How We Started A $80K/Month Coffee Roasting Company
Hello! Who are you and what business did you start?
My name is Raimonds Zadvornovs, and, along with my partner Gatis Zēmanis, we run Kalve Coffee Roasters - a coffee roasting company based in Riga, Latvia. Our main operation is simple - we buy high-quality green coffee, then skilfully roast it, and afterward sell it, but obviously, the business involves a lot more than that.
This is why these days we call ourselves a coffee service company - our main task has not changed, but we’re continuously expanding our work and growing along with the company. Our big public launch was in February 2019 with just the two of us and roasting at 5% of our production capacity. As of this day, we’re a team of 13 people and roasting at 70% of our maximum production capacity.
What's your backstory and how did you come up with the idea?
My educational background is completely different from what I’m doing today - I used to be a translator and an English teacher. I started drinking coffee when I started my bachelor’s - and because I lived a true student lifestyle in dormitories, I and my roommate could only afford the cheapest coffee on the shelves. Not drinking coffee was not an option. Even back then I often thought - I see why people drink coffee, but I have no clue how someone can enjoy the taste of it.
Our coffee shop was supposed to be a sort of a “business card” and ended being much more than that, generating around 1,000-1,500 EUR in nothing more than 40 square meters, selling coffee and pastries.
It was until I went on a trip with my current wife. We had saved some money to enjoy ourselves, so for breakfast, we went to a coffee shop - nothing fancy, but quite hip at the time (around 2010). There I had my first cafe latte and it blew my mind, I remember it till this day, it was that coffee that set me on a mission - I forever want to drink coffee this good!
When we got back, I immediately spent the last of my money to order different samples of coffee, bought a coffee grinder, and even a small espresso machine. I got so caught up in coffee that it swallowed up my days. I knew I had reached a point where I need more information, so I turned to the company who sold me some barista accessories and asked them whether they have an available position. And they did. So I quit my studies and started working as a sales assistant in a large coffee service company. I was 21 years old when I changed my career path completely.
I worked there for 4 years - I had the amazing opportunity to work in one of the leading coffee companies at that time, to learn from industry professionals, travel around to learn different coffee cultures and enrich myself with all the know-how I could. At the end of my working days in the company, I was head of coffee quality. Then things turned around - I have gained more coffee know-how than my peers, but unfortunately, my ideas and suggestions were rarely implemented due to how the owners saw the company developing, and I had to find other means to continue my growth.
My current partner, Gatis, had left the same company earlier, and we occasionally met - he was in a similar position. That is when we decided to take matters into our own hands, and agreed to start KALVE - a company where we could fulfill our ambitions and introduce specialty coffee in the market in the way we saw it developing.
We invited our current brand manager, Jānis Andersons, along with us. We spent days, weeks, and months creating the brand and the idea until we came to a consensus and established KALVE in early 2017.
Take us through the process of designing, prototyping, and manufacturing your first product.
What we knew back then was that the specialty coffee market was a very niche in Latvia - there were 2 roasteries at the time, and we saw that neither of them was presenting specialty coffee in an accessible, sustainable and user-friendly way. The prices were way too high, the product was, taste-wise, hard to grasp for the daily coffee lover, and it was only enjoyed by a very limited number of consumers. We wanted our product to bridge the gap between commercial coffee and high-end specialty coffee.
I was, and still am, responsible for the creation of the products - creating blends, deciding which origins to purchase and how to position them based on what the market is missing and demanding. Gatis saw how to scale the business and sell the products in the foodservice market, and Jānis had a vision as to how we should communicate the brand and the products.
We knew that the coffees had to be accessible taste-wise. Our first blend (also our current top-seller) is called “Chocolate Bar” because we felt that this is what people most enjoy about coffee - full-bodied, creamy, sweet coffee with notes of chocolate, nuts, and caramel. The rest of the products were developed to meet other taste profiles of other preferences. We also wanted to have a trend-setting line of products, so we included coffees from origins at that time rarely accessible to people, like beans from Peru or Tanzania.
The packaging was another thing - why would a coffee company based in Riga transport products within 10-15 minute reach in plastic bags, for them to be only unpacked and thrown outright as they receive it? We wanted to have this in a more sustainable approach, so we decided to deliver the beans in refillable food-safe buckets. For people who buy the coffee for home use, our coffee is packed in 250-gram tins that can be continuously refilled. All of this ties in together with one of our main values, which is sustainability.
The good thing is that our raw materials are very accessible - good green coffee was easy to come by because I knew who to ask and who to make contracts with. Since we have different packaging than the majority of other coffee companies, we had to look in other foodservice markets to find what we need, but that was no challenge either. Everything is there, you just have to look for it.
Our main marketing has always been word of mouth - do our job well, stand by our values, and proper aftersales.
Once we had our initial recipes, ideas, and packaging ready to go, it was a matter of finance. We had some money saved that could serve as an initial investment, and we also took a loan from an EU financial institution called ALTUM, which finance start-up companies such as ourselves. We started the company with an investment of approximately 60,000 EUR, which is quite low for a production company, and we were only able to do so because each of us had the experience to know how to make the initial setup small but effective.
Describe the process of launching the business.
From our established, all the way to our public launch, we worked low-key. We had around 10-15 coffee shops and restaurants who trusted us to provide them with coffee service. Our bills were paid, so we could go slow and learn the business as we go. We decided to set an ambition, but not set any exact goals, because we wanted to retain flexibility and be open to ideas and adventures. It wasn’t until our public launch in February 2019 that we saw a growth in our customer base. We were happy to go slow and sacrifice on some comfort of life, but have a more stable financial situation and steady increase.
We created our website earlier to already have an online presence before the launch. The website we created was initially purely informative, and we, later on, added a webshop so that the website can sustain itself. Right now we’ve adapted it to be more wholesale oriented, and we often get leads directly from website inquiries.
In June 2019 we opened our first flagship store in the center of Riga. We noticed that we had gained some recognition in the B2B market, but had no direct touch with our B2C base. Our coffee shop was supposed to do just that - be a sort of a “business card” for people who want to have our coffee at home, and just be a solid marketing project that would cover its costs.
It ended being much more than that, and is now one of the most popular coffee shops in Riga, generating around 1,000-1,500 EUR turnover daily in nothing more than 40 square meters, selling coffee and pastries.
We sometimes think back and discuss if we would have had faster progress if we would’ve started with a considerably bigger financial resource, and agree that we probably would have. However, that would mean taking out a bigger loan or having an investor in the company, that way losing some independence - so, at the end of the day, we’re happy to have started slower and come out as one of the leading coffee companies in the Baltics in just a bit more than 3 years.
Since launch, what has worked to attract and retain customers?
It’s always a good idea to have someone in the team who helps start the company with a decent customer base. For us it was Gatis - he had in the past established good relationships with several different companies, who were ready to sign contracts even before we were roasting coffee. That helped us to already have turnover as soon as we started roasting coffee, and allowed us to have some breathing space as we continued to develop the company.
Our main marketing has always been word of mouth - do our job well, stand by our values, and proper aftersales. We are a small market - Latvia is a country of 2 million population, so this approach works very well. More or less everyone knows each other in the food industry here, so establishing sustainable relationships is a great way to grow your business.
As for retaining B2C loyalty - social media works great. We keep a neat, tidy, and well planned social media presence on both Instagram and Facebook. Your Instagram feed works as a sort of example to show your customers who you are, so you should be keeping that nice and tidy. In the stories, you can repost pictures put by your clients or customers, to grow personal loyalty towards you, and as for Facebook - it works as a wider platform to deliver bigger messages.
How are you doing today and what does the future look like?
We’re amazed and proud of the situation where the company is now. We’ve covered 4/5 of our debt and loans, we’re profitable and continuously growing. The company is in a very good place now, and we’re continuously looking for opportunities to expand.
By creating a compact but efficient distribution system, we’ve managed to keep costs low and clients happy. We have a customer relations manager who is also responsible for deliveries, and he has the competence to cover a wide range of tasks. Since sustainable working relationships are our go-to, we deliver coffee to customers in Riga personally, using that visit also as an opportunity to strengthen our cooperation, adjust the coffee machine, taste the coffees and introduce them to any new products we may have.
For customers outside of the capital, we use a carrier service and visit them monthly to sustain communication. This consists of about 90% of our customers. The remaining 10% is export, where we rely mostly on our product quality to speak for itself and visit rarely to do an event, like a cup tasting, or training.
Right now we are in an interesting situation where we have to be smart about who we sell our coffee to, as a means of not to oversaturate the market with our brand and avoid the risk of “being everywhere”. An effective way that has been working for us is offering white-label coffee, where we create a separate brand for that exact company and develop a coffee limited only to them.
Export is another interesting area or work, because the market is huge, and our share is minimal, so we’re continuously working on brand recognition in Europe. Right now we sell decent volumes to Estonia, Lithuania, Poland, France, and the Czech Republic. We know how to improve our volumes here, but it requires some investment in marketing and direct sales.
Through starting the business, have you learned anything particularly helpful or advantageous?
Somehow we got lucky enough to not make any drastic mistakes. There were small bumps along the way, but to be honest it is quite hard to recall anything specific because those were the cases that we managed to either sweep under the rug or just live past them.
One of the best decisions we made was to partner up with our brand manager Jānis Andersons, who at that time was a freelance designer, but now has his design company. I knew coffee, Gatis knew business, but if it weren't for our cooperation with Jānis, we may still be struggling with visual identity, brand management, etc. So if you can, partner up with someone ambitious, and can use your company as a project for their visual and design development.
We have now achieved great insight as to how other foodservice products are performing in the market, besides coffee, and that has already given us some ideas about developing new products. We have a wide customer base, good pallets, and business knowledge, so creating and implementing a new product is much easier for us as an existing company, rather than a startup. I think if we’d started a craft beer brewing company now, we could use our existing range of customers as a good base for starting up!
What platform/tools do you use for your business?
I’m a big fan of spreadsheets. There is nothing better in this world than a well-designed spreadsheet to show you data and statistics.
But really, I think the most important thing is to have a working business management system and inventory management system, along with a CRM. The more info you can collect efficiently, the more data analysis you can do, and that can show you how efficient, or inefficient you are in certain areas.
Find a good business management system that works in your market and is localized for it, as well as meets the demands of the government institutions. The more user-friendly it is, the better - that can help avoid the unavoidable human error.
What have been the most influential books, podcasts, or other resources?
For me, it helps to read a down-to-earth book, instead of super inspirational. I always prefer an autobiography of a professional I look up to, instead of a book which will teach me how to earn all the money in the world.
I truly enjoy and recommend the work of Jordan Peterson - I believe he is one of the greater minds of our times, so definitely give 12 Rules for Life a read.
Advice for other entrepreneurs who want to get started or are just starting out?
It’s always good to rehash the good old “do what you love”. There is a lot of truth there because if you do what you love, you will put much more effort into your business unlike if it were just doing something that may or may not at that time be a good idea.
Of course, tread lightly - understand if “what you love” fits in the needs of the market now and if you can scale it into a considerable business that will pay the bills and not keep you awake at night (in a bad way).
And I may repeat myself, but this helps - establish partnerships with who will be the key people in your company. I believe we have the perfect trio partnership - the CEO, the product developer, and the brand manager. We’re all eager for this to work out, so we will find ways to make it happen.
Are you looking to hire for certain positions right now?
We do not have open positions now per se, but we’re always interested in what could be great partnerships. We have this brave idea of opening a flagship store in another country, so if you want to be a part of a coffee company that is growing and challenging the status quo of other specialty coffee roasting companies, we’ll be happy to hear from you!
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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