This is a quick “timeout” (or better yet an aside) from our series on “Copacking Coldbrew Considerations”. We get a lot of inquiries weekly, and often we find ourselves making a constant evaluation between the ultimate, perfect scenario, and the practical, real world. And it is important that our potential partners think through this too. As early in the process as possible.
Perfect vs Profitable
In evaluating the production and market potential of a product, different organizations have different goals. However the inescapable goal is profit. Without it, you don’t have a product or an organization very long. And for the window of time you do have it, it is a pipe dream. And the scary things is, you might not know it.
I have spoken in front of many groups presenting manufacturing concepts and operations solutions and the best way I have to communicate this idea is:
“You need to have a profitable company built on profitable manufacturing and operations. If you DON’T, you have a NON-PROFIT. Non-Profit organizations are neat too. They just exists for totally different reasons,a nd make totally different decisions.
It is just important to know which one you have, and make sure that is what you want. The real danger is when people think they have a For Profit, and actually have a Non Profit”
When it comes to product design, especially with Cold Brew Coffee and other RTD beverages, Perfect can be the enemy of Profitable.
- A perfect product can be so expensive from a raw materials perspective, it wont even make it out of the gate.
- A perfect product can be so difficult to source correctly it wont be able to scale.
- A perfect product can be so high maintenance to produce it will be inconsistent and turn off customers.
Whether the problem is too expensive, too difficult or something else, the result is the same. Failure of the product to remain profitable will simply dominate all other problems.
Practical can be darn near Perfect
The idea of optimizing from a practical paradigm is as powerful, or more powerful, than the alternative. The goal is to find the right balance between the best, most optimum product concept with the practical, real world considerations oriented to profit. For some people we talk to, this is simply the end of the conversation. The practical realities of scaling up their product will undermine their commitment to the product identity. Sometimes it is the flavor profile, sometimes it is the lack of scale for sourcing, sometimes it is food safety requirements.
At some point, if commitment to the perfect product outweighs the commitment to profit, the big red handle should get pulled and the train should come to a screeching halt BEFORE the product goes into the market.
Here is some examples:
Prospective Client A contacts us and has “The BEST cold brew on the market. No one has EVER had this before. Every retailer is going to want this on their shelf. WE NEED A COPACKER!”. We hear this a lot:)
The client makes this in their local shop or cafe. They source the coffee from Roaster X,t he coolest roaster currently on the scene. The coffee is a high altitude, shade grown, micro lot from a farm with an amazing story. They figured out the perfect grind size on their EK, the perfect water temp, steep time, and sell out every day.
And now they want to bottle this and sell it in every local
Whole Foods (Amazon), Indie Specialty Foods store, and out of their cool new solar powered tandem bike set up.
Perfect: Super high end flavor profile. Great story and vibe. Local demand, strong brand.
Practical: Their profit margin is $.25 a cup because their coffee is $12/lbs wholesale, and they spend 3 hours of staff time to make 5 gallons prepping their Filtron (or even better their Kyoto Tower).
It simply wont scale. Their isn’t enough of that origin to grow, and the method they used might work fine at 5 gallons at a time but doesn’t translate to hundreds. And the profit margins are very, very think because the raw materials is so high. The ability to create a boutique add-on to an operating cafe works well because the customer might also order this every day, along with pastries, and a bag of beans once a week. This cold brew is not the only revenue stream, and works in concert with other products and offerings.
The Unique Add on
Prospective Client B has a product that would work so well with coffee. It has health property X, Y and possibly Z (although that one MIGHT be regulated by the DEA) and since everyone who likes hacking their brain loves coffee, this is a “no brainer” product.
However, adding ingredient A, B and C in powder form now ends up separating inside the bottle. The product wont stay stable, and there needs to be a stabilizer put in. But stabilizers are bad for the customer demographic. Brain Hackers don’t like stabilizers, because those are chemicals, unlike the nootropics they wanted to add.
So now we have a cold brew coffee, with several powders added in, some of which cost significant $$, and there needs to be a bunch of R&D on how to make the product stable. Is it possible? Yes. But it turns out you need a few more ingredients, a special mixer and tank system along with updates to packaging and customer education.
Perfect: High end, super cool niche product that has high dollar value to a constituency.
Practical: Loads of complexity in the sourcing and manufacturing chain. High maintenance processes take a lot of staff, focus, and add inconsistency. There is going to be lots of product loss, and lots of planning struggle.
These are only 2 examples, but they hint at where things start to go south.
What is the Alternative?
This is the big question. The alternative is boring, commodity crap made the easiest, cheapest way possible shipping in the largest volumes. And unfortunately, there is already a ton of that out there. Those products are for well capitalized, big brands who literally design the product and think and execute in the millions of units right out of the gate. They don’t even get into the market without thinking that big.
That is boring, and hyper competitive. It is all branding identification, not product quality.
The answer is more fluid than simple. It is a balance of practical realities against perfect concepts. It is the constant adjustment to the perfect goal of a product, with the right compromises that sometimes even IMPROVE the product in the end. It is open minded, pragmatic thinking that looks for profit in each decision in concert with perfection.
In short, it is a goal, not something you arrive at. You are constantly adapting and improving and innovating as you scale, and maintaining business goals strategically, while making product decisions tactically.