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THE GREAT DEBATE: National Brands Are Pre-Sold, But Private Label Can Add Profit

by Len Rashkin
Posted On: 1/3/2011

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private label coffee, national coffee brands, office coffee service, OCS, Len Rashkin, office refreshments, office coffee delivery service, OCS business, OCS sales training, sales training, vending, vending machine, vending machine business, coffee education

Over the years, coffee service operators have wrestled with the question of which coffees they should promote to their customers: national brands or their own private labels. Debates and panel discussions have taken place at national conventions, hashing out the pros and cons of both approaches. The late Stuart Daw of Heritage  Coffee Cos. was a strong crusader for private label, and he regularly took on the brand managers from the leading national roasting companies. Both sides presented well, and the ultimate winners were the coffee service operators, who came away with valuable insights into offering their customers what they wanted, and those customers, who got want they wanted.

Throughout the years, I often have been asked by operators and friends, "What is the best coffee to drink?" My standard answer is simple: "The coffee that you love, not the one I love." Coffee tastes differ, and no one product will please everybody.

Let's take a look at the pros and cons of both sides of the national brand vs. private label issue. Please keep in mind that, when I refer to branded coffees, they are the standard blends sold by each national roaster, not their specialty coffees or "straights" (from one country).

Later in this article, for those of you who want to promote your own private label, I have detailed an effective promotion that has worked for me and several of my clients over the years.

Nationally branded coffees are recognized instantly by the majority of coffee drinkers. Their taste profile has been established over many years; it is constant and consistent, so the people who like it always get what they expect. Consumer acceptance is there, and it is easy to sell to the general population due to the heavy advertising and promotional messages that have inundated the airwaves and print media. Branded coffee companies have strong marketing, and the general public will go out, purchase their coffee and experience the taste that they have been told about in the ads. Generally, the flavor of the brew is very acceptable to millions of consumers.

The negative side is that many of the blends from the branded companies are a mix of arabica and robusta coffees. Blending arabica coffee, which usually is of good quality, and robusta, which is cheaper, allows branded roasters to keep their prices down and to make it affordable to the mass market of coffee drinkers. But, in the OCS distribution channel, the price for a case of the branded coffee is much higher by the pound than most OCS private-label coffees from roasters who usually provide 100% Colombian Excelso.

Heavy marketing cost and multiple levels of management add to the cost of nationally branded coffees. Private label coffee does not have those heavy marketing and management costs. Most of the OCS community is using single-origin Arabica coffee, usually "Generally Accepted Colombians" with the Colombian Coffee Federation logo, depicting Juan Valdez, on their labels. This logo is well known to the public, due to the Federation's marketing efforts. Office buyers are aware of the quality of Colombian coffee, which makes it easier for operators to sell their own private-label Colombian coffee in the office environment. Price per pound is also a major factor, and profitability is much greater with your own private label.

Many operators want to build their own brands, rather than push branded coffees, since any competitor can offer the same branded coffees to the purchasing agent, and cut the price. A coffee service does not want to be compared by "apples to apples," and let price alone determine who gets the account.

On the negative side of private label, it may be initially harder to persuade a conservative decision-maker or a buyer who already loves his or her branded coffee. Taste tests or free trials are important here, if you encounter resistance to your own label.

Here's how to promote coffee under your own label:

Have your telephone account reps or your route sales drivers tell every customer who presently uses a national brand and is ready to reorder coffee, "You currently use XYZ coffee, which is a decent-tasting retail coffee, but our 100% Colombian coffee is very rich and has a more robust flavor because of its high-quality beans, grown in the mountains of Colombia -- 75% of our customers now purchase our coffee, and I am sure that you have seen the ads on TV with Juan Valdez. The price is the same as you are now paying, but we are running a promotion: for every case you order today, we will include a 1-lb. tin of gourmet butter cookies. If, for any reason, you are not happy with our coffee, we will exchange it back to XYZ, and you can keep the cookies as our thank-you for trying our own Colombian coffee."

The cost of the cookies is around $3.50 a tin. I also suggest that you give your representatives $3 for the first case they sell, and $2 for each additional case on the first order.

This is worth doing. All orders placed in the future will be more profitable for you than the national brand that your customer was using. The majority of your customers will not switch back to their old coffee. In this economy, buyers want to save money, without affecting the quality of their brew. You just improved it.

Please let me know how this promotion worked out for you. I can be reached by calling (516) 241-4883 or by emailing me at

LEN RASHKIN is a pioneer in office coffee service. He founded Coffee Sip in 1968 and after 22 years merged it with Dell Coffee, of which he became president in 1991. Sales at Dell topped $7 million dollars. Rashkin is also a founder and officer of Eastern Coffee Service Association and National Beverage Products Association. His industry honors include NCSA's (now NAMA) Silver Service Award and NBPA's Lifetime Achievement Award; he was inducted into NBPA's Hall of Fame in 1996. His marketing excellence earned him NBPA's Crystal Bean Award and three NCSA Java Awards. He is a frequent speaker at national and local trade conferences, consults on OCS sales and marketing and has is the author of two OCS training programs.