I am doing a business growth for a small business in Australia called Renegade Roasters. it is a local coffee roasting company so I am going to help grow their small business which is currently based

·        Scope of operations ✓

• Currently supplying to 4 cafes

• Charity and $1 give back

• KIVA

• The LoveWell Project by the Hope Foundation ($1 from every 1kg of Lovewell Blend goes to Hope Foundation)

• Crop to cup, Rainforest Alignment, Organic, Fairtrade (any one)

·        Current customer market ✓

• 4 cafes (Lane7, Lost Bean, Sweetopia, Lovewell Project)

• locals/tourists

• Offices (wholesale discounts for offices?)

• MOST SALES ARE ONLINE

·        Current Sales

• 30kg wholesale (cafes/offices) a week

• 10kg retail a week

• • 40kg roasted beans a week roughly $1800 a week BEANS/PODS ONLY

• 90L manufacturer cold brew a week

• 10-15L a week wholesale to bars (martini)

  • 100L (forgot to ask price) a week COLD BREW ONLY

·        Current Staff (3 business partners)

• Beck → roaster, retail sales and admin/finance stuff

• Rhys → cold brew maker, social media guy, online/wholesale sales

• Christian → just investment partner who helps make large decisions (rent/machinery) but not really involved in sales or processes

·        Best opportunities for growth

• Change the market location i.e. international shipping and farmers markets → household or office use ✓

• Potential new products like biodegradable cups or packaging. PACKAGING IS A BIG ONE (NOTHING EXISTS THAT KEEPS THE COFFEE FRESH AND IS SAFE TO USE AND BIODEGRADABLE ETC) ✓

• Use of wastage products → COLD BREW lots of wasted grinds hopefully turn into body scrub or farming products (compost) ✓

• Use of wastage products → ROASTING BEANS lots of chaff which is good for farming (soil nutrients) and for animal bedding like a sawdust flooring in stables and coops or even animal food for sheep/horses etc. ✓

• Would like to open their own cafe associated with “renegade roasters” unfortunately not allowed to in current location unless a previous business that was there before them closes as only allowed one cafe/restaurant on the site

·        Compelling reason to buy/use above opportunities

• Sustainability and Biodegradable ✓

• Fits current big brand machines like Nespresso ✓

·        AAMI Insurance - $110 a month

·        Rent $60sqm pa at 260sqm

Renegade Roasters Growth

In this business growth report, we aim to focus on the local coffee roasting company, Renegade Roasters to help grow their small business currently based in Moorooka into an internationally profitable enterprise. Through connections with one of the partners of Renegade Roasters (team member’s neighbour) we have investigated their scope of operations and business background, as well as the current environment of their industry in coffee production, and have chosen to apply the growth strategy of market development. Using this strategy, we aim to identify the organisational requirements necessary for Renegade Roasters to successfully increase their profits and business scope, and the risks associated with this pursuit of business growth.  

Renegade Roasters is currently a new small business having only been operational for approximately two years. The current turnover is approximately $100000 a year estimating to hit just over $120000 in the next 12 months. Renegade Roasters currently supplies to four local Brisbane cafes including Lane7, Lost Bean, Sweetopia and Lovewell Project. Currently Renegade Roasters completes approximately three quarters of their sales as online wholesale orders and the other quarter as locals buying direct from the warehouse. These sales include approximately 40 kilograms of roasted beans and 100 litres of cold brewed coffee a week.

The current warehouse is operational with only two business partners operating the warehouse six half days a week (total 27 hours each per week). There is three business partners but the third is only for investment purposes. The warehouse currently is of a relatively small size operating only to meet demand. However the current warehouse has the potential to roast up to 1000 kilograms a week with a few changes as discussed further below.

Renegade Roasters has a large focus on sustainable and ethical business practices. Currently Renegade Roasters is giving $1 per kilogram sold back to farmers and supporting various charities and foundations with their different blends. For example $1 from every kilogram sold of their “Lovewell Blend” is donated to the Hope Foundation. Renegade Roasters is also currently supporting various coffee bean projects and philosophies such as Crop to Cup, Rainforest Alignment and Fairtrade Certified.

Renegade Roasters aims to increase awareness of their ethical brand and help to fulfill their business aims. The overall business aim for Renegade Roasters is to share their love for “Just Good Coffee”. Renegade Roasters is focused on valuing coffee growers and sharing their love for down to earth ethical coffee. The overall growth aims is to increase brand awareness and profits allowing for long term stability and profits to ensure adequate partner profits and farmer returns. To fulfill these aims several recommendations in regards to growth strategies and ideas along with current word of mouth will hopefully aim to multiply profits and see long term growth. The ideal growth for the business as seen below in the financial spreadsheet is 5% per quarter across all sales including wholesale and retail beans/pods, cold brew coffee and any potential new products.

·        Ecological environment

·        Selective environment…...

·        Emergy

In the process of investigating Renegade Roasters current scope of operations and their business background, we have identified several opportunities for growth that would not only align with their sustainably focused company practices and foundations, but also significantly increase their profits and customer base.

Firstly, one of the greater opportunities for growth can be found in their market location. The majority of Renegade Roasters sales comes from wholesale orders made on their online store that currently only ships nationally. There is a huge opportunity for growth here by expanding their shipping scope from Australia-wide to worldwide. This would be one of the easier ways, in terms of labour and employee training, to expand their market location because it doesn’t require major changes to the processes set in place for selling goods online. Workers could still package the coffee products in a similar, if not same, way as they would when shipping nationally, and the customer base would instantly grow overnight through ease of access to their website.Another way to increase market location would be to start selling products at local food events, namely food and farmers markets, as a way to broaden their product advertising and business outreach. It is assumed that many people who attend these events are looking to support local businesses and would find a unique product, such as Renegade Roasters’ biodegradable coffee pods, to be an exciting purchase, and one that they would find easy to access again through their online store. This would also help to spread the word of Renegade Roasters and be a great opportunity for the business to penetrate the household market, especially as Renegade Roasters’ coffee pods can be used in other coffee machines, most namely Nespresso’s.

A second opportunity for growth can be found in the potential selling of new products such as biodegradable carry cups or coffee bean packaging. Currently, there is no biodegradable packaging available for coffee distribution and this presents a fantastic prospect for innovation at Renegade Roasters. They could break new ground in the coffee industry by producing packaging that is both effective at keeping the coffee fresh and safe to use, as well as being good for the environment. This would also be a great way for Renegade Roasters to achieve an advantage over their competition in the coffee industry, but it could also be used as a product to be sold or patented. All of these are compelling reasons to follow this opportunity, however, the costs of creating these new products would be a strain on the business’ budget, as shown in the financial statement.

The third opportunity for growth would be the use of wastage products as it presents alternatives ways of using the coffee grinds left over from the cold brewing of coffee and the roasting of the coffee beans. The cold brewing creates a large quantity of wasted grinds that could be used in body scrubs or as a material in farming products, such as compost. The roasting of coffee beans also creates a large quantity of chaff, that is an invaluable product for farmers as it can be used as both food and bedding for their animals, as well as a good source of soil nutrients. Both of these alternatives for waste usage are a compelling reason to pursue this opportunity because it would increase profits with minimal effort and it would be a great way to support Renegade Roasters’ mission of being a sustainable business.     

The three potential growth opportunities listed above all fall into different marketing strategies. The Ansoff Matrix determines the strategy based off whether the product is a new or existing product in a new or existing market. The international and farmers market opportunities features an existing product (beans/pods) launching into a new market (international/household). This means a market development strategy is required. This opportunity is the most feasible short term growth opportunity targeting potential new buyers in the current market expanding to new geographical and institutional locations.

The biodegradable cups or packaging would feature a new product (packaging) in our current market (national wholesale to cafes). This opportunity would require a product development strategy. This opportunity has high potential due to the current lack of saturation in the market however it is a large risk and would change operating costs for the business introducing a potential risk of loss. This opportunity might be more suited in a partnership capacity or once profits are steady.

The wastage products would feature a new product (scrubs or compost) in a new market (beauty industry or farming). This opportunity would require a diversification strategy. Whilst this strategy seems the cheapest in terms of finance (as the wastage is free) it is also the riskiest as the beauty industry, skin care industry and farming industry are unknown in regard to market demand and potential distribution laws. This strategy would require further research.

·        Requirements that need attention in order to enable growth

·        Human resource implications

·        Resource profile implications

·        Include actions to lessen the risks

• Would need to hire an extra sales person or roaster

• Warehouse is large enough to roast 200kg a day 7 days a week (currently only roasting about 100kg a week so plenty of room to expand in current location just need the manpower and sales)

• If needed to buy new roasting machine (current is 10kg roaster next size is 20kg roaster) would need to invest $120000 in new machine

• Would need to organise different storage techniques (vertical pallet stacking to store green beans) but there is opportunity for this

·        What assumptions are you most relying upon?

• Loans from Kiva?

• People who attend farmers markets are looking to support local businesses and willing to buy

• Assumed new products will just take off

• I think we should say we will need to take the risk to buy the green beans and actually roast before knowing if the product will sell i.e. demand?

• Ethical imports/exports if we cant source ethical beans the whole ethical story and focus is gone

• Continual growth

• Inflation rate stays consistent

·        What associated risks need evaluating?

·        What are the potential consequences of such risk to your financial modelling?

·        Are there other strategies you can consider that will decrease potential risk?

The financial spreadsheet indicates a continual growth period over the next three years. It is estimated that there will be positive profits for the entire growth phase however these figures are all estimates based on typical business percentages such as 30% cogs. The spreadsheet has allowed for the implementation of a part time staff member within the second year growing to another full time staff member in the third year. The rent is set based on the current warehouse rent per square meter signed on the five year lease and has not allowed for any inflation or rent increase. Insurance is also based on the current business quote and utilities have allowed for potential increase as demand increases and the business is working longer hours (electricity for roasting) to meet demand. Based on these estimated growths, the current roasting machine has sufficient capacity. However if a new machine or new size was required this expensive purchase would leave several quarters in the negative. It is predicted that this will not be needed for many years though. The overall growth does not meet the expected 5 to 10 times increase however we have put this down to the overall decline in coffee drinking as seen in Australian Food News (2014). As stated in the growth opportunities potential packaging changes and new product ideas would introduce new cogs percentages and new equipment and consumables needed to produce these new products.

Australian Business Register. (2018, June 15). Current details for ABN 610 880 236 | ABN Lookup. From ABN website: http://www.abr.business.gov.au/ABN/View/77610880236

Australian Food News. (2014, March 12). Average Australian coffee consumption drops, but cafe visits continue to grow, research. From Australian Food News website: http://www.ausfoodnews.com.au/2014/03/12/average-australian-coffee-consumption-drops-but-cafe-visits-continue-to-grow-research.html

EatSouthBank. (2017, August 12). My Sweettopia Switches Beans | eat South Bank. From EatSouthBank website: https://www.eatsouthbank.com.au/stories/mysweetopia-switches-beans/

Roasters, R. (2019). Renegade Roasters | Fresh Roasted Coffee Australia. From Renegade Roaster website: https://www.renegaderoasters.com.au/

Roasters, R. (2019). The Lovewell Project | Wholesale | Renegade Roasters. From Renegade Roasters website: https://www.renegaderoasters.com.au/lovewell-project

Roasters, R. (2019). Why we use Kiva. From Renegade Roasters website: https://www.renegaderoasters.com.au/cuppingnotes/why-we-use-kiva

Roasters, R., & Facebook. (2019). Renegade Roasters - Home. From Renegade Roasters Facebook webpage: https://www.facebook.com/renegaderoasters/

Roasters, R., & Instagram. (2019). Renegade Roaster (@renegaderoasters) - Instagram photos and videos. From Renegade Roasters Instagram webpage: https://www.instagram.com/renegaderoasters/

Rosnick, B., & LinkedIn. (2019). Beck Rosnick - Coffee Roaster - Renegade Roasters | LinkedIn. From Beck Rosnick LinkedIn webpage: https://au.linkedin.com/in/beck-rosnick-999055153

Rosnick, B. (2019, April 29). Renegade Roasters. (C. Edgerton, Interviewer)

Trademarkia. (2017, July 10). RENEGADE ROASTERS Australia Trademark - Reviews & Brand Information - SONDER ENTERPRISES PTY LTD. From Renegade Roasters Trademarkia website: https://trademark.trademarkia.com/au/trademark-1855000.htm

https://www.renegaderoasters.com.au/lovewell-project