Bachelor of Arts and MBA from the University of Hawaii. He has worked at several coffee shops, and also as a coffee roaster under the wing of a master roaster.
Through a combination of a solid Business model, strong educational credentials, and proprietary coffee roasting techniques, Lincoln possess the requisite skills and knowledge to build Green Coffee into a significant market player in the high-end coffee market.
We plan to establish three functioning units within Green Coffee: Production, Sales and Marketing, and General and Administrative. Green Coffee Production unit will involve our Customer Service Specialists, who will be attending to the needs of our customers.
Our Sales and Marketing will take care of the promotion of our business and services, as well as the promotion of the Drive-through and the Community Contribution program. General and Administrative will take care of the facilities, equipment, inventory, payroll, and other basic, operational processes. Below are the portfolios we plan to establish;
Chief Executive Officer
Chief Operating officer
Chief Financial officer
Chief Information officer
Director of sales and marketing
District and facilities manager
Warehouse manager/store manager
Customer Service Specialists
Cleaner
Our key objective at Green Coffee LLC is to develop a high-quality menu of different coffee blends and also provide an excellent service experience, while anticipating the needs of our customers and delivering the best service. At Green Coffee, we look to operate as a coffee distributor between importers and small roasters.
The business will be a seller of green unroasted beans to small and medium sized roasting operations that alone do not have economies of size.
By working closely with these roasters, we can purchase the goods they need and better understand their demand. Acting like a cooperative, we can also pool smaller roasters in Hawaii to help them, and us, get a better price from importers. Clearly summarized below is the result of our SWOT Analysis;
Our detailed SWOT analysis has identified three keys that will be instrumental to our success at Green Coffee.
Weakness
Our weakness will be the time it will take the people of Honolulu to know where we are and what we offer. People go about their daily activities and most times tend not to discover the new business in town unless the business establishes a direct marketing Plan. We plan to start advertising even before we open up our facility, at least to make sure that our brand is known.
Nothing wakes up our senses more than the freshly brewed aroma of a dark roasted, full-bodied cup of coffee. Regardless of gender, age, socioeconomic status, or location, each and every one of us loves to have a cup of coffee. From the famous espresso shot of Italy and the flat whites of Australia to the Kona coffee of Hawaii, coffee drinkers from all over the world are always searching for the latest trends that will satisfy their adventurous taste buds.
Our threat at Green Coffee is the fact that we are competing with already established facilities in Honolulu, and also there are other entrepreneurs who are likely going to launch similar business within the location of our business. But with our unique workforce and plans, we have all it takes to dominate the industry and take up enough market shares.
Market Trend
With the constantly evolving and ever-growing coffee industry, we at Green Coffee LLC understand the need to find new ways to bring customers into our shop. The competition is tough and most coffee businesses have their own marketing gimmicks to lure in caffeine addicts.
At Green Coffee, we plan to continuously develop tailor-made ideas to better serve customers. From trying out new flavours to offering a unique ordering experience, we plan to stay ahead or in-line with coffee industry trends that will surely bring in more customers and profits to our business.
Our number one focus is on improving customer experience. From our daily operations to engaging in customer service, we plan to build our efforts to simplify the whole process. We plan to make our shops conducive enough to welcome customers.
When it comes to tracking our inventory, we plan to invest in applications that will provide real-time insights regarding our current stock level. We plan to optimize our ordering area to maximize the space for both employees and customers.
We will also consider swapping shifts and letting employees find their own replacements in case of unplanned time off. We will also develop a system that will allow online ordering and pickup to minimize the time customers spend queuing.
Meanwhile, according to reports, millennials are the largest living generation in the united states, comprising of 71 million people. Due to their ubiquitous and very active way of life, millennials value experience more than the price of their coffee.
Differing from their parents and older siblings who prefer to brew coffee at home, they prefer to drink coffee on-the-go or at a hip shop. For most millennials, drinking coffee is a lifestyle choice rather than a mandatory need to jumpstart a hectic day. They fancy drinking a cup of morning Joe in public places together with friends.
Having these in mind, we at Green Coffee hope to invest in unique and visually attractive packaging, making sure it’s social media worthy. We will also experiment with new ordering and delivery systems, because the simpler the better. We will always connect with our customers by letting them know the story behind every cup of coffee.
Our target market at Green Coffee LLC is composed of cafes, restaurants, and individuals desiring high quality roasted coffee. The green coffee target market is composed of roasters that are running smaller operations and businesses that want to sell green coffee. Our target roaster will sell to shops using between 30 and 100 pounds of coffee a week.
The roasters will need to be skilled in roasting, or the increased quality of bean will likely be of little importance to the roaster. The beans we expect to source will be organic, fair trade, or traceable; we will appeal to these consumers. Millennials are now a larger generation than the Baby boomer Generation. They are also the largest segment in the work force.
While their earnings have not risen as quickly as past generations, they do have different trends in purchasing behaviour. People in the millennial generation are getting married and having children later in life, so they may spend disposable income on more things like coffee.
The retail locations we will sell to, like coffee shops, will desire access to artisan Coffee. If they roast at their location, the supplement of other artisan coffee can help boost revenues by providing variety to keep returning customers. The coffee may be used to supplement non-organic or fair trade coffees on the menu.
Our coffee will come from the roaster packaged and be ready for resale. The coffee will be under the label of the roaster or can be specially labelled to reflect our brand, but the focus on selling an already established brand would take precedence.
The roasters will be looking for similar qualities in their coffee to appeal to their clients. Since they operate in a market selling premium goods, they will be looking for inputs that can be paired with their expertise to give them a Competitive Advantage. While large batch roasters facilitate the fulfillment of large orders, inability to finely control the roast can cause the quality of the cup to suffer.
Our Competitive Advantage
At Green Coffee LLC, our competitive advantage is our market leading product quality. By leveraging personal relationships, we at Green Coffee have gained the recipes and knowledge of an old master roaster. Part of our secret to success is the old world roasting techniques, part of the winning formula is the art of blending different green beans to come up with special recipes.
Green coffee beans are a commodity, therefore any variations in one company’s coffee to another is based on roasting techniques if they are using the same types of beans.
We will be able to stand out among our competitors by using time tested blends of different green beans to come up with compelling final products. This competitive advantage we believe is sustainable in the sense that this information that Green Coffee possesses is a trade secret and not available to other roasters.
At Green Coffee, our marketing strategy will communicate to our target customer segments that our entire product clearly exceeds all of the competitors. This strategy will leverage several methods to communicate the message. The first will be a print advertising campaign. We plan to make use of different sources including a local restaurant industry journal as well as a regional coffee shop trade publication.
Advertisements in these publications will be effective in reaching our target audience. Our second strategy will be the use of “get out the word” to achieve several different cuppings. Cupping is analogous to a wine tasting where many different varieties are tasted, compared, and analysed.
The cuppings will be a perfect opportunity for Green Coffee LLC to have prospective customers taste the difference between its products and the competition. We also recognize that we cannot solely compete on product alone, that much of the transaction involves excellent customer service.
Sources of Income
Our revenue drivers at Green Coffee LLC are the amount and type of coffee we sell. We are dependent on the sale of large amounts of green and roasted coffee. The sale of green coffee makes up a large portion of our sales, but roasted coffee has a higher margin. For green coffee to be our number one revenue driver, we would need to be selling almost 17 percent more green coffee to match the breakeven point of our current ratio of about 60-40 green to roasted sales.
When demand wanes, we will focus more on the sales of green coffee. The connections and accounts we will gain as we grow are the main reasons for selling the roasted coffee. As we sell a higher volume, our margins will increase with our green coffee so that we will be less reliant on our roasted coffee sales.
Demand for the coffee is related to per capita coffee consumption. Generally, coffee sales fall into a commodity market where the cheapest, acceptable quality product will succeed. The price is highly related to the demand of the product since there are many substitutes.
Seeing as our products are premium products, we are afforded some leeway on the pricing which is important to consumers. Demand will also follow per capita coffee consumption, but the trend of high quality, specialty coffee helps our product remain relevant and in demand. It is expected that the demand will increase in the future.
As a start-up organization, it will take time to grow our customer base so that it is at a sustainable level. Aside from our expected turbulent first year, sales for year two are forecasted to be $2,187,000 rising to $3,556,000 in year three. Net profit is projected to be 7.09 percent for year two and will jump to 9.21 percent in year three.
Our plan at Green Coffee is to gather enough brand awareness to leverage the product line into other regions and gain inquiries from potential inventors. To achieve this goal to expand and grow, we plan to do the following;
Our pricing strategy is to use cost based pricing for our green coffee. We will use value based pricing for our roasted coffee to the extent that the product is a higher quality and certified, so people can feel good about the product and enjoy the best coffee possible.
This means that the amount we can charge for our product is based up on the perceived benefits, but it will be slightly constricted by the customers’ understanding of the relative increase in product quality or other attributes.
Our payment options at Green Coffee will be all inclusive because we understand that different people prefer different payment options as it suits them. Here are the payment options that we will make available to our clients;
We have also chosen banking platforms that will help us achieve our plans with little or no issues.
Based on demand projection and the expectation to outperform the current coffee Production growth expectations, we expect to grow at 25 percent a year for the first two years. To be able to meet this demand and to have the facilities, staff, and equipment necessary to operate, we will need an initial capital investment of $650,265.
This will be facilitated through loans and an Initial capital investment of $150,000 from the owner. This startup capital will be used to buy equipment, pay relevant expenses for the first six months of operation, and purchase inventory that is required to operate as a distributor.
The major cost incurred by the business is that of Inventory. We will be operating under the expectation that we will be able to partner with small and large roasters at the beginning of operation. Our expectation is to venture into the market having already made partnerships that started at least six months prior to start of operations.
The current projections that we are using have based the expected sales on selling to 30 mediums sized, busy cafes. This number would be lower if focused on roasters, because the sales amount is coming out to be about 23 bags of coffee sold a week.
This is assuming 132 Pounds per bag. Based on demand and the size of the Hawaii market, we believe the number to be reasonable and attainable especially if the roasters or cafes rely on our warehousing for their business.
Generating Funding/Startup Capital for Green Coffee
Green Coffee will be structured as a Limited Liability Company and registered for Business in the state of Hawaii. The management will be composed of a single member (Lincoln Danby) for the time being, and the entity will be treated as a sole proprietorship under federal taxation. We hope to raise our start up fund through the following ways;
Note: We have been able to raise $150,000 from the personal savings of our founder, $200,000 from soft loans from family members and friends, and we are almost at the verge of completing the capital from a reliable Angel investor.
At Green Coffee LLC, we will require staff that are knowledgeable about coffee. To ensure quality products, we need to either develop relationships or hire staff that can taste special notes in coffee. Since we are focused on quality instead of quantity, we must be selective in the coffee we purchase.
This isn’t to say that we ignore turnover. Coffee has a relatively low margin, and since we are a middleman, we must have high turnover. We will need large amounts of different types of green coffee.
We will likely have to partner with a firm to help us with branding for business to business sales. We will also need to have a positive image to be able to make new relationships and grow current ones. We will need the proper equipment such as scales and containers to keep the coffee separated once out of the original bags.
We will need to have a vehicle to respond to orders where we cannot use less than truckload shipping. We will be able to combine the shipments to the warehouse from the ports, but shipping to individual locations will require more flexibility.
At Green Coffee LLC, our product will be desirable because it assists smaller roasting operations expand their client base and enables these roasters to make money on their unused capacity. By roasting for Green Coffee LLC when not fulfilling other contracts, they maximize their capacity and can cover some of their fixed costs with our arrangement.
This benefits the company by reducing the amount lost to idle equipment. The green beans will be desired by companies wishing to offer premium coffee to their customers. The purchasing arrangement between us and the roasters will help to reduce costs for all parties.
It will also allow the roasters to know what the product in stock will be like and make sure that the roasters understand that inventory is near at hand. Since we hold the beans, we will reduce the amount of space needed at the roasting operations for storage. This can help the roasters save money on fixed costs.
Our location in the supply chain also helps us to deliver fresher beans to consumers. The decreased lead time by moving the distributorship near the market means that the beans can be sitting for less amount of time. While Green coffee can have a long shelf life, the different processing methods of coffee determine how long it will take for the coffee to become stale.
Our company will try and keep the green coffee in the warehouse no longer than six months, but the beans should retain their quality for up to a year.
Checklist /Milestone
