Niche is next, now that the largest coffee roasters and tea blenders have paved the way. Second generation filling and packaging equipment is less expensive, easier to clean and economical, according to Pacific Bag’s Mark Howley as he demonstrates with a $7,250 filler and sealer during Coffeefest Seattle.
“The product line is based on the idea that specialty coffee roasters will deliver a fresher and higher quality cup of coffee, at a higher price point, than mass produced retail cups,” said Howley, Seattle-based PBI’s c.e.o. and president. There are a at least 30 manual and semi-automatic PBideas machines in the field running the Upshot Cups™, all of them charging a significant premium over traditional K-cups, he said. Examples include Deathwish Coffee in NY, Just Love Coffee Roasters in Tennessee, Mission Coffee in Indiana and Independence Coffee in Texas, said Howley.
Pacific Bag’s CMS uses Kups manufactured by LBP Manufacturing. The one cup manual sealer sells for $3,750 and the filler for $3,500. Unit price depends on the quantity purchased but with coffee prices at record lows a small shop can profitably fill and seal Kups at roughly double the unit cost of mass market. A pallet of UpShot™ cups cost 18 cents each and the clear lidding is under 2 cents. Eight grams of ground coffee is only pennies at $8.50 to $10 a pound for green beans. Since the coffee is exposed to air and moisture it must be sold in moisture barrier bags, preferably with a valve, adding 4.7 cents to package 10. The average price in grocery and department stores is falling but the big brands get 60 cents per cup. A boutique roaster could profitably sell a 10-ct bag for $8.50 and a 20-ct bag of pods for $15.
In Canada Gabriel Marchionda of MyCoffeeBrew.com is typical of small volume co-packers. “We can provide custom cups as low as $.30 a cup. There are many factors to consider (including blend, shipping costs, design work, and quantity, which has the biggest influence on cost). So for the purposes of the article you could use the figure $.30 to $.40 for large orders, and $.40 to $.55 per cup for small orders, which is generally what small roasters are interested in,” said Marchionda. Order minimums are negotiable, he said.
Whether you do-it-yourself or co-pack costs are below a $1.50 café brewed coffee. “Boutique roasters and small brands should focus on quality and attaining the best possible cup experience, given the limitations of the existing Keurig type brewers,” said Howley. “They know they can’t achieve the super low cost pricing, given their pursuit of quality,” he explained. “Their markets will likely include existing customers and area restaurants and grocers who want to offer a better at home coffee experience,” he said.
“Folks have a good shot to enter the market and if they can tackle quality, a new standard (and price point) could be established,” said Howley. His advice: concentrate on local/niche clients “those who trust the local roasters’ commitment to commitment. In most cases this is a quality driven model and not price-driven.”