Topic Talk | Xochitl's Coffee Business
The A to Z English Podcast
Challenges of Pricing and Diversification in a Coffee Business
Exploring the struggles faced by a coffee business in pricing their premium single origin, organic coffee, leading to low profitability and the importance of confident pricing strategies.
In this episode of The A to Z English Podcast, Xochitl talks about the organic coffee business she has started with her partner.
Transcript:
00:01:24
Jack
Kind of a a sky blue or or light blue color with a a really cool logo and everything on there and so I was just wondering like what's going on with that?
00:01:36
Xochitl
Well, that I started selling organic coffee. My partner is a coffee farmer in the Sierra Juarez, which is an area mountainous area of Wahaca where I live.
00:01:50
Xochitl
Yeah. And he he's a farmer, so he does things like, uh, he plants beans, corn, coffee, pineapples, mangoes, avocados. But the big one of the big.
00:02:07
Xochitl
Sources of income for coffee farmers are for farmers here in Osaka is coffee, is coffee used to be quite well paid, but unfortunately the the price of coffee has really gone down a lot. I'm not sure what's going on, but the market.
00:02:22
Xochitl
It's not that there's more supply than demand. It's just I think, how.
00:02:29
Xochitl
Some things have been happening with exports to the United States and prices and the dollar and the peso and how they're moving up and down. It's caused a lot of issues and.
00:02:41
Xochitl
Well, I was talking to him and he was he was telling me that.
00:02:45
Xochitl
They can only sell their coffee in parchment at 41 pesos, which is about like 2 bucks a kilo. A kilo is 2 point.
00:02:53
Jack
Dollars a kilogram for. Oh my God.
00:02:56
Xochitl
Yes, it's parchment coffee, so it's not like roasted or anything. It's just it that has to go through a whole process before it's ready to drink, but it's.
00:03:05
Jack
MMM.
00:03:07
Xochitl
It's still far to cheap price for organic coffee, and they're not making any money off of it anymore. And also.
00:03:16
Jack
Someone's making money though. It's like the middleman, you know, they're.
00:03:19
Xochitl
Yeah, it's the middleman is making money because the the price of coffee, especially organic coffee and local coffee, has gone up on the market, but they're not paying coffee funds.
00:03:21
Jack
Yeah.
00:03:28
Jack
Right. But the farmers are getting screwed on the on the the back end, yeah.
00:03:33
Xochitl
Yes, it's exactly what's happening. So it's it's really been a disaster for a lot of people. And yeah, I was talking to him and I just had the idea to sell his coffee here in the city because I live here.
00:03:35
Jack
Yeah.
00:03:45
Xochitl
City.
00:03:46
Jack
Hmm.
00:03:47
Xochitl
And you know, we talked about it and we made some plans and we kind of it just got, I just kind of posted it on an expat wahaka group saying hey, guys like would you be interested in organic coffee?
00:04:01
Xochitl
And a bunch of people were like, oh, yeah, you know, we didn't know how to price it. Like, we didn't know.
00:04:05
Xochitl
Anything about it?
00:04:06
Xochitl
Because he's gonna coffee farmer and his family has done coffee farming for generations. But like he's never really been on the on this like market end of.
00:04:14
Xochitl
Things.
00:04:15
Xochitl
Because what they usually do is they they belong to an organization coffee organization called Niche.
00:04:21
Xochitl
Yeah. Which is like organic coffee organization and.
00:04:25
Xochitl
They they give them like.
00:04:28
Xochitl
Courses and stuff on how to grow organic coffee and different varieties that are worth more money and all these kind of.
00:04:34
Xochitl
Things.
00:04:35
Xochitl
But because of how the market's going and I don't know what's happening, they're only able to buy 200 kilos on average from each coffee farmer.
00:04:45
Jack
Oh, it's nothing. 200 kilos.
00:04:45
Xochitl
And.
00:04:47
Xochitl
Yeah, the the usual production is at least five. You usually at least have 500 kilos leftover after that, you know, even for a small farmer. So uh.
00:05:01
Xochitl
Yeah. So it got to the point, you know, they have they have like at least 300 kilos or leftovers. So I talked to him and we went through the whole process of deciding to sell it and we got a lot of attention on that's that's.
00:05:14
Xochitl
What I could do?
00:05:15
Xochitl
And so we kind of had hit the ground running because I posted this just out of curiosity and I got I got, like business out the wazoo and.
00:05:25
Jack
Yeah.
00:05:25
Xochitl
I was like.
00:05:27
Xochitl
Tons of people inquiring and and a lot to keep up with. And so at that point we had to go ahead and we hit the ground running.
00:05:34
Xochitl
So is he.
00:05:36
Xochitl
We we decided to go with an artisanal process because that's pretty much how he knows how to make the coffee. So what you have to do is you have to take a like mortar and pestle, which for those of our listeners who aren't familiar, a mortar is like kind of like a a stone or wooden bowl or something and a pestle.
00:05:42
Jack
MHM.
00:05:56
Xochitl
Like a giant one, though.
00:05:58
Xochitl
And a puzzle is like the thing that you use to pound it. So people used to do this to like grind flour and stuff. In the olden days.
00:06:05
Jack
Right now you see a lot of people using mortar and pestle for like medicine and stuff like that.
00:06:10
Xochitl
Yeah. Medicine are like herbs. A lot of people use it for, like, finely grinding herbs and teas, but he has to use a giant one to like, take all the the kind of peel the shell off of our coffee.
00:06:22
Jack
Right.
00:06:23
Jack
OK.
00:06:23
Xochitl
So he does that all by hand, so that's crazy. It's a lot of work and hard labor.
00:06:28
Jack
Wow, he must be in great shape then because.
00:06:31
Xochitl
He hasn't. Really. Yeah, he's a really good team. But yeah, he's very strong and honestly, I don't think I would probably last two minutes trying.
00:06:33
Jack
Strong.
00:06:39
Xochitl
To do that.
00:06:40
Xochitl
So yeah, he he definitely he dishes the coffee that way and then we pay a local woman to hand roast the coffee.
00:06:41
Jack
Yeah, me neither.
00:06:51
Xochitl
Which is artisanal traditional method to do it?
00:06:54
Jack
Wow.
00:06:56
Jack
That's awesome. So like if people start drinking your coffee, they're they're going to be used to her roast. Basically, she kind of determines the flavor in a way like part of it comes from the the, you know, of course the bean. But then part of it also flavor of the coffee comes from how it's roasted. Right.
00:06:57
Xochitl
And right.
00:07:08
Xochitl
1.
00:07:16
Xochitl
Yeah. So she so depends on how you raise the coffee and there's different roasts like you can do a light roast, dark roast and medium roast, and they all have different flavor profiles. And she does kind of a medium dark roast, which works really well because they they they're hand roasted, they have like, a different. They have color variations and the beans, but once you.
00:07:30
Jack
Yeah.
00:07:37
Xochitl
Grind them in your coffee grinder or whatever. It's an even color. It's a uniform color and uh, it's smells delicious because there's the sugars and the coffee beans are like caramelized because they're roasted by hand, so they're not burnt like in our machine. But that would be if you did it by machine process.
00:07:51
Jack
Yeah.
00:07:54
Xochitl
And.
00:07:56
Xochitl
It just comes out really great. It has really. It has like a bold uh flavor and it still has body for those who like dark roasts, but it's not like a bitter dark roast that has, like, acidic notes and floral notes.
00:08:10
Xochitl
And uh, it's very it has a very sweet aroma, a really pleasant like caramel like aroma and almost like some chocolate you.
00:08:19
Xochitl
Know it's really.
00:08:20
Xochitl
Be good. I'm. I'm not a huge coffee drinker myself, but I definitely started because I had to describe it to the clients.
00:08:20
Jack
Yeah.
00:08:25
Jack
You sound like a coffee drinker, though. Jeez, you. You're describing all the notes. I mean, I just like. I just wanna. When I saw the the post, I just wanted to grab one of those bags. And just, like, open it and just stick my nose in there and.
00:08:29
Xochitl
Yeah.
00:08:39
Jack
Just smell it.
00:08:39
Xochitl
Yeah, was.
00:08:40
Jack
I love that smell of fresh. Oh my gosh. I bet it just it is.
00:08:44
Jack
Only.
00:08:45
Xochitl
Yes, it smells amazing and.
00:08:49
Xochitl
There's been a lot of things to learn. We price to way too low. So now we're figuring that out because we we didn't really know about the market. And there's a single origin coffee, which means it's coffee all from the same community and the same pic of that year. And so it's like it's worth more. And then it's also organic. So it's worth more and it has expensive.
00:08:55
발표자
Hmm.
00:09:10
Xochitl
Varieties inside the ensemble like there's different beams that we use, so we use like geisha, which is pretty expensive. Kafa Deepika, which is one of the original ones.
00:09:21
Xochitl
Has been.
00:09:24
Xochitl
Planted for hundreds of years here and yeah, so a lot of those things that, you know, quality and expense. And then the other things we went with an artisanal process which requires a lot of Labor, manual labor.
00:09:25
Jack
Yeah.
00:09:37
Jack
Yeah.
00:09:38
Xochitl
So we kind of replaced it way to that we personally 10 bucks a kilo.
00:09:44
Jack
10 bucks a kilo. Wow. You get through like you're giving it away for free there.
00:09:45
Xochitl
Yes, yes.
00:09:49
Xochitl
We basically did. It's 200 pesos or two hundred 200 pesos kilo, which is 10, about 10 bucks.
00:09:57
Jack
So is are you still making profit though, like at that price point?
00:09:58
Xochitl
And.
00:10:02
Xochitl
Uh, we're barely not. If we count our hours of Labor, we're not. We're in red numbers. But if we don't count the hours of Labor that.
00:10:08
Xochitl
We.
00:10:08
Xochitl
Put into it, then, yeah, we're making, like a tiny profit, a very tiny profit, so.
00:10:15
Jack
So you guys have to you guys have to reprice that then eventually this first round, maybe you can you can sell it cheaply, but you know after that you're going.
00:10:24
Jack
To have to.
00:10:26
Jack
You know, put put it up a little bit.
00:10:28
Jack
You know.
00:10:28
Xochitl
Yeah, I don't know what to do. I I I I'm not sure how to reprice it because I like, it's scared of losing customers or something.
00:10:40
Jack
No, that's just you that you guys just have imposter syndrome. You know, you, you just, you just you just don't have the confidence right now because you're just starting out. But I I think you should be very confident in your product. It sounds like a great product. I mean it looks amazing. So I think you guys could ask, you know.
00:10:41
Xochitl
So we basically have 349.
00:10:47
Xochitl
Best year yet?
00:10:56
Xochitl
Yeah.
00:11:00
Jack
Double that much and people will still pay. You know, if they love it, they'll they'll pay, you know? Yeah.
00:11:04
Xochitl
Uh, yeah.
00:11:06
Xochitl
Yeah, that's kind.
00:11:06
Xochitl
Of where right now, and I think it's going pretty well, a lot of people ask us, you know, do you have half kilo bags, do you have white roast? Do you have decaf? It's like we don't have any of these things yet because I think we have people don't don't like know the whole process like being a coffee farmer and working on doing all this like it's kind of amazing that we've gotten as far as we had in the last month.
00:11:28
Xochitl
We've only been doing this a month. We really hit the ground running but.
00:11:31
Jack
MHM.
00:11:32
Xochitl
But yeah, we we can't diversify our products yet, so that that is one hurdle that we've been dealing with. But one thing I'm happy about is the packaging. I'm going to pick that. And I also designed a little logo and I think it came out really well.
00:11:47
Jack
Yeah, that's the fun part. I I I enjoy that sort of stuff. The, the, the smashing, the the beans. Not. Not exactly my cup of tea right there but or.
00:11:48
Xochitl
And and.
00:11:59
Xochitl
No. Yeah, that's that's his job. So he does all he's like, but he's out of quality and production or whatever he's had of production.
00:12:06
Xochitl
So he's quality.
00:12:06
Xochitl
People and smashing beans up and going to different like sea farmers within his community to see, you know, if we can buy their crop for the next year. But he's he has a very.
00:12:18
Xochitl
That they're organic and that they're certified organic.
00:12:22
Xochitl
And so he's doing that whole process himself.
00:12:25
Xochitl
And then my end is really customer service and communicating with the client.
00:12:32
Xochitl
And sending them, you know, information about this and that and whatever and.
00:12:40
Xochitl
Making sales and whatnot, that's basically my whole and designing the Flyers, designing the coffee bags, designing the different products that we're going to introduce into the market, all that is.
00:12:52
Xochitl
Kind of what I'm up to.
00:12:54
Jack
Right, you're you're marketing and these operations, I guess or something like that and yeah.
00:12:58
Xochitl
Yes, that's really what it is. I'm marketing these operations and I'm also customer service I'm trying.
00:13:05
Jack
Right.
00:13:06
Xochitl
Even the customer service on things, but it's like he's kind of shy, so it it doesn't work as well for him I think. But you know I'll get him, I'll get him. I'll work him up and I told you that you should be confident because it's your, it's your product and your you made this. So a lot of people.
00:13:11
Jack
Yeah.
00:13:26
Xochitl
Are interested in talking to you about your project and you know.
00:13:30
Jack
Right.
00:13:31
Xochitl
Don't be shy.
00:13:32
Xochitl
OK.
00:13:33
Xochitl
So.
00:13:33
Jack
Yeah, be proud of it. Be proud. I mean that. He should be very proud. That's amazing. What what he's doing? So what you guys are doing together? It's really cool.
00:13:40
Xochitl
Yeah, that's really cool. I think in the future we're trying to do something like talks where we kind of have these like I'm going to do raffle tickets. So we're selling each raffle ticket for like 12 bucks, but they get to come to a.
00:13:56
Xochitl
Talk.
00:13:57
Xochitl
About about the coffee and how he produces it and everything, and they get free coffee and snacks and then they also get a chance to win like a coffee experience. So we're we're planning on doing a business in the future where people can like de shell and hand roast their own coffee so they can like, you know.
00:14:17
Xochitl
Have the experience of seeing what it's like.
00:14:19
Jack
Yeah, and that's a good for tourists. I think they would really enjoy that, that would.
00:14:23
Jack
Be really, yeah.
00:14:23
Xochitl
Yeah, I have a friend who does it with chocolate with cacao and I think it would be really awesome with.
00:14:30
Xochitl
Coffee.
00:14:31
Jack
Yeah, I think that would be a great experience and you can get the tourists to deshell those coffee beans for free. So get them on the pestle and mortar.
00:14:39
Xochitl
Yeah, yeah, we can use painting to do labor for us. So, yeah, I think it'll be exciting.
00:14:44
Jack
Pictures.
00:14:51
Jack
All right, well, good for you. Yeah, congratulations to you and your partner for that. That venture, it's it's really cool.
00:14:58
발표자
Thanks Jack.
00:14:59
Xochitl
All right, listen, there's well, let us know if you have any more questions. Are you coffee drinkers? I'm curious. I myself, I, I grew up drinking coffee, but I stopped drinking around 18 and and then I just started again. So yeah, I'm curious. Are you guys big coffee drinkers? We know Jack is leave us a comment down below and let us know, do you like coffee?
00:15:19
Xochitl
Do you enjoy it? Do you have any recommendations for our business? We'd love to hear them leave a comment down below it. It is englishpodcast.com. Shoot us an e-mail at it is englishpodcast@gmail.com. And don't forget to join the Channel one group so you can join Jack and I on the conversation.
00:15:34
Xochitl
One and Jack and I started an English corner, which is another business venture that I have on my hands now.
00:15:40
Xochitl
But it's been really.
00:15:40
Xochitl
Exciting and really fun, and we do it Monday through Friday for an.
00:15:44
Xochitl
Hour a day.
00:15:45
Xochitl
And it's just $10 USD a month, so you get it for $0.50, a class or whatever. And we have a lot of really strong English speakers and we've made some adjustments. So you guys get a lot.
00:15:56
Xochitl
Of.
00:15:56
Xochitl
Speaking time and yeah, we're really excited about this project, so if you're interested, make sure to send us a direct message.
00:16:03
Xochitl
And ask about it and I will be happy to get back to you.
00:16:06
Xochitl
See you guys next time. Bye bye.
00:16:07
Jack
Go back.
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