Spend More Money and Beat out Your Competitors
Why Kicking Horse Coffee made a pricey decision to provide a product its customers hadn't even asked for.
By Jim McElgunn
CEO, Kicking Horse Coffee Co. Ltd.
Since we founded the company in 1996, 100% of our coffee has been organic. But for many years the supply just wasn't available for all our coffee to be fair trade, too. By 2007, we were at 60% fair trade and 40% non-fair trade.
That was a pivotal date, because we decided to recommit to what we believe in and go to 100% fair trade. We believe in fair-trade coffee, and you're either fair trade or you're not. Our customers weren't asking us to do that, so we'd be giving them something they didn't know they wanted yet. But I think you should trust your gut instinct.
Our coffee brokers said, "Are you nuts? There isn't the supply. It's really risky." And I said, "We're doing it, we're going to push forward."
At the time, our non-fair-trade coffee was $13.95 a pound and our fair-trade coffee was $14.95. In our market, a dollar is a pretty big difference. So we had to count on consumers accepting this because this is what they expect from our brand.
We had a lot of work to do on logistics. We put pressure for more fair-trade coffee on our main supplier, which knew this was our top priority. And we diversified our suppliers and built up a nice buffer in our inventory so we wouldn't run short of fair-trade coffee when supplies fluctuated. We invested about $1 million in this inventory—a big amount when our revenue was about $12 million.
In the end, things went quite smoothly. And, as more competitors started to enter the market, we avoided having someone new offering 100% fair trade when we were still at 60%. Since then, our revenue has doubled and we've become the No. 1 super premium coffee sold in Canadian grocery stores.