Why This Small Coffee Business Doesn’t Need to Compete on Price

Why This Small Coffee Business Doesn’t Need to Compete on Price

Every coffee company has an angle.

Folgers made it fast. Nabob made it romantic. Starbucks made it hip. And today, artisanal coffee is making it expensive. But how do you convince someone to pay a lot more for their coffee? The answer is actually pretty simple: all you need to do is tell a story.

We sat down with Helen Schafer, owner of Tiny House Coffee Roasters, to find out more.

In this interview, you'll...

  • Find out how a great story can help you charge more for your products
  • Discover an easy way to tell your story (without an advertising budget)
  • Learn about product positioning and why it's your key to boosting sales

Check out the full interview below:

Want to hear more? Listen to the rest of episode six now.

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Female Narrator: "Helen Schafer wakes up really early on Saturdays. That's the day she sells coffee at the biggest farmer's market in Austin, Texas. Her company? Tiny House Coffee Roasters."

Helen: "How it all started was went to Nicaragua where I was a peace corps volunteer. Some of my best friends were coffee farmers. They would always say, "Oh, when you go back to the United States, you're going to sell our coffee right?" We're thinking, "Yeah, sure.""

Female Narrator: "Helen and her co-founders looked at different models for socially conscious businesses. They decided that fair trade just wasn't good enough."

Helen: "Fair trades usually has a bottom of about $1.50 a pound. With our model, the farmers get guaranteed $3.25 a pound."

Female Narrator: "Per pound, their beans are about 3 dollars more expensive than Starbucks. That's already 3 times as much as the stuff you get at the supermarket. How do you get customers to pay that much more? It's all about positioning. Figuring out what makes your product different, and being able to tell your target customer a compelling story. Listen to this. Here is Helen's co-founder Blake Thomas at the farmer's market."

Wendy: "I don't drink coffee. I want to know what makes this different."

Blake: "Sure. This coffee is a direct trade coffee with Nicaraguan farmers. What we did, we met these guys while we were peace corps volunteers down in Nicaragua. They encouraged us to try to do something with their beans when we came back to the states. We came back, did a bit of market research, and then decided to give it a go. We set up a revenue sharing model with the farmers down in Nicaragua, so brought in their coffee on consignment, and as we sell it, we share a portion of the revenue with them."

Wendy: "It's single sourced?"

Blake: "Yes. It's from one farmer, one farm. We call it single estate."

Female Narrator: "This type of positioning works well at a farmer's market. The folks here like to eat organic and want to know where their food comes from. Tiny House Coffee Roasters wants to market to everybody, even people like Wendy Collins."

Blake: "What's your preferred method?"

Wendy: "I'm usually ground coffee, Folger's. You know. But I really appreciate my coffee, so maybe it's because I haven't been exposed to as many options."

Female Narrator: "Wendy turns away from the booth and she's typed."

Wendy: "I'm turning into a coffee snob."

Female Narrator: "Christopher Bacon says, "Socially conscious coffee started going mainstream in the 90s." He studies the impact of fair trade and direct trade coffee at Santa Clara University."

Christopher: "I think a big decision was when Starbucks decided to carry fair trade certified coffee. That brought a lot of marketing to a lot of people, but of course the percent of coffee that Starbucks sells as actually fair trade certified, is I think it's still between 5 and 10 percent."

Female Narrator: "Chris calls that green washing, when a company markets itself to be more environmentally friendly than it really is. He says that's where Helen's direct trade coffee company can find it's niche."

Christopher: "If it's clearly communicated sustainability that has tangible impacts on the ground, and there's authentic verification and connection, it probably could do more. If it's only a marketing claim, people are becoming a little suspicious about the risk of green washing."

Female Narrator: "There's a problem. Unlike fair trade, direct trade coffee doesn't have an independent verification process. It's up to Helen to educate her customers and hope that they trust her, even though her advertising budget is zero."

Helen: "How we get people to tell is we tell them about them. On our website, we have these glamour shots of all the producers. They're all making really serious faces. That's how they like to take photos. We put their photos online. We tell their story. How long they've been working in coffee, how they support their family with their coffee, things like that."

Female Narrator: "When Helen and her co-founders go to Nicaragua to meet with farmers and select their coffee, they are constantly taking pictures and shooting film for their website. With all the footage, they're able to position their company as a relationship, between coffee producer and coffee drinker. Not every customer makes it to the website, so Helen puts her positioning directly on the package."

Helen: "I think it's really helpful when they learn about them personally, so on each of our cards, we have a little something. Right now we work with 6 Nicaraguan producers, and on each of our coffees, we name our single estate coffees after the farmer that it comes from. A lot of people, they have been drinking Donaldo Cuadra. It has on the back, a little tidbit about Donaldo."

Female Narrator: "Helen's business is pretty new, but so far selling tasty coffee with a story seems to be working. In a few months, she'll be able to work at her company full time. Whether direct trade coffee will be the new fair trade coffee, that's still a big question mark, at least according to Chris Bacon."

Christopher: "No, I think it's probably going to be around for a while, and I'd like to do more research to understand the benefits and limitations of it, for producers, and also why it's been so ... I think the taste and the experience are part of it. It'd be interesting to know how it appeals to consumers and even citizens."

Female Narrator: "For that to happen, Helen's marketing strategy will have to be successful outside of a farmer's market. She believes the taste of her coffee, along with a really good story about where it comes from, those two things will be enough to get people to put down their instant coffees and their frappuccinos."


Show notes:

About TGIM: TGIM is a podcast for people who can’t wait for the week to start. In each episode we’ll be bringing you inspirational stories about entrepreneurs who have overcome obstacles, built incredible businesses, and are now living the life they want.