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DROP BY DROP, STARTUP COFFEE SELLER GRINDS OUT HIS PITCH Crain’s Detroit
When it came to entering a supply chain, A.J. O’Neil would have been hard pressed to make himself any less sophisticated with how to go about it.
He was poorly dressed, unfamiliar with industry expectations and had a rambling business pitch.
O’Neil is best known for the Ferndale coffee shop A.J.’s Music Cafe, which he ran from 2007 through 2012 and which was the origin of his current enterprise, Detroit Bold Coffee Co. So he had a background in business, and in dealing with coffee. But that was about it when he began approaching stores to sell it.
“I didn’t have the quick answers they need,” O’Neil said.
O’Neil roasts his Detroit Bold brand coffee at Becharas Bros. Coffee Co., a 100-year-old commercial roaster in Highland Park. Through shoe leather and elbow grease, he was able to get his coffee into specialty shops and small grocers fairly quickly. One of them, Ferndale Foods, had been carrying his coffee since his café days.
By the end of last year, his product was carried by 12 companies, some small like Mootown Creamery in Eastern Market, some larger like Westborn Market.
All 12 of those came by cold call, but O’Neil got more results after he honed down his pitch, having answers ready for practical industry questions on inventory, the stocking of shelves, display maintenance, delivery scheduling and terms.
He has spent a lot of time talking to buyers and reps. “For the most part, they’re cordial but they have a standard bottled answer — this is what you do, call this 1-800 number — which thwarts 99 percent of people,” he said.
Trying to get into the Whole Foods Market chain, he went through the process, “followed every piece of protocol,” sent samples to Chicago for regional product testing … only to get rejected in the end because he was putting 24 bags of coffee to a case instead of six, he said. It’s an industry standard he wasn’t aware of.
Experts say it’s all about relationships when it comes to entering and staying in a supply chain. O’Neil had plenty of contacts from his days running the café, and that helped. But when it came to going after a big fish, Meijer Inc., he chose to buy a relationship. He got a broker.
The broker is Pat Beyer, owner of Etherton Sales and Merchandising Co. LLC, based in Grand Rapids and with an office in Auburn Hills. The company acts as a manufacturer’s representative for dealing with large chains, taking a percentage of sales as commission. The commission on O’Neil’s coffee sales is 5 percent.
Another key relationship for O’Neil was the one he developed with a local food entrepreneur with a reputation for mentorship, Jack Aronson at Garden Fresh Salsa Co. Inc. in Ferndale.
Aronson worked with O’Neil for a year until he thought O’Neil was ready for a broker and introduced him to Beyer. Beyer then worked with O’Neil for another year before he thought O’Neil was ready for Meijer.
Along the way, O’Neil dropped his trademark scruffy jeans and baseball cap and began donning a tie and slacks for meetings to pitch his product. He got marketing help for packaging.
He also became familiar with standard industry practices. Some stores expect him to make sure the product is displayed correctly every day. They want to know about product samples and demos.
They expect him to know about SKUs (stock keeping units) and billboards (the graphic design on the front of the product) and “planograms” (mock-ups of store shelves to show how products would appear).
Beyer approached Meijer in early December. Meijer already has given the go-ahead to stock Detroit Bold in about 115 stores in mid-April.
A success, to be sure. But it took four years of taking thousands of half-pound bags coffee around town for no profits to get there.
O’Neil said it has cost $50,000 in out-of-pocket expenses to build his business. Completely self-funded, O’Neil buttresses Detroit Bold by doing side jobs as a roofer.
Last month, Warren-based distributor Lipari Foods Inc. placed its first order for Detroit Bold. O’Neil expects that deal to put his product in another 50 stores.
“Instead of orders in the hundreds every month, I’m getting orders in the thousands,” he said.
Last year, O’Neil’s revenue was $40,000 and it came in at a loss. But now that he’s in the chain, he expects revenue to reach at least $200,000 this year.
“I’m thinking it’ll be substantially more, but I want to be conservative at this point,” he said. “I don’t want to bite off more than I can chew. That can be the biggest mistake.”