The Exchange: Episode 19 - The Coffee Roaster & Packaging Part 1

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The Exchange: Episode 19 - The Coffee Roaster & Packaging Part 1

“This is all about means of packaging, strategies for packaging, economics of packaging, packaging types, and the decisions that might drive you one way or the other.” -Todd introducing the topic after introducing our special guest for this episode, part 1 of The Coffee Roaster & Packaging.

Available on iTunes and Full Transcript Below

Mike: Welcome to a special episode of The Exchange, presented by Olam Specialty Coffee, hosted by Mark Inman and Todd Mackey. I'm Mike Ferguson. It's a special episode because we have what we who ran podcast e-empires like to call a special guest. This is Episode 8 of Season Two and our 19th podcast, The Topic Mark and Todd and our "special guest" discuss over two episodes is packaging from its role in your branding and different types of packaging you might use as your business grows. And now here they are. Mark and Todd. And our special guest.

Mark: Welcome to The Exchange, presented by Olam Specialty Coffee. I'm your host, Mark Inman, and with me, as always is, well, our producer, Mike Ferguson in the background there, Todd Mackey, my co-host and our very special guest today, Mr. Rob Steven. Rob.

Rob: Hi, Mark.

Mark: Hi, how are you?

Rob: I'm great.

Mark: As we start this segment, always in the beginning, why are you laughing, Todd?

Todd: This is the first time we've sat across from each other. You didn't even mention that in the intro.

Mark: That's true. That's true. We have not mentioned that yet. Way to steal my thunder, Todd. This is a unique episode because we are all in the same room here in our Providence, Rhode Island office. I am out here. I brought my mic setup, and Todd and I... This is the first time we've ever done this face to face.

Todd: Yes, it's weird.

Mark: And I'm probably intimidating the living hell out of you, aren't I?

Todd: Quite literally are. I mean...

Mark: I'm like leaning in menacingly at your face right now to get in on this mic.

Todd: The shoulders of your blazer...extra hot. This is very unique day. I mean, I've always pictured that we would get to this point, but I didn't know it would come so soon.

Mark: It's a dream come true for you, I'm sure.

Todd: Oh, it's amazing . Yeah. What a day. But yeah. No, of course. Making like unbroken eye contact from the moment that you introduce the show is absolutely changed the dynamic.

Mark: This is what I do when I'm at the office in Healdsburg because I just stare at a picture of you in, you know, with the same kind of intimidating gaze.

Todd: Sure. Well, you're well practiced.

Mark: Yeah. Trying to send a chill down, you know, from afar.

Todd: Yeah. There's a reason we're not recording this by video and distributing it because none of this is true. We're obviously smiling and having a great time. But it is exciting. And we certainly don't want to speed over our very special guest, obviously, being that we're recording this at a reasonable hour. We are on the east coast.

Mark: Yeah, we're actually... Yes, it's the afternoon.

Todd: And the fact that we have Rob Steven here at our disposal. You know, we wanted to take advantage of his expertise for this episode. Which is "The Coffee Roaster and Packaging." Rob is, in particular, the packaging expert, longtime consultant. But without getting too far in, I'll kick it over to Rob. If you wouldn't mind, give us your title here at Olam Specialty Coffee and let our listeners know exactly what it is you do.

Mark: Well, as well as your professional background, give a little bio about who you are. Who's Rob?

Rob: Who's Rob? Well, aside from the fact that Rob's been friends with you for nearly 20 years...

Mark: Yeah.

Todd: I'm so sorry. {laughter}

Rob: And you for what, 12, 13?

Todd: Yeah. Getting there.

Rob: So let's see, I am the General Manager here at Olam Specialty Coffee, and I've been in coffee about as long as you have, Mark. I've had a chance to work at some different places in different segments of the industry, I was a buyer for many years. I started as a roaster and did my apprenticeship at Pete's long, long time ago. And I was a buyer for several companies. I ran the coffee division at Dunkin brands back in the day. And...

Mark: I remember that all too well.

Rob: Yeah, I started a third party consulting and training and lab company, called Coffee Solutions, that I worked with. Mr. Mackey at for some time.

Todd: And Mr. Ferguson.

Rob: And Mr. Ferguson. That is true. I was on the board of SCA with Mark and where I met Mr. Ferguson. And we also have been friends for decades now. And so, yeah. So did that for quite a while. I got into trading about ten years ago and worked for another company with Todd. And then I am here and have been here for about five years. So excited to join you guys. I'm a longtime listener, first time caller.

Todd: I mean, awesome recap on your experience, which is obviously deep. As all of you listening might imagine, I'm actually sitting across the table from these two titans of specialty coffee, and I'll bear the weight only for you. We appreciate you.

Mark: Titans. Give me a break.

Todd: But Rob, if you would, also give us a sense of what your days looks like here at Olam Specialty. And just for the listeners who often imagine Mark just plucking away on the keyboard, pushing paper and getting things done all over the world, what is it that you do, that's similar or different?

Rob: I mostly monitor his YouTube use {laughter} which is about a half time job.

Mark: Yeah, yeah, probably.

Rob: No, what do I do here? Jeez, that's a good question. So theoretically, I'm in charge of trading, which is so sales and purchases, marketing and just a general sort of health of the business, so there's a lot of moving parts, but in general what I'm trying to do here is just, we've got a lot of talented people, so I'm trying to clear the way for them to do what they do really well. And so it's a sort of varying things every day. I still get to cup every day. I still get to keep my hands on coffee. I still buy coffee. I still sell coffee. So I still get to do what I love. So, yeah, best part of it is I have a great team. So I like coming to work every day.

Todd: We like having you. We typically, as a listener I'm sure you know that we typically be in the show, a segment we call What's in your Cup? What's in Your Glass? Your Can? It can depends on the time of day we're recording it, of course. The taste of the moment.

Mark: Right.

Todd: But I wanted to kick that off. I'll spin it over to you, Mark. What's in your cup?

Mark: What's in my cup? We have been in meetings all day up until the minute we recorded this. So I have room temperature coffee that at one time was delicious Honduran Microlot that is an arrival sample, I believe?

Todd: No, no, no. Pre-ship samples.

Mark: Pre-ship samples.

Todd: This is an ironic moment where we we have exactly the same thing in our cup.

Mark: Yeah.

Todd: And it's equally room temperature, though I took this as the dregs of the carafe just in the moment, realizing on the way into the room that I didn't even have a cup or a glass. I just had to grab it and run. So. But yeah, this coffee should not be glossed over. This is fantastic coffee. These are pre-ships for microlots that we're bringing in with a supplier who, I'm sure, many people know. If you don't, you should. This is Beneficio San Vicente in Santa Barbara, Honduras. And they are just awesome bringing coffees from multiple areas of the Santa Barbara mountain and beyond in Honduras. We just put together the approvals on what will be the third container containing some available coffees that are not direct trade back to back that tasted great. And we took of course, the samples don't get wasted. We brew them all and drink them all because they're just fantastic stuff. So there's a bit of a blend. Some of those particularly Pacos and Borbone varieties...

Mark: I mean, it was great when I was hot. It was fantastic.

Todd: Nice. Let's pull Rob in to the fun. Rob, what do you have in your glass?

Rob: I am drinking a liquid blend that's two parts hydrogen, and one part oxygen. Yeah. So...

Mark: Real exciting. Yeah.

Rob: I would love to be drinking a beer or some sort of great beverage right now, especially after a long day of meetings. But, we are here in the Olam conference room, and it's not even 5:00, yet, so...

Todd: Might I recommend in following this session, maybe a short walk to the eddy for a crushable punch.

Rob: Crushable punch.

Mark: The after party to the show.

Todd: Maybe that's where it's going. But yes. So we're doing an episode called The Coffee Roaster and Packaging. This is all about means of packaging, strategies for packaging, economics packaging, and then, of course, packaging types, the decisions that might drive you one way or the other... You guys have been in numerous places in sort of subsegments of the roasting business. So I'm going to sort of try to guide our discussion and I'll kick in, of course, my experience, wherever it's worthwhile. But I think the place to begin is just to kind of recap in our experience... What drives a startup coffee roaster to engage the concept of packaging? There are people that are probably putting a product out strictly utilitarian...like "I'm throwing this at anything I can just to get it in the hands of my customers."

Mark: Right.

Todd: When that change is ever so slightly to, "OK, I'm taking myself seriously. I'm a brand. I'm a company. I'm organized..."

Mark: Right.

Todd: What are the first considerations? And we can start by just how packaging is executed. So, you know, to give startups a little bit of peace of mind if they're finding themselves with really primitive setups. But also, you know, to give a launching point for getting further down the road to the places where you have been and have a lot of experience, Rob... I know for me that one of the first roles I had in a roastery was packing bags by hand.

Mark: Yeah.

Todd: I was just scooping...

Mark: Scooping away.

Todd: And slinging coffee beans and weighing them on scales, putting it through a uline foot sealer.

Mark: But that's even more than most people do. Some people go right into a glassine lined, tin tying paper bag. And I do think that if you are doing a more Spartan approach right now, there's nothing wrong with that. I think in many ways, some of the cooler packages I've seen out there are either poly pro lined paper bags or glassine lined with a very simple and elegant look to them. And I think if the philosophy of your coffee is it's like putting a loaf of French bread in a bag, paper bag, and putting it out there because you're to consume this quickly... I don't think there's anything wrong with packaging in paper. If obviously as you grow or if you have accounts where coffee is going to sit for longer periods of time, then that's not going to work. Obviously, you have to think about packaging options that preserve the coffees freshness as long as is possible. But I think there's a two pronged approach to this. Packaging is about marketing and branding, heavily about that. And it's also about preserving the freshness of the product. And you have to take both into consideration, but sometimes you may lean more one way than the other. And have your reasons or your philosophy thought out as to why you're doing that?

Todd: Yeah, I think back to paper-bagging. I come from a different angle because you flash back 10 years, and so many of the trendsetting roasters were on the West Coast. And I remember taking trips and grabbing coffee. And by the time I would get back, they'd lost that freshness.

Mark: Right.

Todd: You know, there's always been this sort of line in my mind where to now seal the coffee is like the first big step up.

Mark: Sure. Without a doubt.

Todd: I mean, there is that sort of pivotal staling study that the SCAA did. Both Rob and I were cuppers as part of that contingent. The freshness and staling a report, I'm failing to remove the year. But that's out there in print. And I believe you can buy it in book form, and it's a pretty comprehensive study from a sensory standpoint as to the staling effects of having an unsealed bag and also whether or not a nitro flush is another step up.

Mark: Or vacuum seal.

Todd: Yeah, I think the first step that you see people take beyond this is that whole valve seal, one-way, breathable...

Mark: Sure.

Todd: You know, Rob, maybe you can give us a little insight into why that packaging is out there, why it's so sort of unanimously adopted. And for a roaster who's currently doing kraft bags or similar with a tin tie rolled up, and that's that, why they might consider spending a little bit of extra money, and on what, to get started at this.

Rob: Yeah. Well, when I think about packaging, the way Mark outline it has always been the case, which is it's two things. It's a vehicle for your brand and your identity and it's a vessel for your coffee to arrive where it's destined, and what quality and what condition it ends up in that way. So even when you go back to the beginning of the distribution of coffee nationally, so this red can/blue can... When they were sending sealed coffee cans, they had to grind the coffee and let it de-gas before they could put it the can, or it would burst. Because that's the force of de-gassing the coffee. So the biggest revolution in packaging technology, before and since, continues to be the one-way de-gassing valve because it's the only time that you were allowed to take fresh roasted coffee, package it immediately and then keep it in that same container without having to degrade the quality at all. So, you know, if you have any hope of either storing coffee for a long time or sending it on any sort of lengthy distribution route, it's a must. But if you're in a local environment where you're delivering fresh and delivering local, it's also a cost. And so that's one of the first things that I used to consult with people about is, you know, do you need to build an iron submarine for something that's not going in the ocean? Right? So if you're going to have packaging just for local roasting, and you're trying to keep the cost down and you're going to use a net weigher or a scoop and a scale, then you don't need something incredibly sophisticated. But if you are gonna be doing something nationally or regionally or going into grocery, then the question doesn't become if it's just about how. And then the different packaging options give you so many different ways to express your brand, express your identity, express how you want to visually appeal to customers. I think we all know that at this point, coffee bags are like wine labels. They send a message in a sea of different labels. And so what you put on them can be incredibly important. That's sort of like my opening salvo in packaging.

Todd: Sure. Yeah. So it's interesting, as you were talking about that, it dawned on me, and it's almost silly to say that we skipped right over, understandably given the scope of what you see in the retail landscape now, but we skipped over the whole of coffee bin, self scoop type model.

Mark: Right. Gravity fed beans.

Todd: So, I mean, you were a retailer for a long time.

Mark: Yeah.

Todd: And with just bulk coffee.

Mark: A lot of it. Yeah.

Todd: What was the engagement from the customer? Do you feel like that's missed in the market? I still see it in old school shops here and there. What are the challenges in doing that? Why should someone do it or not do it? And what do you think we learn from it even if we decide not to do it?

Mark: Sure. Well, back in the day, as a wholesaler, that's where you wanted to be. You know, having usually a grocery store chain as an intro to get you on the shelf would say, "We'll let you have some of your packaged coffee on the shelf, but you don't get to go to the gravity fed bins until you've graduated." And as far as sales go, the sales would be 10 to 15 to 1, gravity fed bin to package. It convenient. It's easy. Customers go for it because the perception is it's fresher. This is fresh. This stuff in package has been sitting for how long? You know, roast dates and stuff like that have changed that perception a bit. But that's what it used to be. And I would still assume in markets where bulk coffee is still sold in this manner, that it's still a much more lucrative route to go. Now, as far as management of that goes, the onus is on you, the roaster, to make sure that that coffee's rotating out very rapidly. You don't want it sitting in the bin for more than a couple of days. You need to clean those beans a lot because nothing looks worse than, you know, a coffee company and they've got gravity fed bins and there's like literally rancid orange oil on the plastic and you can't even see the coffee beans. You would be surprised how many hundreds of gravity fed bins I saw looking like that. So early on when I was doing wholesale, the hook I had over my competitors was I was cleaning my bins weekly. Some of these things were just like, you couldn't even see through the glass or the plexiglass. You have to rotate the stock daily. You have to be very on top of a product or blend or a single origin that is moving fast. So you have to be aware of this blend didn't move, and get it out of there, put something else in there because it's just gonna sit and go stale. And then I had obviously packaged product, as well. I packaged in cans as we have talked about earlier on this show before. And I at one point I had to hand drill and manually apply one-way valves before they started making this a part of the can. So I had a drill press and Plitek valve rolls in the silicone oil and doing one by one by one. But I mean, we're talking thousands of these things. And I did it for years. And obviously I know you can over bag, to me, was a way better option. And I've given numerous presentations at the SCAA about this. I still think for a small roaster, it's a great way to stand out. It's a great way to be unique. My pitch with the can was always you just... Mentally tell me what the La Colombe bag looks like. And then now mentally tell me what the Hills Bros can looks like. And you're probably gonna be more accurate on the Hills Bros can. Why? Not because you drank Hills Bros, or because you worked for them. It's because it was in your grandfather's garage with nuts and bolts in the can or your color crayons were put in there after they used it. Nobody throws these cans away. And so it's like going back to the creepy tobacco industry marketing like, you know, make these packages look cool and people will remember them. It'll be a fixture in their home. And the whole Joe Camel, you know, all the rumors and kind of urban myths about how tobacco companies marketed. I was literally doing that. My thinking was if those color crayons are in a Taylor Maid can, and that kid's looking at that every day until they're an older kid. Guess what coffee brand they're probably going to go to when they're old enough to drink coffee. And then in addition, I did refilling the cans in stores, which was, you know, people can reuse this package. It was reusable and that was important for me. Sustainability was huge. Whereas the multilayered bags didn't have that. But to get your original question, bulk coffee, gravity coffee was the way to go. But it requires a lot of responsibility on your end to be on top of it.

Todd: I mean, this was essentially the contemporary to the draft, in relation of beer, right?

Mark: Absolutely.

Todd: We have this beer on draft and then a carry X number of cans.

Mark: Right.

Todd: You know, most people even currently sit down and say, "Well, what's on tap?" first...

Mark: What's on tap? Yeah.

Todd: You know, unless that's not a concern to you, which is unusual if you're a beer drinker.

Mark: Now, I don't know enough about beer, but let's say you introduced a beer. You were a beer brewery. You brought in a keg of beer that's some weird experimental like made from the yeast of your toenails or something. And a third of the keg is being consumed in nine months. Is the two thirds going bad or is it being preserved in some way all in perpetuity?

Todd: Well, sure. I mean, this is a conversation that's too long for The Exchange. Maybe we can kick off... This is like how we spin off our second series.

Mark: This is how we become a triple episode by these little side roads.

Todd: No, we get a whole new series on other specialty food and beverages.

Mark: Yeah. Yeah.

Todd: But you know, hops are the preservative. Obviously, the can is awesome. And I think you back up it being sustainable, it being durable. You know, I just refinished floors in my house, and I literally found a patch under layers of what has since become finished floor, a Maxwell House can that was hammered out flat...

Mark: That's awesome.

Todd: And covering like a gap in the wood flooring. Right? Amazing.

Mark: And nobody is going to do that with a coffee bag.

Todd: And of course, I'm pulling that out, and taking a picture of this dramatic thing, and if I was a consumer, that could be convinced to love something other than obviously specialty coffee maybe I move that direction.

Mark: Right.

Todd: Why don't you think we see the can at play now? Rob, you've done a lot of quality testing and a lot of consultation in terms of brand development and putting people in touch with supply chains. Is that a limit co-packers and partners that actually have that capacity? Is it the cost of the thing itself? Is it just out of trend or what?

Rob: Well, I'll give you the example... I was responsible for the package coffee program launch at Dunkin. And that's a company that worked with four major national scale roasters. They had four different plants. So all the plants had to make the same product, which meant they had to get the same machinery. So you have four huge canned lines installed in those kinds of places would have been completely inconceivable. But the even bigger thing is when you're trying to make several million packages a year, that's several million empty cans you would have to bring in, whereas instead you could just bring in rolls, rolls and rolls of film that goes into a form, fill, seal machine and comes off the line at four to five cents an impression. Right? And so between cost, between the complexity of the line, between just the efficiency of the thing, between the inability to standardize that across operations, it gets tricky really fast. So I think whenever you're looking at national scale or really large scale, the can becomes impractical. But I think from an artisan standpoint, from a local standpoint, in addition to being a great differentiation factor, I mean, it's a great barrier protector. All these bag foils have some amount of leakage, some amount of failure rate, and they have some amount of just stuff passing through the material. You know, you talk about cans protecting beer, right? Well, beer has hops, right? Beer has something inside it, part of its integral ingredients, that protects it. Right? Coffee doesn't have that. All you can do with coffee is protect it from oxygen. And any of these flexible packaging have some amount of leakage. Where the can is a tank. So as long as you got the lid on there right, you're in a much better spot. So I'm a big fan of cans, from sustainability aspect, from ability to brand your products, create a lasting impression, from a quality standpoint... But it has a lot of ups and downs when it comes to manufacturing and cost.

Todd: Yeah, I love the look, like the reveal on a can is amazing. I think the fact that you can, especially if you're reselling retail packages through wholesale partners...

Mark: Right.

Todd: Especially in grocery... I mean how else do you see the product go out through a relatively complicated distribution channel and then sit there perfect? Perfect corners. I mean, the corners would look almost as good as the shoulder points on your blazer right now.

Rob: Well, or as exactly as good as his pockets square.

Todd: Yeah. Let's not bring up the pocket square. It's a sore subject.

Mark: {laughter} It's too much you?

Todd: We got into it earlier in the cupping lab. And it didn't go so well for Mark, and I don't want to make him feel bad about it.

Mark: Oh boy. {laughter}

Todd: Anyway. So regardless of can or bag...

Mark: Yeah.

Todd: Let's assume that new roaster XYZ is hand packing their units. They might be rolling and tin tying. They might be tin tying and valve sealing, like I was talking about with one-way valve seal bag. Sorry not valve sealing...doing a heat seal. But let's say that either way they're packing these bags by the hand. They're doing something is relatively simple in that regard. What are the big next steps when companies are starting to level up, they're starting to consider the oxygen that they so desperately need to protect its coffee from, they're considering like trying to scale and speed up their process or lower the labor costs of having someone pack the coffee, assuming that this is something that's divided... You know, there's a visual approach across the team. What are the options? And we'll kind of take them one by one. Let's bring one up and let's talk about maybe from a capital perspective, from a process perspective, why those things look good. What the gains are and what the costs are.

Mark: Sure. I'll give you some poor man options, too. So going off of a tin tie bag that you're rolling and hand scooping would be heat sealed multilayered bag with a valve on it. The problem would just heat sealing it is you're not, if you package right out of the roaster, you get the degassing, and that has some preservative effects of pushing the oxygen out of the bag. But it doesn't do an adequate enough job to preserve freshness over any length of time. And that's been teased out in that freshness study that that doesn't fully work as people used to believe they would.

Todd: There was a huge gain on quality duration when you would package directly out of the cooling tray, compared to 24 hours or more later.

Mark: Absolutely. And you should be trying to do that as fast as you can. If you're somebody is roasting batch after batch after batch, and you've got coffee sitting in buckets, and you're going to package later, every hour that you're delaying that is delaying the potential for freshness in that package. So the first step would be heat crimping and letting the degassing take care of the pushing of the oxygen out of the package. Now, I recommended, when I've done some consultation jobs, a poor man's vacuum sealer, because vacuum sealers can be quite expensive for a new roaster in the thousands of dollars, is to heat crimp in a button valve, a good quality button valve bag, and then actually take a shop vac and go over the button valve and you suck the air out, you open the valve up, and then as soon as you take the vacuum off, the button closes and you basically recreate a high quality vacuum machine that if you O2 test it, it's very low.

Todd: Really?

Mark: Yep. I've done it plenty. You can get almost a brick pack vacuum on these bags at that point.

Rob: The problem with that is that if you get even the slightest coffee dust particle in that valve, it will never close.

Mark: Well, I'm talking, poor man's. I'm not talking perfect solution here.

Todd: I know shooting from the hip, type of thing. That sounds genius.

Rob: Yeah. I mean, I guess I come at this... I always come at this systems like "What are you doing with your coffee?" is the first question I ask. Sort of like when you... I listened to your retailing episode. Like asking these fundamental questions upfront. And for me, when it comes to packaging, it's like, "Where are you trying to put this coffee?"

Mark: Yeah.

Rob: And so if you're a wholesale roaster and you're a local community and you're going to put it on the shelf in your roaster frontage and you're gonna put it in six coffee shops that are nearby you, you do not need to be messing with expensive sealed valve bags.

Mark: No. Absolutely not.

Rob: And instead, you should spend it on making them look great, so that they can all face together, and then just deliver them frequently. But if you're gonna get into any kind of distribution, where you're going to be sending cases of package product to be handled by people that you don't know, then you're making an investment at that point. And if you're making an investment in sealed bags with valves, valves in them, then, you know, I sort of at that point say, if you're gonna make the investment, you should make the investment. You should make the investment in a proper sealer. If you're gonna be in distribution for longer than a month or two, then you should make investment in a vacuum sealer and or flush. And I would even advocate for doing on your own oxygen testing.

Mark: Yeah, but that entry is how much ballpark? It's up there.

Rob: Yeah. You're in it for 20, 30 grand.

Mark: Right.

Rob: But I would say if you're going to put that much coffee into distribution you should be expecting to get that out of it.

Mike: You have been listening to The Exchange, presented by Olam Specialty Coffee, hosted by Mark Inman and Todd Mackey, directed by Mike Ferguson, and featuring Rob Steven as our special guest. Our opening theme was Hot Coffee by Gleb Bones. Our closing theme is Caffeine Sessions by Alex Mackie. All music is used under a Creative Commons. Remember, you can e-mail us at theexchange@olamnet.com. Thanks for listening. And we'll see you in two weeks for part two of The Coffee Roaster and Packaging. And now your postscript.

Rob: I think Mike fell asleep. {laughter} Mike's like, "Wait, did you want me to record that?"