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Private Labeling: philosophic decision, pragmatic choice.

Private labeling is a growing trend in the coffee industry and is attracting a following for a variety of reasons:

* It allows a company to sell coffee that is strongly identified with the company without all the manufacturing problems, and;

* Coffee blends are created according to the customers taste and finances resulting in a finished product that has a name, package design and taste of the customer's choosing.

Many retail and Office Coffee Service operations are opting for a custom roasted, privately labeled coffee program ad delegating product manufacturing responsibilities to an experience roaster. It is viewed as a positive move, freeing them to concentrate on product sales and customer service.

A privately labeled coffee program has advantages and disadvantages. The advantages include a personalized name and blend as well as packaging. Product costs are fixed over a set period of time so that profit margins are stable rather than fluctuating with the market.

There is no equipment cost for roasters, grinders, and packaging machines. There is no money and warehouse space tied up in green inventory and packaging film as well as employee payroll.

Private labeling could also have disadvantages for some companies. To have a personalized program, the customer must commit to buying a certain amount of coffee over a set period of time. If these buying goals are not met, penalties are incurred. Another disadvantage would be lack of brand name recognition and this is especially critical to smaller companies. If there is no brand name recognition to stimulate sales, marketing efforts and dollars have to be applied. Most smaller companies do not have the money to develop marketing pieces to help sell their privately labeled product line.

To be successful in a privately labeled, custom roasted coffee program, a company that must have a firm grasp of its business and its customers. the company must have an idea of a taste profile they want to achieve, reasonable estimates of annual usage, and a realistic idea of the amount of money they can spend. If they take this knowledge and align themselves with a roaster with a good company philosophy, a consistent and quality oriented product, and marketing support to help their customers sell coffee, they have every reason to be successful with a custom roasted, privately labeled program.

One of the largest custom roasters in the United States in Continental Coffee Products Company, a Quaker Oats Company, headquartered in Chicago, Illinois. According to company President James Bankard, "There are two parts to Continental's business; the 'Continental' brand and, custom roasting to meet the unique taste profile requests of OCS vendors, distributors and other customer groups."

Although Continental has been selling its signature branded coffee items since 1917, custom roasting represents a big growth area. According to Bankard, "Our company philosophy is to sell the customer the way the customer wants to be sold. We have increasingly found that within the industry, people have an emotional attachment to their coffee and want to customize the unique taste profile appropriate for their marketplace."

He further commented that he has seen a dramatic growth in private labeling in recent years and expects this upswing to continue. "I continue to see, dependent upon some upturning in the economy, a desire for consumers and OCS operators and vendors to have excellent cups of coffee available within easy reach. I also believe you'll be seeing a significant increase in gourmet coffees available in work environments."

Although Continental has 1,600 to 1,700 items in their product line, fulfilling their requirements for private labeling is fairly simple. According to Bankard, a 50,000 pound annual commitment is "where we can intelligently and effectively manage their needs." This 50,000 pound commitment allows for two film types, 25,000 pounds each and on the average, each order should be 500 pounds.

Continental private labels tea as well as coffee and according to Bankard, "If we're not second behind the nationally recognized brands, we're a close third."

In summing up his company's philosophy toward private labeling for customers, Jim Bankard states that "ours is a company that listens, we don't sell what we have, we sell solutions to customers needs after we have had a consultative interaction with them on what it is they want. We sell the customer the way the customer wants to be sold on a mutually profitable basis. Our strength has been on our ability to listen and hear, to customize a product to meet the taste profile desired, and to hustle and get the product in the production line and out to the customer to meet their needs."

As mentioned earlier, a good company philosophy is only one attribute needed by a custom roaster. Equally important is the quality of the coffee that is custom roasted and then blended for customers. The person who oversees this important aspect is referred to as the "Blendmaster" and Jack Sutherland, who is also vice president of purchasing and green coffee operations is Continental's Blendmaster and has been involved in coffee since 1957.

Jack explained the process involved in creating a custom blend. "We question the customer in regards to what they are looking for in a taste profile. We also spend a little time with the green coffee content of the blends but most of our time is spent on the taste. It's a question of communication with the customer."

Even if customers have no knowledge of coffee, the Blendmaster makes it easy for them to convey information by asking specific questions. "They have to tell me what they are trying to accomplish ... if they want to be known for their coffee, then I know they want a higher quality blend."

According to Sutherland, more companies are trying to provide high quality blends to their customers. "They realize that they are charging a lot for a cup of coffee and they owe the consumer a higher quality product." This demand for a higher quality coffee is reflected in the growth of gourmet coffee. "Five years ago gourmet was 5% of the total volume of coffee pounds sold in the United States and five years from now it will probably be closer to 20%. This growth of gourmet is promoting better quality coffee."

Continental's size and concentration on private labeling has allowed it to acquire knowledge about packaging and consumer needs and to develop a vast network of quality control checks on products. Coffee goes through a total of 23 quality inspection checks and this dedication to quality extends to the material used to package the coffee. Continental pioneered metalized nylon film and has won several awards for work done in this area.

Jack views his job with Continental as providing "Consistency ... we like to say that if you like our coffee today, you're going to like it tomorrow because it is going to be the same ... consistency to us is the key job in green coffee and purchasing."

A final critical attribute of a custom roaster is the marketing support given for the privately labeled product and Sheldon Kail is Continental's director of marketing. "The focus of our efforts is geared towards helping our customers move coffee. We develop merchandising programs, point of sale materials and promotional idea to make available to our customers to help them sell more coffee. Our support goes beyond the obvious equipment and service support."

As private labeling increases, so do requests for marketing materials. Continental recognizes that independent operators do not have the money and resources to have the marketing materials of large national accounts and according to Kail, tries "to be almost an extension of their marketing department in providing materials they need to be successful. If you want to be successful in private labeling, you have that kind of support."

Kail also sees gourmet coffee as a big growth area and within the gourmet segments, comments that dark roasted and flavored gourmet coffees seem to be in demand. For customers that want to implement a gourmet coffee program, Continental has developed a starter program that is virtually mistake proof. "We go way beyond providing just standard POS materials, we also provide recipe ideas and turnkey promotions. We provide kits to operators that allow them to actually run a coffee promotion or gourmet coffee program in their operation. We provide specialized equipment from airpots to I.D. tags, to specially designed and colored coffee pots to brewing equipment. Our starter kit can get most any operator immediately into the gourmet coffee business."

Service was a consistent theme with Bankard, Sutherland and Kail who summed it up best, "We try to sell the customer the way the customer wants to be sold and to provide them with the programs, materials support that will make them successful. If we do that, in turn we shall be successful with them. We will have formed, if you will, a partnership."

To be successful with a privately labeled coffee program, a company must align itself with a roaster with a sound business philosophy, a commitment to a quality product, resources to provide marketing assistance and a dedication to service. Continental Coffee Products Company is certainly not the only custom roaster, but it certainly is a good one to measure all other by.

For more information about Continental Coffee Product Company, call 312/222-8734.
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
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:growing importance in marketing coffee blends
Author:Sturdivant, Shea
Publication:Tea & Coffee Trade Journal
Article Type:Column
Date:Aug 1, 1992
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