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Pure Coffee

Should I move into the instant coffee business?

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Hi, I currently import and distribute coffee beans, I would like to get into the instant coffee business and launch my own brand by competing on price undercutting Nestle & Jacobs/Douwe Egberts.

 Do you think that there is an opportunity for a new low-cost brand in this industry?

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What is your current business model? Buying beans in big backs and reselling them in smaller bags?

Who roasts the beans?


Specialist in failure.

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3 hours ago, Pure Coffee said:

Hi, I currently import and distribute coffee beans, I would like to get into the instant coffee business and launch my own brand by competing on price undercutting Nestle & Jacobs/Douwe Egberts.

 Do you think that there is an opportunity for a new low-cost brand in this industry?

Who is going to produce the instant coffee and where?

Where are you going to be positioned in the market? How much cheaper?

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19 hours ago, Mesa Verde said:

What is your current business model? Buying beans in big backs and reselling them in smaller bags?

Yes

19 hours ago, Mesa Verde said:

Who roasts the beans?

I buy it already roasted.

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18 hours ago, Brakish said:

Who is going to produce the instant coffee and where?

Me in Cape Town

18 hours ago, Brakish said:

Where are you going to be positioned in the market? How much cheaper?

Somewhere between chicory and premium coffee like the brands mentioned above. 

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22 hours ago, Pure Coffee said:

I buy it already roasted.

Why not roast?

Not profitable enough?

Not as glamorous as owning a retail brand?


Specialist in failure.

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On 10/24/2020 at 12:48 PM, Mesa Verde said:

Why not roast?

Not profitable enough?

Not as glamorous as owning a retail brand?

Yes to both :)

Is going retail in my situation a bad idea?

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4 hours ago, Pure Coffee said:

Yes to both :)

Is going retail in my situation a bad idea?

The short answer is probably yes unless you have a lot of money, to launch a national brand will be expensive with no guarantee of success you will need deep pocketed and patient investors.

Safest is to move up your existing value chain - roasting, buy the green beans and roast it. The natural progression would be to optimize value chain and work up your current value chain to roast the beans instead of entering a new category based on *potential* profits. You are essentially going from a packing operation to a instant coffee brand, manufacturing, marketing etc.

I assume you looked at roasting and assumed that is was not as profitable but you are entering a new product category based on speculation the question is how much more can you make from roasting your own vs this potential new business considering you are going up against old, large and aggressive market leaders who have major brand cachet?

While roasting beans not as glamorous as owning a coffee brand, you have to be careful with falling in love with an idea. It will be far easier to compete with a brand like Peacock who has their own roastery in the Cape than go up against the Ronald McDonald and Colonel Sanders of the coffee world. 

And even if you do decide to launch a brand a more premium fair trade ethical brand would probably be a better idea then to compete will well-known brands with loyal consumers.


Specialist in failure.

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On 10/22/2020 at 7:46 PM, Brakish said:

Where are you going to be positioned in the market? How much cheaper?

 

On 10/23/2020 at 2:29 PM, Pure Coffee said:

Somewhere between chicory and premium coffee like the brands mentioned above. 

What is that R50-R60 retail?

Like @Mesa Verde says importing a ton of coffee beans and packing it into 1000 1kg bags and putting a logo on is a different business completely from processing beans into instant coffee and launching a brand from scratch.

I can see this possibly working by going strictly private label, doing house brands for major retailers, this will allow you to sell at a lower price point as you will not need a multi-million rand marketing budget then later on you can decide to launch your own brand, that makes a lot more sense or make those instant sachets the margins on that must be crazy.

It might also be easier if you already have shelf space at major retailers but even that does not guarantee success.

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