What are we doing about coffee prices?

Tom, Production Manager at Stokes Tea & Coffee

In my previous post (which I’d advise reading, it’s very good) I went over some of the factors that are contributing to an unprecedented rise in the price of green coffee, which is causing headaches for coffee roasters, cafes and restaurants all over the world. That first post on the subject was, I’ll admit, a little doom and gloom. I think it’s important to recognize the situation we’re in, but this time round I’m going to be speaking about what we here at Stokes are doing about it. It’s a difficult situation to navigate, but there’s a number of levers we can pull that will help mitigate the impact of the increase on both us and our customers, whether it’s wholesale, retail or just someone visiting our cafes for a quick brew.

We’ve got two broad strategies in place that I’ll talk about here. The first is to do what we can to minimize the price increases, or at least the impact of them, on ourselves. That’ll help ease pressure across the board in the short term and insulate us and our customers from further problems in the long term. The second strategy involves supporting and helping our wholesale customers directly to reduce the impact of any price increases by increasing their own revenue.

How we’re managing our costs

I’ll start with what we’re doing to manage our own costs. There are a few different ways we’re approaching this, which mostly comes down to more efficient planning systems. This means I’ve needed to create a large number of increasingly complicated spreadsheets, which is always a treat.

The biggest lever we have to pull here is the price of the green coffee we’re actually buying. While there’s nothing we can do to change the meteoric price increases we’ve seen over the last few months, more involved planning systems let us order further in advance, which in turn gives us a lot of good options. With good predictive models, we can order green coffee potentially 6 months before we need it. This lets us lock in a price that may avoid future increases, while also giving us enough advance notice on outgoings to prepare for it. It also lets us take advantage of one of the major upsides to roasting blends over single origin coffees; flexibility. With a blend, we choose the flavours first and then find coffees that achieve it. This consequently means that we can make changes to the ratios of the different coffees involved, or swap them out entirely, and still maintain the same flavours at the end by adapting the roast itself to compensate. This isn’t a quick process however, with a lot of time needed to test and iterate, but with enough notice on orders and pricing it allows us to keep our own costs more consistent without any drop in quality.

We’ve also begun working more closely with coffee producers and farmers. There are a few different partnerships we’ve been building over the last couple of years that have been really exciting, and are now allowing us to manage costs a little better. The basic gist of these relationships is that they allow us to cut out some of the middlemen involved in green purchasing (export/import companies, brokers etc.) and shorten our supply chain. This is great not only for our bottom line, but it results in a fairer price for the farmers themselves. It also lets us cast a wider net when searching for suitable green to make up our blends, and more options will inevitably get us closer to an ideal price overall.

While all of these systems are useful, and are genuinely making a huge difference, at the end of the day green coffee prices are skyrocketing and there’s unfortunately nothing we can do to stop that. To that end, we’ve also been implementing a number of cost saving measures across our roastery and warehouse. Perhaps the biggest of these is our zero-waste bucket scheme, launched back in 2019. This involves us sending our wholesale customers their coffee in reuseable buckets, which they then send back to us for cleaning and refilling. This has resulted in us using substantially less packaging material than we otherwise would, somewhere in the region of 65 Kilometers of packing film has been saved since the schemes inception. This has been a huge win for both the planet and our wallets. To go along with this, we’ve been making continual improvements to our warehouse layout, storage systems and stock control, which all come together to give us better options when buying in any of our supplies. Having the space and the right stock tracking systems in place allows us to purchase more of our products in bulk, which generally comes with per unit discounts as well as helping to cover us against any future market volatility.

Boosting customer revenue

The second half of our strategy revolves around helping and supporting our wholesale customers so they can increase their own revenue and minimize the impact of any cost increases. We’ve been operating for over 120 years, and a lot of that time has involved running our own cafes and catering businesses, as well as supplying hundreds of other businesses across the country. We know how this industry works, and how difficult the past few years have been for everyone, and we’ve developed a lot of systems and initiatives to offer as much support as we can.

One of the reasons we moved to our current premises at The Lawn in 2017 was because it had the space to allow us to build a dedicated training room capable of teaching our customers how to make amazing coffee on a huge range of different equipment. We offer free training to all our customers, both in-house or on site if needed, the benefits of which can be huge. Improving the quality and consistency of the coffee you’re serving is a simple way to increase footfall and revenue. Word of mouth is often an important factor when it comes to small cafes and coffee shops, and there’s no better way to make it spread than by serving someone a great cappuccino. Along with this, investing time and resources into your staff often pays dividends in a lot of different ways, some of them unexpected. It can lead to better staff retention, which means less time spent training overall and limits all the little costs that add up when you have to bring in new staff. Having a core team of well-trained, long-term staff also helps build a stronger rapport with your regulars, and keeping your most loyal customers happy is a great way to keep your income consistent. It also means that when you do have to bring in more staff, you’ve got a core team that can pass on their knowledge and training more effectively, further improving that consistency.

In an effort to expand our reach and supply as many customers as we can, we’ve been adding new products to our range. We’ve switched our syrups over to Sweetbird, made in Bristol, who bring with them a really exciting range of flavours. We’re now able to supply our customers with some really popular and unique flavoured syrups, along with detailed recipes and POS support to help make sure they get the most out of them. This came in alongside the addition of the Matcha and Spiced Turmeric powders from Zuma, which are already proving great sellers. We found that one of the best ways we could support our wholesale customers long term was by making sure they have all the options they need to draw in any of their target customers, and expanding our offering was the best way to do that. We’ve also been pushing a white label service for retail bags, letting a coffee shop sell bags of coffee with their own branding, further expanding their own customer base.

As the final piece of the puzzle, we have a service team of experienced coffee machine engineers, offering full support with repairs, service and emergency callouts should the need arise. This feeds right back into the quality and consistency set in place by our training programs; by making sure your equipment is always at its absolute best it allows your Baristas to produce perfect coffee every time. We also have a large store of loaner machines that we can bring out should your machine need to come back to us for major repairs, so there’s no downtime for you. 

Next steps

Stokes has been roasting and supplying great coffee for over 120 years, through two World Wars, the Spanish Flu and now Covid. While the last few years have been challenging, and there’s no doubt more on the horizon, we’ve kept ourselves and our customers going through rough times before. We’ve got a good plan in place, and we’re constantly looking for more innovations and ideas to help improve things even more.