MEET PAUL RALSTON, president and roastmaster of Vermont Coffee Company, an artisan coffee business operating out of a small industrial building down by the river in Bristol, VT. Despite a clear trend toward multichannel retailing, Ralston won’t let you order his products over the Internet or out of a catalog. To savor a cup of Ralston Roast dark, mild, or decaf, you have to buy it from a retail store, order it in a fine restaurant, or have a connection. And you pretty much have to be in Vermont.
“We’re a local coffee company trying to sell to local communities,” he explains. “Our business model is a fresh model. We hand-roast the coffee and personally put it on store shelves the very next day.” Nor does Ralston sell just any coffee. “We blend and roast exclusively fair-trade, certified organic coffee,” he says. Sustainable coffees. Beans that are socially, economically, and environmentally responsible.
To gear up for the growth he does want, Ralston is doubling the size of his roastery. Until recently, his business shared a 3,300-sq.-ft. building with a beeswax candle manufacturer. The candle-maker is now gone, and Ralston is taking over the facility.
Ralston’s shop is small and efficiently laid out, but not without its quirks. Aisles are just wide enough for a forklift to drive down, turn for a pallet, and back out. “This expansion is going to allow us to keep on our growth track, have enough inventory and warehousing space, room for new roasting and packing equipment, and a more efficient layout,” says Ralston. “There’s really not a lot to it. It’s a very compact facility, and we have had to design systems to accommodate such a small space. We do that primarily in how we manage our inventory. Most of our inventory is held off-site at public warehouses, and we call for what we need on a monthly or biweekly basis.”
TWEAKING THE BLENDS Ralston purchases unroasted, green beans based on availability, price, and quality from brokers who specialize in sustainable coffees. “The blends are a mixture of different beans, and we roast them at different profiles,” he says. Crop variations affect the product: “We keep tweaking the blends in order to maintain the taste profile that we want.”
There are no procedural manuals involved, and no computer-controlled machinery telling the roastmaster or his assistant what to do. “Ours is an artisan process,” says Ralston. “It’s about sight, sound, smell, flavor. Roasters can be trained only by roasting thousands of batches.”
CAFFEINE CRAZE Ralston’s roasting experience dates back to 1980, right before the explosion in specialty coffees. He had opened a café inside a bakery and wanted to serve a better coffee. Unable to find one, he bought a used roaster and started making his own. After years in other consumer products businesses, Ralston launched Vermont Coffee Company in January 2002. He achieved profitability within six months and took in about $100,000 for the year. Ralston started selling in earnest in early 2003. These days, he’s roasting about 1,000 lbs. a week, and retailers are calling him. Food cooperatives, natural food stores, independent grocery stores, and specialty retailers form the bulk of Ralston’s customer base. He also sells to high-end restaurants and cafés. Ralston ships some beans directly to consumers, but those kinds of direct sales are a small fraction of his business and not something he actively seeks.
Ralston’s growth plans do not include adding products to his three-blend line-up. So many other coffee companies are already offering dozens of SKUs, he says; there’s simply no need for another. “What we do think there is a need for is a more focused coffee company,” notes Ralston: one that concentrates its energies and resources on creating one fabulous coffee in each of the three main categories — dark roast, lighter roast, and decaf.
Having a limited number of products also helps Ralston compete more efficiently. “This is a very, very competitive category,” he says. “There’s no open shelf space waiting for us. One way we’re able to convince retailers to give our offering a try is by having only three high-volume-selling SKUs.” And then there are the logistics. “Inventory control, inventory turning, packaging — all that stuff is greatly simplified with only three products.”
ALL IN A DAY’S WORK A typical day at Vermont Coffee Company starts at 7 a.m. with the firing up of the roasters. Ralston has created a computerized forecasting tool that uses each customer’s sales history, inventory data, and other information to generate a roasting schedule and pack/ship schedule for the day. The roasting schedule indicates how many batches of each blend to prepare. The pack/ship schedule shows who gets what and by what method of delivery. Then the employees go to work.
Burlap bags filled with the beans needed for a day’s roasting are pulled from their pallet locations and brought into the roastery. The roasting area is separated from the warehouse area by an insulated sliding door. Beans are roasted in 20-lb. batches, cooled, then sent over to the packers for weighing and filling. Vermont Coffee Company sells coffee in 1-lb. and half-pound bags. Roasted beans go into a liner bag that’s sealed and placed inside a paper bag along with any communications to consumers.
Finished packages are placed on trolleys, rolled into a holding area, and loaded into company vans the next day. Vermont Coffee Company drives its own delivery routes and manages its own shelves in stores.
“Retailers don’t have to order the product, detail the shelves, or rotate the stock,” says Ralston. “We do all of that for them. The driver goes in, takes a count of what’s there, and replenishes the stock based on our projection of what we think they’re going to sell over the next week.”
At the end of each day, Vermont Coffee Company’s place down by the river is out of roasted beans. “The whole drive for freshness is a drive for eliminating finished inventory,” says Ralston. “I can’t tell you how many Saturdays my wife and I wake up in the morning, look at each other and say, ‘I can’t believe we don’t even have coffee for us!’”
Dana Dubbs is a freelance writer who can be reached at firstname.lastname@example.org.
Coffee roasters: Ambex, Clearwater, FL; antique Royal Roaster
Coffee grinders, brewers: Fetco, Lincoln — shire, IL; Bunn Corp., Springfield, IL
Pallet stacker: Multiton, Richmond, VA
Macintosh computers: Small Dog Electronics, Waitsfield, VT
Labels: Creative Labels of Vermont, Winooski, VT
Bags: BagsOnTheNet, Bohemia, NY
Boxes: The Randall Boxes, Ferrisburg, VT
It’s Only Fair
Vermont Coffee Company blends are currently sold in northern Vermont, but president Paul Ralston’s sights are set on expansion. By summer 2004, he’d like to have his coffee in stores and restaurants throughout the state and in bordering towns in New Hampshire, Massachusetts, and New York.
Chances are he’ll succeed. Sustainable coffees account for a mere 2% of the North American specialty coffee market, but sales in that segment are growing more than 20% annually, according to a 2001 sustainable coffee survey conducted by Daniele Giovannucci for The World Bank, Specialty Coffee Association of America, and other organizations. Being in Vermont helps. “Fair-trade coffee is all about a fair price to the farmer, and that resonates with Vermonters,” says Ralston. “Agriculture is a big part of our heritage and our existing economy.”
Headquarters: Bristol, VT
Revenue: Projecting $500,000 by summer 2004
Total employees: 6
Phone: (802) 453-2776
Web site: www.vermontcoffeecompany.com
Roastery size: 3,300 sq. ft.
Volume: 1,000 lbs. per week