2012

2013 – The Huge Opportunity! How to Be Successful in Whatever Economy

greenlogo“At the end of the day, the end-user really wants a great cup of coffee!”  We hear this over and over, but as a manufacturer do we really make Quality the ultimate objective day in and day out?  Do we really believe that “quality in the cup” will separate us from the crowd, create loyalty, and guarantee success in any economy?

First of all, can we prove to ourselves and to others that we are making a great cup of coffee?  Well, that is pretty subjective and can vary by as many opinions as there are people in the room. But, there is a certified method to quantify brewed coffee quality which has been developed by the Specialty Coffee Association of America.  It is called the “Golden Cup Standard”.

Assuming you are using good quality water, proper brewing equipment (with the proper settings), and grinding the coffee properly, the analysis focuses on the starting coffee volume, water volume, and the resulting coffee to water ratio in the brewed cup.  Ok, that is a lot of information, but let’s simplify the calculations by analyzing exactly what happens when you brew a cup of coffee with a coffee pod.

12_12 20-BSuppose you start with a coffee pod containing 12.5 grams of coffee and end up with 7.5 oz. of brewed coffee.  Assume 2.5 grams of coffee makes it to the brewed cup.  So, 2.5 grams out of the starting 12.5 grams means you created a 20% Extraction Rate (2.5 grams / 12.5 grams = 20%).  For a golden cup, the SCAA recommends a range of 18 – 22% Extraction Rate.  So, that meets one requirement.

Then, assume 7.5 oz. of brewed coffee weighs 208 grams.  The coffee the water ratio is therefore 2.5 grams of coffee / 208 grams of brewed coffee = 1.20% Total Dissolved Solids (TDS).  For a golden cup, the SCAA recommends a range of 1.15% – 1.35% TDS.  So, that meets the final requirement.

As you can see, the golden cup standard is theoretically possible with a soft paper pod.  In fact, there is no other single cup brewing delivery system (that also offers variety) that can meet both the recommended SCAA Extraction Rate and the TDS ranges in a 7.5 oz. brewed cup of coffee.  That is a bold statement but it has been and can be proven by following the simple method outlined above.  So, if you are the marketer that wants to offer the end-user variety and a great cup of coffee that meets the golden cup standard, the only option is the soft paper pod.  Understanding this theory and using it in your presentations can only improve your selling results, if your key focus is on “Quality” in the cup.

Additionally, there is a very “Green” story connected to the pod.  Pods are “compostable”.  Other alternative single cup brewing systems, that offer variety, use a plastic cartridge that is not compostable, biodegradable, or recyclable.  These plastic cartridge options include K-Cups, Flavia, Tassimo, etc. (probably need copyright symbols for each of these.).

Finally, there are three other advantages.  One is a lower cost advantage of approximately 20%.  The second is enjoying a 50%+ gross margin again.  Remember those days when you could price your products without worrying about your customers buying your product offerings cheaper at a retail store?  The third is the option of using your own coffees and branding.  Wasn’t it important to be different and sell your own private brands back 15 to 20 years ago?  Did we get used to selling our competitor’s brands (the same brands as other competitors sell)?  What’s that all about?  Were we duped somehow without realizing it?

Bottled water companies are starting to see pods as a profitable way of entering the coffee business during the cooler weather periods when their water sales slump.  They are also creatively looking at ways to add coffee pods to their home delivery accounts.  Why not increase your gross profit per stop?  They are beginning to understand this concept very well and will be capitalizing on this in 2013.

Selling pods is a slow education process.  You may start out growing at a rate of one account at a time.  But, you will develop strong loyalty with those customers.  Remember that you are delivering  the best cup of coffee and that is what they truly want.  You can also provide variety in your private brands.  What a novel idea!  This is totally different than selling the same K-Cup brands as your competitor down the road, and only competing on price (and, of course, lower margins!).  And, it will take a while before you have new customers picking up the phone and calling you for your pods, but they eventually will, once they find out that the pod delivers the best cup of coffee.  But, if you are patient, you will convert them.

So, in summary, with pods you can offer a great cup of coffee with your blends and branding, a green story, and all of this at a lower price!  How hard is this to sell in today’s economy?  Go for it in 2013!

Thomas G. Martin is the Executive Vice President, Chief Operating Officer and an owner of Pod Pack International, LTD. located in Baton Rouge, LA. Pod Pack specializes in providing single cup brewing solutions for its private label customers.  Previous to Pod Pack, Tom spent 11 years working at Community Coffee Company in various roles.

12_12 20-CTom has a BS degree in Industrial Engineering (1977) from Mississippi State University, as well as an MBA (1987) from LSU. Since the early 1980’s, he has been active in a number of coffee related trade organizations (NCA, SCAA, PCCA, NAMA, and was a past President of the Southern Coffee Association).

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