Contract Roasting Questions

[expat]

So I've been approached by a grocery store chain in the U.S. to supply them with our coffee.

Preliminary research tells me that there is no import duty on roasted coffee so maybe I should roast it here in Ireland and ship it to the U.S?

Or maybe I'd be better off hiring a local U.S. roaster to roast, grind, bag, ship, etc., and I would take a small piece of the pie for my efforts and management of the relationship. I like this idea better because we're plenty busy with the local market and most importantly it makes the coffee on the shelves weeks fresher than if we produced it across the Atlantic.

Have any of you had experience with this type of situation? Have understanding of import/export paper trail, etc., if we choose to go that direction? Have understanding of licensing a local U.S. roaster, or possibly roasters, each close to this company's distribution centers, to handle our business?

Any insight would be appreciated.

 

[PinkRose]

Congratulations! It sounds like your roasting business has grown in leaps and bounds!

I've always gotten the impression that you're a very savy businessman, and that your wife is a very "smart cookie," so I don't think I need to give you a lot of words of caution about being careful if you decide to work with a local roaster in the US. The possibility of that local roaster going behind your back and stealing your thunder has probably already crossed your mind.

 

[ensoluna]

hey expat.
1. hiring US roaster to roast and sell your coffee to US chain.
Problems:
a. if US chain wants to pay to that US roaster (they tends to do that if you ship from US roaster), US roaster will take their profit, fees..etc and send you the balance. it will be the biggest headache in your life.
b. unless you know that roaster inside out and they are really good roasting, packing, shipping... (US chain will have 300 plus pages of regulations and penalties and it will be tough to comply)
c. eventually the US roaster will be "the face of your company" for the US chain. so more likely, that US roaster will source out and sell to the US chain directly and cut you off soon or later on. (and you will never know how or when it will happen)

Above are 3 major problems.

2. Roasting and shipping from your country to US by ocean.
depends on which US chain you work with (as example, Whole Foods (very highend US supermarket) knows and will want to store freshest roasted coffee as possible and their customers will demand it. but if you sell to Vons/Ralphs (mid to low chain, they would not care about expiration date. it can be up to 2 years)

let me give you example : a week ago, I put a thread here, Coffee Beans & Tea Leaf company which is one of the biggest coffee chain stores in USA sells their JBM / Kona coffee at $39.99 12 oz with almost 2 years roasted coffee expiration date. (BTW, CBTL is idiots!) so, probably you can roast and ship them from your country without any problem.

3. Best option
if you are keep planning to open US market, eventually, you need to make your own office/roaster for roasting and distribution.
if that is not possible at this time, due to money and time, it is better to make a partnership with a roaster, so that you can also control their ways of business / finance / logistics and accounting.

below photos are from "coffee bean & tea leaf" coffee chain store. it is crazy selling original 100% (supposedly) JBM & Kona with 2 year expiration date!

View attachment 4000View attachment 4001

 

[expat]

Ensoluna, thanks for the feedback, and yes I agree with you on the possible back stab by the contract roaster. As to shipping it to the U.S. from Ireland I think I could roast one day. Pack a pallet the next. Have it picked up the next. And in a container and on a ship within two days of that. By arranging everything right I could be on the shelves within 2.5 weeks of roasting. Also we won't sell to our customers in big bulk, just what they need, which means a lot of late nights for us but that way we could keep the coffee fresh. It isn't a done deal so we'll see how things pan out.

 

[JohnD18]

If you end up growing with the grocery store, and it is worth your efforts and money, you could always establish a small roastery somewhere in the US.

 

[slurp]

Call me I can help you.