A Case for Craft Coffee Distribution

by | Nov 16, 2022 | Blogs, On Trend

Spread the love

Can Craft Coffee Scale and Disrupt the Norm without Distribution?

The growth of local, craft coffee roasting brands over the past decade has significantly impacted the coffee market in the US[R(1] . According to recent data from the National Coffee Association, 56% of the total cups of coffee consumed in the US yesterday were specialty coffee. [R(2] 

While craft coffee brands continue to spring up around the country, what is the string that can tie them all together, that helps to tell and deliver the story for consumers from market to market, and ultimately – that allows consumers and companies to choose craft in the broader, national landscape consistently?

Good Specialty Coffee distributors are that string. Frequently, more prominent national coffee brands have adopted a three-tier system of distribution -manufacturer, distributor, and retailer. This tier system has been standard in beer and, more recently, the craft foods industry. In the book Craft Beer Revolution, Steve Hindy writes, “‘It did not take me long to understand the value of a beer distributor,’ Within a decade after starting his business Boston Beer was the only microbrewer with nationwide distribution making Samuel Adams the face of the industry.” 

On the other hand, craft coffee companies tend to be hyper-local to cities and specific regions of the country. In those places, they often balance the manufacturer, equipment service, and distributor roles in executing coffee programs with clients. This tier system of distribution, while motivated by a heart for driving more direct and transparent relationships, comes at an opportunity cost, giving bigger, national brands an advantage of moving and innovating more quickly in the space.

The first opportunity cost is a division of focus from the specific activities that give craft brands strength in the market; their sourcing practices and supply chain relationships, roasting techniques, and overall focus on improving the quality of the products and how those products are brewed and consumed. A focus on the strength of the brand and on what differentiates craft brands from others will help educate consumers and create a further understanding of their value, thereby helping change consumer habits. 

Additionally, distribution has its costs; personnel, trucks, and the equipment for clients to operate the coffee program, compete with finances that could further fund sourcing more coffee and projects to improve the supply chain, and scaling the operational side of roasting and packaging coffee. Leaning into distribution partners allows them to take on the responsibility of those costs to deliver the program to clients, not to mention the advantage of a sales team and client network that already exists for most distributors. 

Lastly, a tier distribution system in the wholesale coffee supply chain discourages brands from embracing choice as a growing consumer trend. For too long, coffee and tea brands have supported a competing narrative at the wholesale level, encouraging a single brand experience in most foodservice and hospitality sites; rather than encouraging collaboration and shared spaces amongst their brands. Until craft brands make up most of the market, there are still far more important things to contend for within consumer perception and decision than competing for exclusive featuring on the brew bar. 

The industry is doing so much good for farmers, our communities, and the many causes it supports. It is, therefore, critical to consider the best ways to grow the space and the impact and, like other craft industries, embrace distribution, as a means of scaling in a meaningful way. 

By going at it alone, companies take on many extra burdens of growing and maintaining a wholesale client base and sacrifice energy and resources to focus on growing and marketing their brand. By leveraging companies whose core competency is distribution, equipment service, and education, we create an environment and system set to develop the whole. As the expression goes, a rising tide will lift all boats.

As a craft coffee distributor, we at Tradecraft recognize the unique support required and the opportunity for success in being partners with the brands we distribute. We understand their brand differentiations and product stories and provide supporting marketing to communicate those things to the consumer. We are equipped with a sales team, equipment service groups, and a robust network for last-mile delivery services to deliver success to clients across the nation. 

By Michael Klong and Michael Kaiser

The US coffee market is estimated at a $48B value in total with specialty coffee being 55% of that. (older statistic without a continuity of data that is current) [R(1]

56% of the cups of coffee consumed in the US yesterday were specialty coffee. (NCDT, 2021)

This was true of Q3 Fiscal 2021 – mostly lead by suburban and drive through sales, but it was also the first return in sales they were seeing in urban markets since 2020.  [R(2] [R(2]

Global full year SSS increase was 17% in 2021 & US full year SSS increase was 22%.

Christa Thomas


Other Articles

Subscribe to Our Newsletter

Subscribe to our Tradecraft newsletter to receive seasonal drink recipes and occasional non-annoying updates from the training team.