Demand for a particular brand of coffee can be fickle, especially for smaller operators. Maybe you got a glowing write-up in a popular magazine and demand for your coffee has soared. Or perhaps you landed an export contract. So, you start looking into expanding your roasting facilities. Before you venture down the path of using your capital to buy a bigger roaster, consider the following key questions.
Can you maintain the demand needed to pay for and profit from upgrading your roastery?
You need to be certain you will be able to justify the spend with sustained long-term demand. A coffee roastery complete with packaging systems does not come cheap nor are they cheap to maintain and operate. You will need to maximise product going through it to be commercially viable. Are your current contracts likely to continue indefinitely or could there be a drop off in demand? If so, you’ll need a back-up plan to expand into new markets if you want to get the roastery working to capacity.
Do you have space and packing facilities?
A larger or additional roaster is not a standalone investment. It requires additional space, storage, and the big one – packing facilities. If you are hand-packing, you’ll need to double your head count to avoid major bottle necks, which means extra staff and hours. The other option isinvesting in in-line packing equipment which is a significant financial investment.
The price of printing and packing machines depends on factors such as the rate of bags packed per minute, and the thickness and quality of the packaging. To maintain freshness, you want to be sure you’re using the best and thickest laminate’s available. But be aware that upgrading your packing facilities to manage and leverage your roastery’s increased capacity will put additional upward pressure on your costs. You may also need to purchase or lease more warehouse space to house this equipment, as well as store the extra green coffee that will be going through your roaster.
If you want to maintain your quality standards and compete against other brands as you expand, these investments are a bare-minimum requirement. This is not to mention the changes you may need to make to your marketing and overall strategy. Which brings us to the next question…
Will buying a bigger roaster serve the overall long-term strategy of your business and brand, or would it be smarter to outsource?
You want to keep everything in-house because your customers love your brand and they want to know that you roasted those delicious beans yourselves, right? Not necessarily. They love your coffee and your brand. This is usually the differential that leads to demand overflows. Nonetheless, many companies are tempted to go and buy a bigger roaster. Taking this commercial risk could be a good move, if it fits with your long-term strategy. Typically, most companies are known and sought after because of their brand while having their own manufacturing infrastructure not being important – a good example of this is Nike. Therefore, you probably want to be in it for the long-haul if you’re going to set-up shop as a large-scale producer.
Outsourcing to the right partner could be a cheaper and easier option, with the same if not more opportunities for growth. Private label roasters have the advantage of scale so they can often afford to invest in best-available infrastructure to ensure the highest quality standards. They can also be flexible with your orders if demand fluctuates, at no cost to you and the coffee recipes and brand remain your IP.
Whether or not buying a bigger roaster is a smart move really depends on your business model, so make sure your rationale is crystal clear and your growth plan is mapped out. Sit down with your business/finance? team to weigh up the commercial risk and potential long-term benefits.