April 30, 2020

Becoming a Private Label Specialty Coffee Provider

It’s a common assumption that roasters roast, manufacture, and package their own coffee products. However, this isn’t always true. Sometimes, they’ll partner with a roaster who works as a private labeller. This is someone who’ll work behind the scenes to supply, process, and brand coffee products on their behalf.

Depending on your roastery’s size and capabilities, you could offer this service. Here’s what this would entail, and how you can get involved.

Lee este artículo en español Cómo Ser Proveedor de Café Especial Para Marcas Propias

What Is Private Label Coffee?

Private label coffee products are created by one company but packaged and sold under another client’s brand. With specialty coffee, the client can provide their own to package and sell. They can also ask the supplier to roast it for them, which is known as toll-roasting.

Phil Smith is the Head of Category & Insight at UCC Coffee UK & Ireland and offers this service to clients. He says, “We go through a thorough and considered process to create a coffee that works for [our clients]. That includes looking at everything from roast profiles, bean selection, certifications, and importing and holding the green beans, to commercials, [and] how the coffee will be delivered to the consumer”. 

Greg Gould is President of Joe’s Garage Coffee, a business offering a coffee packaging service. He explains that “It’s more common to request that we source and roast beans. About 15% of our business is co-packing roasted coffee, while 85% is roasting our beans. There are roasters that would never allow the outsourcing of roasting, but for the majority, it’s simply more economical and efficient to not ship coffee back and forth”.

As time has passed, coffee professionals have started to recognise that private labelling can offer the artistry and attention to detail that characterises specialty coffee. “… It [is] clear to me that consumers [are] moving away from corporate food, and [that the] demand for local, craft food [is] on a meteoric rise. Coffee [is] no exception to this fundamental shift in the way we want to consume,” Greg reveals.

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Is There a Market For Private Label Coffee?

According to data information and measurement firm Nielsen, private label products continued to gain market share across over 60 countries last year. This includes many specialty coffee businesses. As Greg informs me, “Since 2012, we’ve seen a ten times increase in the number of coffee roasters seeking partners to help bring products to retail, diversify product offerings, or increase capacity without large capital investments”.

Roasters pursuing this option benefit from being able to scale their businesses up and offer new products to customers, without the usual time and money investment that would be required if they did it themselves.

How Roasters Can Become Private Labellers

Roasters wanting to offer a private label service should try to meet certain requirements to improve their chances of success. The first is having the equipment and facilities needed to produce the required volumes.

Another requirement is being able to let clients sample the product throughout production. As Greg tells me, this reassures the client and fosters trust. “Our clients engage in a very hands-on sampling experience in which we continue to make tweaks based on feedback until they’re proud to put their name on the product. During this step of the process, we’ll dial in the exact specifications that make [their] product unique”.

Helping clients stand out in the market by offering a wide product range is also essential, and can help attract more clients and a bigger customer pool. This could mean offering specialty pods and capsules as well as roast and ground beans. “In 2013, we invested heavily in coffee pods and identified them as a significant sector in retail – and one which will continue to grow for many years to come,” Phil tells me.

Finally, Greg believes that being upfront about your services can win over clients and keep them loyal to you. “Do what you say you’re going to do when you say you’re going to do it. Your clients rely on your service more than you can imagine, and if you’re able to deliver on their needs and earn their trust, you’ll enjoy a very prosperous relationship”. 

Advantages of Offering a Private Labelling Coffee Service

The biggest advantage of offering this service is that you can use your existing workforce, infrastructure, and equipment to create additional products, maximising your profits without requiring a major capital investment. As you could also implement a minimum order size, you could be able to guarantee a certain sales volume at regular intervals.

The branding and marketing of a product can take a long time to develop and fine-tune. However, as your client will often decide on their product’s marketing and branding, this process is likely to be quicker, easier, and more affordable than if you had to do it from scratch – shortening the timeline from product conception to sales. 

Because working with you benefits your clients, they might want to work with you on similar endeavours. “The advantages [for clients] are endless: product diversification, new market penetration, capacity upgrading, quality increases, business continuity, supply chain streamlining, and distribution flexibility, to name a few,” Greg says.

Disadvantages of Offering a Private Labelling Coffee Service

While the above advantages are significant, they should be weighed against the disadvantages of offering a service before pursuing it. 

As a private labeller, you’ll know what works and doesn’t work in all aspects of creating and selling a coffee product. Despite this, your client will ultimately have the final say over their product’s creation. They could make a decision that will hamper their product’s market success, and you would not be able to contest this.

It can also be an expensive endeavour if your business isn’t equipped with the necessary machinery and space. Not having either means that you’ll need to make costly and time-consuming purchases. You’ll also need to hire and maintain more staff members to make sure every client’s products are packaged, branded and delivered appropriately.

As your clients become more successful and their business grows through your services, your risk will also increase. Depending on how large a client grows, they might find it more financially feasible to take over the production of the products you provide them with.

While practical considerations can’t be ignored, the key to delivering a successful private label service starts with being transparent about the service you provide and entering into the relationship as equals. “Remember that your clients are your partners, not just your customers – partnerships take a lot of work and ongoing maintenance,” Greg explains.

Both partners should work towards creating a rewarding relationship for mutual long term success. “In order to succeed there should always be a long-term partnership approach, with continued support to help drive results and make the most out of [your] coffee,” Phil concludes.

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Feature photo credits: Julio Guevara, Neil Soque

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