Wholesale and retail are the two most common avenues for roasters to take when selling their product.
The reason they are the most common is because both are highly effective. Selling coffee through wholesale or retail avenues connects roasters to a consistent and reliable source of demand and gets their product and brand in front of a larger audience.
However, deciding which route is best for a roastery can be a challenge. In addition to having to set up wholesale channels, roasters must find the perfect café to work with.
To find out how roasters can go about choosing the right café to sell their coffee wholesale, I spoke with the beverage category lead at Starbucks South Africa, Ishan Natalie.
Wholesale versus retail
As is true of almost any sales model, both retail and wholesale have their own strengths and weaknesses.
Wholesale refers to selling coffee in bulk to a retailer. For instance, this is when one roaster is the primary coffee bean supplier for a local coffee shop.
Alternatively, a roaster could establish connections that see their coffee sold wholesale to a supermarket chain.
Going wholesale can be a highly effective choice for several reasons. It dramatically expands a roaster’s audience outreach while providing you with a consistent and dependable stream of income.
Additionally, all of this can be achieved without the roaster having to increase their marketing efforts or investment.
“The main pros of selling coffee wholesale are brand exposure and growth,” says Ishan, who is also a three-time South Africa Barista Champion. “It allows roasters to establish themselves and grow, whilst supporting the growth of others.”
That said, selling wholesale may provide roasters with less flexibility than selling retail. Additionally, it is likely roasters will have to pay for these benefits with a sum of their profit margins.
“A con with wholesale is that wholesale coffees tend to be heavily discounted, which reduces your profit per kilogram or pound roasted,” Ishan explains.
In comparison, choosing to sell retail ensures roasters have complete control over how their coffee is sold. More so, roasters have the flexibility to change roast profiles or bean types whenever they like.
The retail avenue also allows roasters to sell their coffee as part of a story and communicate their brand ethos directly to customers.
Although this may be true, the time and effort required to sell coffee through retail means may not be the right investment for everyone.
Equally, the sporadic demand and extra management demands may put roasters off the venue.
While both sales avenues have their strengths, there are several factors roasters need to consider before venturing down either route.
For instance, Ishan recommends roasters contemplate the application of the coffee and frequency of ordering before selling their coffee wholesale.
“Wholesale roasting often requires bigger equipment and more hours of labour,” he says. “Also, increasing roasting capacity by buying a larger roaster is a massive investment, and so a proper return on that investment must be calculated in order to assess the payback period.”
Ishan says it can be difficult to include the cost of the roaster investment into the selling price, as this may place a roaster’s product out of the competition zone for wholesale roasting, or customer affordability.
“Although this is not an issue, should you have the capital available, all these are costs that need to be factored in,” he adds.
Other points to consider include business expansion plans, a realistic idea of feasible roasting volumes, and a roaster’s work schedule.
Roasters must determine whether they can take on bulk cafe orders and commit to fulfilling consistently large orders.
What are the benefits of selling coffee wholesale to cafés?
A number of roasters have benefited from selling their coffee wholesale to coffee shops in various ways.
Wholesale can dramatically expand a roaster’s audience outreach, as the coffee is more likely tasted by a higher number of people.
By getting their name in front of a larger market, roasters can boost their brand recognition, awareness, and website traffic metrics – which may help increase sales.
In short, increasing exposure is an effective way to boost a brand’s key metrics, and wholesale selling achieves this at no extra cost to the roaster.
Consistent, recurring revenue
Wholesale purchases usually commit to a regular purchasing schedule as cafes and supermarkets need to keep stocks up.
This is far more stable than the often unpredictable nature of retail selling, as sales in retail outlets will naturally be affected by the holiday season.
No extra marketing costs
The additional exposure that comes with wholesale selling comes without the roaster having to increase marketing efforts or investments.
Usually, to access a wider audience this quickly, roasters would have to sink large sums into social media campaigns or other advertising strategies. The beauty of wholesale selling is that these benefits are just a perk of the partnership.
Provides opportunities for quick business expansion
For these reasons, wholesale selling is also a great way for new roasteries to establish a consistent income quickly.
“Wholesale clients allow you to roast more coffee volumes which will reduce your price per kilogram, but provide you with larger revenue per order and profit per volume,” Ishan advises.
How to choose the perfect café to sell your coffee wholesale
The next step on a roaster’s wholesale journey is to find the right café to represent their brand.
It is essential for roasters to partner with businesses that reflect their ethics and values, otherwise, they risk compromising the brand they have worked so hard to build.
For instance, some roasters may prioritise working with a company that is carbon neutral. Or equally, some may refrain from working with a cafe that does not use biodegradable packaging.
By doing this, roasters can ensure their brand is protected. This is especially important in wholesale selling, as roasters have no control over the image the partner company creates.
Therefore, it is recommended that roasters work to build a strong relationship with the coffee shop owners. By establishing this relationship, roasters can develop a partnership that benefits both parties.
For instance, roasters and coffee shop owners can decide which blends and coffee offerings will be available at specific times of the year. This could mean providing limited edition roasts when they are available, or offering seasonally inspired flavoured roasts.
For the roaster, this enables them to be creative and showcase their skills. For the shop owner, this helps them to better engage their customers and boost their sales.
Additionally, roasters should invest in bold, stylised packaging to ensure their coffee gets noticed in the wholesale outlet.
This could be through a roaster’s choice of colours, typography, branding, illustrations, or the accompanying advertising materials they provide.
Roasters should consider whether a customer will remember their brand, and if not, it may be time to update their packaging.
At MTPak Coffee, we can help you design coffee packaging that will stand out.
Using a range of sustainable materials, including rice and kraft paper, PLA, and LDPE, our expert design team can ensure you showcase your unique brand identity and your coffee, all while preserving its freshness.
Furthermore, we have a quick turnaround time for digitally printing on compostable coffee bags, and are able to offer low minimum order quantities (MOQs) of packaging, no matter what size or material.