It’s no secret that currently the world of logistics is facing some big challenges. Not only is it harder (and much more expensive) to bring coffee into the country, but with the HGV driver shortage deliveries to your roastery are more vulnerable too. Amongst the many challenges we have faced this year though, have you considered what you can do as a roaster to adapt and best position yourself to deal with this?
Christmas this year is already being flagged for having issues with a shortage of HGV drivers. As sales increase towards December, we will see our warehouse getting busier and the demand on hauliers greater. An easy way to help is by taking one pallet of 10 bags over 2 pallets of 5 to ease that pressure. But there is a far more fundamental one when it comes to running a roastery.
We often get asked about our minimum 5 bag delivery. It is there for a reason and serves as a good checkpoint as it can have a considerable impact on the cost of your coffee.
Let’s say you contracted 20 bags of delicious Inga Cooperative coffee, spread over 5 bags per month for 4 months. To keep things easy, we can assume the cost of shipping is £100 for the pallet. That price is the same for 1 bag or 10 bags, so if you are absorbing your shipping cost into the price of your coffee, that can quickly add up.
Quick table showing costs at three price points of green coffee and their change at different stages. Shipping assumed at £100 in each case.
Let’s say your coffee cost you £5/kg, FCA (Free Carrier).
1 bag (69kg), on 1 pallet, delivered = £445, increasing your price per kilo from £5/kg (FCA) to £6.45/kg (DAP/Delivered-at-Place).
5 bags (345kg), on 1 pallet, delivered = £1825, but this time, your DAP price has only risen to £5.29/kg.
10 bags (690kg), on 1 pallet, delivered = £3550. Here your DAP though shrinks to just £5.15/kg.
By the time you take your roast shrinkage into account, (let’s say 16%) that then rolls up to a roasted coffee cost of £7.49, £6.15, or £5.99, leaving you with a difference of £1.50 per kilo of roasted coffee. If you multiplied that by those 20 bags you contracted that is a difference to you of £2070. That’s a huge amount to be giving away!
Of course, this all sounds easy to do; but we don’t always have the cash flow, and that can be deadly to take your eye off. Starting up a roastery is not cheap, and there are always lots of things to spend your money on in your journey. The size of your roaster, labour costs and energy too will all impact on the actual costs, and over the years I’ve seen many ways of covering those but understanding shipping in with kg price has always been reasonably constant.
Particularly now though, there is another benefit to doing this. Coffee on your shelves is coffee you have available to sell. Winter always throws up issues with adverse weather and sickness having effects on the ability of hauliers to deliver. Running a little less tight on stock just means there is a little more buffer to cope if an issue pops up. Again, you have to watch the cashflow, but this is a strongly recommended practice if you can make it work.
When I ran roasteries, I would have a months’ stock on my shelf. This not only gives me that buffer, but also means the green has time to reach the same temperature, as nothing throws your profile off like a freshly delivered coffee that is 10 degrees colder than that in your warehouse!
