Private label coffee is one of the business ideas that we are most excited about at CRDLE. It is not only a highly profitable business venture, but it also has a huge social and environmental impact when done right. Also, we just love coffee (because who doesn't?!
Why Start Your Own Coffee Brand
Selling coffee is like selling ice cream on the beach. It is a no brainer. It is something that 64% of Americans drink daily-- amounting to 400 million cups of coffee every single day!
It is a relatively inexpensive product to launch (details on cost below).
It is also a product that you can launch with ease. If you are working with a reputable FDA approved-supplier (which we can help you find), you will be getting a product that is not breakable, has a 12-18month+ shelf life, and can be easily turned into a passive-income stream when you set it up via a drop shipper or Amazon Fulfillment Center.
What is Private Label Coffee?
Private Label Coffee means that another company is sourcing the coffee beans, roasting them, and packaging them under your label.
It means that you do not have to pay the hundreds of thousands of dollars (if not millions) of roasting equipment, packaging equipment, not to mention a strong value chain, and pricey certificates needed to get going.
Even if you dream of eventually having your own roasting equipment someday, private label allows you to start off with minimum cost to test your idea, your brand, and make adjustments before investing big money.
Private Label vs White Label: What's the Difference?
While often interchanged, there is a small difference.
White label is a generic product, created one way, that several companies use. For example, white label coffee is one type of coffee, roasted and blended the exact same way, and then put in different company's packaging. There could be the exact same coffee sitting on a grocery shelf whose only difference is the packaging.
Private label coffee is customizable. You can choose the coffee region, the type of bean, how it is roasted, the grade, and more. A private label supplier may have a dozen customers and each one is getting a completely unique taste of coffee.
Who Should Do Private Label?
Creating your own coffee brand is great for many different types of businesses.
If you have your own restaurant or café, you could launch your own brand of coffee to sell in-house.
If you have a small store or boutique, you could create cute mini-packages and place them by the cash register as a no-brainer purchase.
If you are a large corporation and want customized gifts for clients, giving coffee is an easy product that anyone would love.
Lastly, if you are an entrepreneur looking for a profitable product that you can either build an entire brand around or just put on autopilot and use to create a new income stream, coffee is a great choice.
Where to Source Coffee?
Many companies who offer Private Label Coffee are either so big or so far removed from the coffee farmers that it feels a bit soul-less.
At CRDLE, we really love the heart behind private label coffee. This means connecting you to the farmers who actually grow the beans as well as the women and families who roast and package your coffee. People in the country of origin whose coffee-growing culture is reflected in everything they do.
Imagine sourcing coffee from Ethiopian farmers and then one day being able to go visit the farms and meet the actual farmers. Or flying to Uganda to meet our private label suppliers in Bwindi who use profits to fund gorilla conservation and then going gorilla trekking to get up close to the majestic animals who are better protected because of your work.
Whether you choose a supplier on CRDLE or not, we fully believe that sourcing directly from the country of origin and from brands that work closely with the farmers (and allow you to meet them!) is what business is all about.
The Impact of Sourcing Directly from African Private Label Suppliers
The Social Impact
Trade with African has primarily consisted of exporting raw commodities and doing the value addition (like cleaning, roasting, sorting) elsewhere.
The problem with that is that it only helps a small amount of farmers and almost no one else.
Alternatively, when you source coffee from a private label supplier in Ethiopia, for example, you are creating 4-5X more social impact. This is because you are creating so many more jobs!
For example, the Ethiopian coffee farmers obviously benefits. But so do the dozens of workers who help clean the coffee, sort the coffee, and then transport it to the roasting facility. At the roasting facility, there will be even more workers roasting and packaging the coffee. There will also be a bigger HR team, finance team, marketing team, cleaners, etc. The local print company who is producing the packaging or the labels for the packaging will also benefit. The businesses around them will benefit-- the restaurants, the shops, the cafe's, etc. Then there is the ripple impact of all of the workers having good income to invest in better education for their kids, buying clothes and shoes for their families, going out to eat, etc.
We could go on and on, but the point is, that the entire community and country benefit when you roast the coffee in the African country then exporting the beans green.
The Environmental Impact
Did you know that Germany is the 2nd biggest exporter of coffee? Yet it doesn't grow any coffee! It buys coffee from developing countries, roasts it, and then resells it all over the world. In fact, one-third of their green coffee is re-exported directly to the US.
This creates a negative environmental impact because the coffee beans travel farther, unnecessarily so, before reaching the end consumer.
In fact, a container of coffee travels an estimated extra 2,592 nautical miles or around 6 extra days (depending on the speed of the boat) to go from Ethiopia to Germany and then to the US (instead of directly from Ethiopia to the US).
Those 6 days might not seem like a lot, but a container ship can use around 63,000 of fuel per day meaning 378,000 extra gallons of gas are wasted.
There are a lot of variables that impact determining a total amount per year, but it is safe to say that anyone who is environmentally conscious should source directly from the country of origin.
The 5 Steps to Launching a Coffee Brand
If you want to launch a coffee brand, how do you actually get started?
1. Choosing a Supplier
The first step is to choose your private label coffee supplier. At CRDLE, we work with many, but one of our biggest ones is based in Ethiopia.
You need to ensure that the supplier has FDA clearance to ship roasted coffee to the United States. You also want to make sure they have a proper facility, traceability, and any certificates you need.
For example, our Ethiopian supplier has both Organic USDA certification as well as Rainforest Alliance certified coffee.
2. Ordering Samples
This is the best part! You can order samples based on:
- Coffee Region: each region has a distinct flavor. In Ethiopia, Sidamo and Yirgachaffe are heralded as some of the best. However, there are some other great regions like Kaffe which is actually where coffee was first discovered!
- Coffee Grade: Grade 1 and Grade 2 are considered specialty coffees. This is the best option if you are creating a premium brand. Grades 3-5 are considered commercial and are more affordable. You can also create a blend of mostly lower grade coffee, and add a bit of Grade 1 or 2 to elevate the taste while still staying mostly economical.
- Washed Or Natural: Most buyers prefer washed, but you can get a sample of both to decide which your target customer would prefer
- Roast: Choose between light, medium, or dark roast,
- Whole Beans or Ground: Whole beans have a longer shelf life and may entice more coffee connoisseurs who want to grind it themselves, however, many consumers also prefer the convenience of ground coffee.
You can order a mix of samples to see what you prefer best.
3. Create Packaging
For packaging, you can either ship your packaging to the facility. Alternatively, you can have them put the coffee in generic bags (like matte black or kraft paper coffee bags) and add your sticker label to the front and back of the packaging.
4. Shipping & Logistics
When the coffee is ready, you can have the company ship it directly to you or to your shipping logistics partner. You may need a clearance agent to forward it on your behalf to your dropshipper or Amazon Fulfillment Center (we can assist with either).
The best part about private label coffee is that you can spend most of your time on marketing it.
Since you are directly sourcing from farmers and working in African communities, there are also so many photos, culture, history, and stories you can share that will truly help you stand out.
If this is a new business venture for you, a great book to read is: 12 Months to $1Million: How to Pick a Winning Product, Build a Real Business, and Become a 7-Figure Entrepreneur. (Note: We are not an affiliate for them, but we have recommended it to several of buyers who have all found it very helpful!).
How much does it cost to actually start?
It depends on the supplier's Minimum Order Quantity.
For example: one of our coffee suppliers in Ethiopia has a MOQ of 2 pallets of coffee which is 512 kilograms of coffee (packaged in whatever size you like).
Depending on the season and type of coffee you get, the price can range from $10-14 per kilogram.
The shipping cost usually adds at least $3 per kilogram.
This means that if your coffee costs $11 per kilogram and shipping costs $3 per kilogram, you will be paying $14 per kilogram x 512 Kilograms (the MOQ) for a total of $7,168.
If you sold the coffee in 250 gram size bags, each bag would cost you $3.50. You could resell it on Amazon for $15. That means you would make a gross revenue of $11.50 per bag (512 kilograms of coffee equals 2,048 bags) for a total of $23,552.After Amazon takes their commission, it would be around $21,667 (depending on their commission rate at the time and the plan you choose).
That means your total profit (excluding tax and other small fees) is $14,499 ($21,667 gross revenue minus the $7,168 you spent on buying the coffee).
There are a lot of variables, but this is just an example to help you.
Ready to take the next step?
If you are ready to explore launching your own coffee brand, you can setup a free consultation with our team here.