Anyone selling to grocery stores? If so how much are you getting a bag? 12 oz or LB?

[Cafeciteaux]

We are looking to start selling (under our label) in a few specialty high end local grocery stores, and I don't want to walk into this blind. What percentage of your retail price are you guys asking for, when selling to stores. If you don't want to share your pricing with the world, thats cool, you can always PM me. Any help would be greatly appreciated.

 

[eldub]

We get 65% of retail. That would be $9.75 on a $15 lb. However, most of our grocery store customers want the beans packaged in 12 oz bags unless they are selling by bulk.

 

[poison]

No comment on pricing, because I don't sell to retail stores, but... I'm not a fan of 12oz bags. One one hand, as a roaster, it's easier, but most roasters I've seen who do 12oz bags do 12oz for retail but 1lb increments for wholesale (cafes, etc). That's just stupid. And I don't know of any other industry that sells product based on what it weighed before processing: 'we charge $5 per muffin, because it weighed 30 percent more before baking'.

The only other reason to do it is to fleece customers who unwittingly assume it's 1lb. I doubt many will admit to that. Sure, folgers does it. Should you?

I could see a store requesting it to lower the price entry for customers, I suppose.

 

[Cafeciteaux]

Was the 65% a number that you negotiated, or is that pretty much a standard?

 

[eldub]

Cafe: I think that number is pretty standard in our market.

poison: It doesn't sound like you really understand the topic at hand. There is nothing easier about packaging 12 oz of coffee. It's a pain in the butt, imo. And to say that it has anything to do with the weight before processing doesn't make any sense.

Fleece customers? Customers are charged for 12 oz of beans, not a pound.

It's mostly about price point. Grocery stores know what their customers will pay for a product. And if a market wants beans packaged in 12 oz bags, I'm going to give them what they want. Its' called customer service.

On the other hand, I polled many people who buy coffee from stores and asked them how much they bought and how much they paid per pound. Most folks knew the price they paid but almost all of them thought they were buying a pound of beans. So if put a pound of my beans on a shelf next to the rest of the brands in 12 oz bags, our product appear to be more expensive.

 

[Bardo]

Also, at least for me, the 12 oz bag works just right for a week's worth of coffee. I plan to sell the 12 oz bags based on that, and price, as Eldub says, based on the finished weight of the product. I hope to market the coffee as a weekly purchase, along with your fresh fruits and vegetables. To that end, I think a 6 oz bag would also be useful for folks who make less coffee but still want it fresh.

 

[sae]

Grocery stores want to be making at least 30% markup (usually more). So if they retail it for $13 then the most you'll ever get out of them is $10. Now, in the real world you'll probably be much lower than $10, probably more in the $8-9 range.

We sell 1lb bags (I wish we could do 3/4lb though!)

 

[eldub]

That said, folks who walk into our shop for a sack of beans usually want a pound. We don't keep any coffee bagged on the shelf and have a scale, but very few people order a half or three quarter pound at a time. Go figure....

 

[Cafeciteaux]

Thanks guys, I very much appreciate the info.

 

[Cafeciteaux]

I've always called the 12oz bags a pound, something that stuck with me since I was a kid. Kinda like "Going to make groceries", another weird saying.

 

[Bardo]

Sort of like a 2X4 only being 1 3/4 inches thick?

 

[poison]

Cafe: I think that number is pretty standard in our market.

poison: It doesn't sound like you really understand the topic at hand. There is nothing easier about packaging 12 oz of coffee. It's a pain in the butt, imo. And to say that it has anything to do with the weight before processing doesn't make any sense.

Fleece customers? Customers are charged for 12 oz of beans, not a pound.

It's mostly about price point. Grocery stores know what their customers will pay for a product. And if a market wants beans packaged in 12 oz bags, I'm going to give them what they want. Its' called customer service.

On the other hand, I polled many people who buy coffee from stores and asked them how much they bought and how much they paid per pound. Most folks knew the price they paid but almost all of them thought they were buying a pound of beans. So if put a pound of my beans on a shelf next to the rest of the brands in 12 oz bags, our product appear to be more expensive.

A lb, as our unit of measurement, was the standard bag size for coffee, up until around 5 years ago. I'm not sure who initiated the switch, but a lot of specialty micro-roasters started switching from 1lb bags to 12oz bags. Interestingly, it coincided with the economic troubles. Some were up front about the switch, some weren't. Some adjusted (ie lowered) prices to reflect the lesser amount, some didn't. Yes, the whole '1lb green is approx. 12oz roasted' was tossed about as a reason for the switch, among other things. The fact is a number of roasters indeed did it to fleece unsuspecting customers, charging the same for less product (or not lowering the price by an equivalent 25%). You can see people's reactions to it here (I'm not dissing Klatch, they dealt with the issue, it's just a readily available example):

CoffeeGeek - Espresso: Espresso Blends, Klatch Belle now only 12.oz?

Eldub, you started your business long after that, I think, and people are aware of the 12oz bags. I wasn't saying you are getting sideways with your practices, haha. I've been selling coffee online and to cafes since 2005, and remember when it came up. I even had customers ask me if I would switch, and I'm pretty sure my answer was 'hell no'.

I may, however, start packaging it in 150gr bags and selling it for $17. 150 has to be a lot more than 12, right?


EDIT: When I said 'easier', I didn't mean the act of filling bags. I meant that you are accounting for shrinkage up front. Buy 100lbs, sell 100 'bags' (which happen to be 12oz) for $10; or buy 100lbs, sell 75 1lb bags (loose numbers there) for $13. It's just easier math to account up front (supposedly).

 

[poison]

Sort of like a 2X4 only being 1 3/4 inches thick?

...but it was 2x4 when we cut it, we pre-shrink it for ya!

The days of the 'baker's dozen' are no more. Pinch and squeeze every last cent!

 

[eldub]

poison: Thanks for the clarification. I wish it was standard practice to sell in pound increments in stores. We'd be selling more beans that way.

Btw, 150 g of beans is just over 5 oz. I'm guessing you are joking about selling 150g of beans for $17?

 

[poison]

Haha, of course.