How micro roasters can grow sustainably

As the global specialty coffee industry grows, the number of micro (or nano) roasters also increases. These businesses often have an outright focus on selling limited edition or high-scoring coffees, and therefore cater to a relatively niche market.

For many of them, this means paying higher prices for coffee, and given that they also sell comparatively minor volumes, micro roasters usually run on very tight margins, too.

So in the wake of rising inflation, increasing food and energy costs, and volatile coffee prices, it’s become more important than ever for these roasting operations to manage systems efficiently and effectively. But if a micro roaster wants to scale their business, how can they do it sustainably?

To find out more, I spoke to Stefanus Goana, co-owner of Compound Coffee Co., and Tony Dreyfuss, co-founder and co-president of Metropolis Coffee Company.

You may also like our article on how the micro roaster market is evolving.

Agility is key for micro roasters

There is no formal definition of a micro roaster, but in most cases, we classify these roasting operations by either machine batch capacity or volumes of coffee roasted per year.

Tony Dreyfuss – co-founder and co-president of US roaster Metropolis Coffee Company – emphasises how these standards have shifted over time. 

“When we won the Micro Roaster of the Year award in 2007, the category was defined as any business that roasts less than 35,000kg of coffee per year,” he says. “Today, roasters selling annual volumes of 45,000kg and over are considered medium sized.”

So given that they roast and sell much smaller volumes of coffee every year, micro roasters are able to stay flexible if they decide to scale their business – which comes with several benefits.

Tony uses packaging as an example, explaining: “Adding a new product or sourcing from a different origin is much simpler for a smaller roaster. You may just need to print or order new labels, rather than making changes to your automated bagging and packing equipment.”

Smaller scale quality control is another important factor that allows micro roasters to be more agile when growing their company, as Stefanus Goana – co-owner of coffee lab and co-roasting space Compound Coffee Co. in Singapore – says.

“With smaller batch sizes, it’s easier to correct any mistakes and change roast profiles to get better results,” he tells me.

Tony agrees, saying: “Micro roasters can develop and customise roast profiles very quickly compared to larger operations that may require more stringent checks.”

How can micro roasters stay competitive as they grow?

As more and more people drink specialty coffee, interest in more exclusive and rare varieties (or even species) grows at the same time. Some examples of these coffees are:

• Gesha (which first rose to prominence in 2004)
• Wush Wush
• Sidra
• Pink Bourbon
• Eugenioides – a Coffea species which has become more prominent at competitions

Many micro roasters share the same values of sourcing very high-quality lots that receive high cupping scores (often 89 points or above) and perform well at competitions and auctions. To maintain quality as much as possible, roasting in small batches is key.

“One of the most important factors to consider is roast profile consistency,” Stefanus says. “Every batch needs to be roasted to achieve the optimal results, otherwise customers won’t receive the quality they pay for.

“Your coffee doesn’t always have to be well known or exceptional – regular quality control and developing optimal roast profiles are more important,” he adds. “Focus on your core offerings and the skills you can use to make these coffees special.”

With many micro roasters having a similar focus on sourcing high-quality lots, standing out and building a solid brand identity is critical, especially in such a small market.

“If micro roasters want to develop a really strong direct trade model, they can source some super unique coffees that will sell on the market,” Tony explains. “They can also establish training programmes that support smaller coffee shops.”

Is selling exclusive coffees profitable in the long run?

During recent years, rising inflation and food and energy prices have hit many roasters hard, so it’s never been as important to manage costs effectively. In March 2023, the BBC reported that food prices had reached a 45-year high in the UK, with similar economic situations in many other countries. In turn, business operators – including roasters – were forced to absorb rising costs and pass some onto consumers as well.

Moreover, with coffee prices reaching record highs over the past few years, smaller roasting operations have had to take extra care when planning their menus. But does this necessarily mean that micro roasters should source fewer premium coffees to better manage already tight profit margins?

“I think it’s definitely possible to focus solely on more exclusive coffees, however, in the long run, it becomes more and more difficult to keep up with your competitors,” Tony explains. “In a lot of cases, customers who buy those coffees are looking for the latest trends.”

Finding new ways to stand out

For micro roasters, operating in such a niche market can present significant challenges for business growth. And considering that many consumers aren’t able or willing to pay high prices for exclusive coffees, these businesses often have to find new ways to engage with their customers.

The most obvious options are to source different varieties, origins, and processing methods, with an emphasis on offering a select number of rare and limited-edition lots. Tony, however, suggests a fairly radical idea menu option for a micro roaster.

“If you can develop a signature blend then you can build a much stronger brand identity,” he tells me – which can help drive more sustainable growth in the long term.

Additionally, looking for new ways to diversify revenue is also important when deciding to scale operations. For micro roasters, this could include selling premium home coffee equipment or offering training services or educational classes – and ultimately depends on individual business needs.

There will come a time when scaling operations is a logical decision for a roaster of any size. But for micro roasters specifically, managing already tight margins as effectively as possible is essential.

The key to finding success is knowing what works for each individual business. And as the micro roaster market continues to grow, it will be interesting to see how trends start to change and shift accordingly.

Enjoyed this? Then read our article on the definition of a micro roaster.

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