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Bad cup of coffee inspires entrepreneur to start business.

"Give me a break. Gourmet coffee in Montana?"

That's what the bankers said when R.C. Beall talked about starting a gourmet coffee business in Whitefish. Now, almost nine years later, Beall is the owner of Montana Coffee Traders, a small business that adds twenty full- and part-time jobs to the northwest Montana economy. Just this year, he set up a coffee roaster in Moscow, serving Muscovites their first cup ever of Glacier, Grizzly, and Montana Blend.

At first, bankers weren't the only ones reluctant to invest in Beall's fresh-roasted beans.

"I spent the first five years pulling my hair out," Beall says. "We had to educate people. Coffee's a habit and we were asking people to change their routine." Most people were used to scooping Maxwell House from a tin can, instead of selecting coffee from 150 flavors and grinding it themselves from whole beans. The biggest problem with commercial coffees--Maxwell House, Folgers, and Hills Brothers are the most popular--is that they are under-roasted and stale, Beall says.

What's more, one sip of Macadamia Nut and Beall figures you can never go back. "If you drink Folgers after, you'll probably throw beer bottles out your window and start kicking your dog."

Actually, it was a bad cup of coffee in a late-night cafe eleven years ago that inspired Beall, former logger, back-country guide, and golf-course manager to do some research on the coffee business. He found out that coffee represents one-third of all beverages sold in the world, and is one of the most important trading commodities, second only to oil. He also discovered that Montana had no other coffee roasters, and for the most part, the coffee Montanans drank was "terrible."

Startup and Financing

For years, Beall had been trying to figure out how to make it in Montana. He knew the economy was bad and the state had such a small population base. He had been visiting Montana off and on since the 1970s and was considering selling his golf course in Houston to move to Montana.

In 1981, he and Whitefish artist Scott Brandt (now the manager of daily business operations) started researching the coffee business. After hours of research in local libraries and many phone calls, they discovered that stored in a barn in the area was a bag of green coffee beans, a grinder, and a 10-pound coffee roaster.

With a $4,000 loan from First National Bank in Whitefish he bought the barn (and its contents) and in 1982, Montana Coffee Traders (MCT) brewed its first cup of coffee. Beall then set up business in a two-story log cabin on Highway 93 South, just twenty-five miles from the jagged mountain peaks of Glacier National Park. After MCT had been operating for nearly a year, Beall sold his Houston golf course and used some of that money to keep the business going.

Adequate financing for startup wasn't easy to obtain, Beall says. "Banks kept turning us down," Beall says. "They thought we were trying to create a market that wasn't there. I mean, come on, this is Montana. Be serious--roasting coffee in Whitefish, Montana?"

Some of the most valuable advice Beall and Brandt got was to do their homework.

"Do your business plan, do your homework," Beall says. "Find out all the reasons it won't work. Just because it works somewhere else, doesn't mean it will work here. How many |customers~ do you need to make the business work? In a state with a small population base, it's hard to make it."

Obviously, Beall did do his homework because nine years later, business is booming. "At least 15 million cups of |our~ coffee have been consumed since we started," he says. Fifteen million cups, or 175,000 pounds of coffee sold to 559 commercial accounts including restaurants, grocery stores, and offices throughout Montana. In addition, MCT mails coffee to another 2,500 or so customers per month.

Beall buys seventy varieties of green beans through brokers in New Orleans, New York, and San Francisco. MCT then roasts the beans, packages them and distributes them throughout Montana, Idaho, and Washington. Coffee retail prices range from $6.50 to $20 per pound--Hawaiian Kona ($15/pound) and Jamaican Blue Mountain ($20 in the United States and $45 in Canada) are the most expensive.

Business Operations

Roasting beans is tricky business--the temperature and time in the roaster are critical factors. Unlike most coffee roasters who are "very secretive" about their trade, Beall believes that consumers should know as much as possible about the process.

When people walk past the covered wagon and enter MCT's log cabin/store, Beall or one of his employees greets them at the door and offers them a sample of Sumatra Viennese, Colombian Dark, Dutch Bavarian Chocolate or whatever happens to be brewing at the time. Visitors browse through the shop, looking at espresso machines, coffee grinders, teapots and kettles, baseball caps that say "How you bean, man?", Made in Montana products such as coffee cups, potholders, homemade jelly, and chocolate.

On the upper level are hand-woven rugs, baskets, wooden cabinets, shelves, and chairs made by local artists. The company business offices are upstairs and have a comfortable, wide-open look, but are stocked with top-notch computer and office equipment. Guitar-intensive rock music plays in the background and coffee smells waft throughout the cabin.

"You got to appeal to the five senses," Beall says. And then his tour begins. The first part of the tour is smelling coffee beans. As visitors sniff large containers of just-roasted coffee beans, he explains that coffee comes from five different regions, each with its own distinctive characteristics:

* Ethiopian - rich, wild, winey, the first of the world's fine coffees;

* Indonesian - heavier and earthy;

* Central American - smoother and mild;

* South American - mild like the Central Americans;

* African - a character like the Ethiopians yet not so wild.

Next Beall shows visitors large bags of green beans, coffee roasters capable of roasting 150 pounds per hour, and a freezer where whole beans are stored. Beans are roasted at temperatures ranging from 440-500 degrees, he says.

In addition to tours and coffee-smelling sessions (conducted by himself or employees), Beall relies on his employees to sell his products. They are all up on the history of coffee and have been around long enough to know Beall's style.

There's not much turnaround among the twenty full- and part-time workers, Beall says. He pays $225,000 in annual salaries for MCT employees and all of them have a health insurance plan.

Marketing and Advertising

Over the years, Beall has learned a lot about marketing and advertising. One thing he's learned is MCT can't compete with Folgers or Maxwell House's advertising campaigns. For instance, Folgers spends millions of dollars on "sappy, emotional" TV ads that reach millions of consumers, like the tear-jerker with the military man returning home to his family and a steaming hot cup of Folgers.

"We can't compete with big coffee wholesalers, so we have to be famous instead," Beall says. And how has Montana Coffee Traders become famous? Many ways.

Quality Products

Beall sells only the best quality coffee in his store. "Quality vs. quantity is the biggest problem with the world," he says. "Commercial coffee houses roast coffee in mass quantities, using smaller, lower-grade beans. Gourmet coffee may be a penny or two more a cup, but it's a dramatic cup of coffee."

But it hasn't been easy convincing restaurants and other retailers to buy gourmet coffee, Beall says. "It's a little more expensive, but quality brings business."

A major turning point for his business was discovering that UPS could ship coffee anywhere in Montana in one day, Beall says. "If somebody wants coffee, they can call our 800-number (1-800-345-JAVA) from anywhere in the U.S. and we'll mail it to them and bill them. Some people couldn't believe they didn't have to give us money first. It's kind of a Montana business attitude--we stand for quality and promote the environment. Anyway, they never usually stiff you."

The best type of advertising for MCT is to provide coffee service at community events, Beall says. "We've learned to channel our advertising through trial and error," he says, and newspaper, radio, and televisions ads aren't as effective as coffee service.

What works is "becoming part of the folklore," Beall says. MCT has turned into a designated stop for visitors to the valley--they associate his coffees with the Montana experience. "We are on people's cowpaths, part of their routine."

MCT uses sophisticated computer equipment--Apple Mcintoshs--for producing any sort of print advertising or promotional brochures. Beall says they were one of the first businesses in the valley to use Apple computers.

Community Support

An avid environmentalist, Beall believes that supporting your community is important and that doing so reflects positively on the business. He is concerned about Whitefish's skyrocketing land values, rapid development, higher costs of living, and the pressures on wild lands that have come with the Hollywood celebrities and wealthy out-of-staters who discovered Montana several years ago.

When he heard rumors last year that a large chunk of property along Whitefish Lake was to be sold, he and a group of citizens arranged for a public meeting before the city council. Enough people showed up to convince the state not to sell the land. The non-profit group arranged to lease the land from Fish, Wildlife, and Parks for $10 for ten years and developed a public park with about 400 feet of gravel beach.

Another one of his projects has been to bring National Public Radio--"a big asset to every community"--to Whitefish. Beall organized several fund-raisers to put a translator on Big Mountain so valley residents could listen to literary readings, children's programs, symphonies, world news, and a large variety of music.

Cafe' Monteverde: "Coffee With a Cause"

Beall's concern for the environment and the economy doesn't stop in Whitefish. When he visited a Costa Rican coffee plantation in Santa Elena four years ago, he saw some similarities to Whitefish. Located near the famous Monteverde Cloud Forest Preserve, Santa Elena (like Whitefish) was being threatened by rapid and inappropriate development; local landowners were selling out to wealthy foreigners for hotel or other developments.

Beall figured that if the people of Santa Elena could make a living growing coffee, the rain forest would be protected. So Beall worked out a deal with Santa Elena's trade cooperative. He would pay premium prices for top-quality coffee in return for exclusive North American rights.

Out of the deal came Cafe' Monteverde, coffee grown in harmony with the Cloud Forest, or "coffee with a cause." For each pound of coffee Beall sells, he donates $1 back to the Santa Elena trade co-op. The money is used for special projects that make the co-op and its coffee harvest more environmentally sustainable. For example, the co-op used $1,500 to buy its own coffee roaster and sell coffee directly to tourists visiting the Cloud Forest. Santa Elena is the first co-op in Costa Rica to operate its own roaster.

Selling "environmental correct coffee" is more of a statement than a money-making venture for MCT, Beall says. "The ecology coffee makes us famous, not rich."

Opening New Markets:

The market was ripe. A hundred thousand foreigners sick of finishing off their Borscht and Chicken Kiev with tea, a shot of Stolichnaya Vodka, or worse yet, Russian coffee. No decent coffee. No roasters.

"It was a great market. Nobody else was doing it," Beall says about starting a coffee roasting business in Moscow, Russia.

The idea of selling coffee came to him when he and Brandt met Sasha Malchik, a Russian who spent most of his life in the former Soviet Union and now lives in Bigfork. For the past several years, Malchik has been consulting with American businesses who want to set up in Russia and he thought coffee would be a big hit over there.

In March, MCT started roasting coffee in Moscow and sold its first cup of coffee to the Moscow Times, one of two English-speaking magazines in the city. MCT is one of nearly 200 foreign businesses in Moscow, a city of nine million people, with a foreign community of about 100,000. Foreign hotels, grocery stores, journalists, business people, and artists will be MCT's target market, Beall says. Part of the reason MCT is targeting foreigners is that they can pay with hard currency, instead of rubles which are virtually worthless on the world market, he says.

The Russia business has almost become self-supporting now, Beall says, which is quite miraculous considering "we're on a different time zone, have a different banking system, different language, and still haven't been able to get a phone connected."

"We have five young Russians working for us," Beall says. "I feel good about it--they don't understand the small business concept, though."

Banking has been somewhat of a problem. MCT does business with a bank in New York, but transferring money is complicated. "We have money floating around everywhere," he says. "But we're there, as long as it pays the way.

"My philosophy used to be 'if you can do it in Whitefish, you can do it anywhere.' Now we've got a new frontier," Beall says. "If you can do it in Russia, you can do it anywhere."

Shannon H. Jahrig is publications coordinator at BBER.
COPYRIGHT 1992 University of Montana
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Montana Coffee Traders Owner R.C. Beall
Author:Jahrig, Shannon H.
Publication:Montana Business Quarterly
Article Type:Company Profile
Date:Sep 22, 1992
Previous Article:Montana's state budget crisis & fiscal reform.
Next Article:Good news at last for Montana's economy?

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