By Bernie Cahiles-Magkilat
Several coffee shops have opened their outlets trying to squeeze each other out in the bustling coffee drinking Philippine market. Amid the noise in most cafes and myriad variants of coffee drinks in this busy world, the joy of having a personalized real coffee is a rare treat. Nobody cares anymore about what goes on in a nicely prepared cup of coffee.
Entrepreneur JAN DAYLE A. BANAAG came up with a unique ecosystem that advocates the use of all Philippine highlands coffee. Thus, the birth of his modest venture: The Little Farmers Coffee.
Aware of the coffee situation in the country, Dayle and wife Nicky started the concept of Little Farmers Coffee on a patriotic note. The couple thought of helping the small highlands coffee farmers along with the need to promote local coffee and to raise awareness about coffee.
But Dayle and Nicky shunned the idea of going the path of most coffee shops. Enough of the noise of cafes and coffee concoctions that could pass off as good coffee through the addition of volume of milk or flavored syrups.
Little Farmers Coffee seeks to offer different types of local coffee beans through different types of roasts, and through infusion of food-grade oil extracts to bring out new flavors and enhanced aroma. Little Coffee Farmers would like to bring back that old-fashioned coffee drink by offering coffee the way it is.
This is also an opportunity to further educate Filipinos especially the youth about coffee and create awareness about the local coffee.
Foremost, the couple had always the little coffee farmers, who are behind every single coffee bean produced in the country.
They made an agreement with the farmers to buy their coffee at an agreed premium price regardless of fluctuations in prices in the international market. Coffee is harvested once a year only.
On top of that, Dayle was able to develop a bond with the farmers. It is also more efficient on the part of the farmers because they only talk to one buyer. Coffee becomes more expensive because of the middle men. This makes coffee from farm to cup expensive.
“But we don’t shortchange our coffee farmers but by selling to only one customer they can concentrate on their farm production,” he adds. Aside from helping the farmers, sourcing coffee direct from the small farmers is cost efficient because they are now able to cast their cost projections.
“Our advocacy is to help farmers because we saw their hardwork from a single green bean to produce a cup of coffee. It is a huge laborious process,” says Dayle.
“We got our coffee supply for a fair price,” he adds. They peg the price at a higher rate, but that price level has to be maintained even if the price goes down or up in the international market. This way, we are assured of supply and the small farmers have a steady direct buyer at a fair price. There is no middle man involved.
Dayle noted that the Philippines is a coffee nation, not only because the country is the fifth biggest consumers of coffee globally, but also for the reason that the country lies on the world’s Coffee Belt, the ideal area that provides favorable climatic conditions to grow all four varieties of coffee, namely Robusta, Arabica, Excelsa, and Liberica throughout the country, even the most expensive of all, civet coffee or kopi luwak.
The Philippine Coffee Roadmap would also make available 213,788 hectares of area planted with coffee nationwide, which will boost the country’s domestic coffee output in the next five years — a huge lift for coffee farmers, producers and trader.
Unknown by most, the country is among the few 50 countries that are able to produce commercially available coffee – with international awards for taste.
Unfortunately, there is rarely a mention of the Philippines when it comes to coffee, even from its own residents, who are stuck to the notion that local coffee is inferior, cheap and of poor quality than the imported coffee.
The Little Farmers Coffee is proud of the Filipino coffee. They have established relationships with small coffee farmers in Sagada, and Benguet, the known best sources of local coffee.
Aside from training and employing their own baristas, Dayle also have master roasters from Baguio. The master roaster is also the one consolidating its coffee supplies direct from the coffee farmers and roast and deliver it every time they order. This makes the Little Coffee Farmers coffee freshly roasted.
CHOOSE YOUR BLEND
Dayle invested ₱600,000 to ₱800,000 for its first kiosk in Bacolod including the grinder machine and the glass display. The couple started with 6 coffee blends either wholesale or retail. A 50-gram coffee is sold for ₱31 while the most expensive is ₱46. The decaf coffee is P88 per 50 grams. Civet coffee commands a higher price of ₱1,000 for 50 grams. They also offer grinding services to customers for free.
Other buyers would just buy small portions and mix and match to create their own blend.
“You choose your own blend and we brew it in front of you or bring home the roasted coffee,” says Dayle.
Rather than having a head-on battle with other known coffee establishments, Little Farmers Coffee focuses on further educating the public in finding their taste in coffee. “Hence, the option to ‘Choose Your Own Blend’ for either ordering one’s coffee bean requirement or enjoying their personal cup.
The Little Farmers Coffee has grown to 10 branches and is now going 12, all kiosk type. It has an only in-line outlet with 24 seats in a Makati supermarket food court.
“It is just an ordinary coffee shop since we are just selling all all-local roasted coffee beans focusing on the highlands coffee of the Philippines,” he adds.
This makes the Little Farmers Coffee unique. It is not actually the typical coffee shop you find in the city. In the first place, it was conceptualized as a wholesaler or retailer of roasted coffee beans. The coffee drinks offered in the store are just an innovation or a by-product of its original business.
Dayle also specifies their kind of roasting whether light, medium or dark depending on their needs. Coffee beans can be stored for a year but roasted coffee is best consumed within 3-6 months from roast depending on storage condition.
So far, their 10 stores require 1.5 to 2.5 tons of coffee a month. They also supply to other small coffee shops in Bacolod and other provinces like Bohol and Davao.
They also supply to pop-up coffee shops in call centers and some convenience stores using their own brands. Sales of roasted coffee beans account for the bulk of 55-65 percent of total sales.
Their hot coffee drink is sold for ₱55 per cup and ₱65 for iced coffee. The decaf coffee is ₱80 a cup while the Civet is ₱200 per cup. They only have one size coffee: 8-ounce hot and 16-ounce for cold coffee. The general rule is two scoops of coffee ground or 15 grams for one cup of 275 ml coffee drink.
Dayle also makes sure to be able to offer simple coffee drink.
“Since buyers of our roasted coffee prepare their own coffee at home, we want to offer the simplicity of making coffee. If we offer and serve coffee drink with the complicated preparations in most coffee shops, coffee buyers may not be able to duplicate that at home as they only use household coffeemaker, so we demonstrate the simplicity in coffee making,” says Dayle.
To demonstrate to customers, Little Farmers Coffee uses only the ordinary household coffee makers. “This is because we want to promote the concept of simplicity,” says Dayle noting they want to offer their customers the household experience of making coffee through their own household coffeemaker.
But why did Dayle put up his business in Bacolod and not in Manila. Aside from the fact that Bacolod is his wife’s hometown, it is cheaper to start in the province than in Manila where rent in malls is very expensive and space is limited.
“We started in the province because it is low risk,” says Dayle, who is from Pasig but has roots also in Bacolod. It is also easier to hire people. Each store needs 2 persons while the biggest outlet needs 5 people.
From Bacolod where they have four branches, the Little Coffee Farmers did a reverse as he expanded to Manila, Cebu and Iloilo after.
The couple were shocked upon opening a store in Makati where the advance rental payments could go up to about 6 months plus 15 percent of gross sales or a fix rate whichever is higher.
“We have to go to Manila right after Bacolod because we want to cater to a wider crowd. It is a test of stamina. If we succeed in Manila, then it would be easier to roll out in other provinces,” he adds noting that they were at first concerned about copycats.
Dayle has jumped the gun on potential copycats by tapping Francorp Philippines, the country’s franchise authority, to craft their franchise system.
Little Farmers Coffee is now up for franchise with total package of ₱850,000 including ₱250,000 worth of initial inventory and equipment.
The average ROI is expected in 8 months although one outlet in Manila was able to recoup its investments in just 4-5 months. From their 10 stores at present, the target 20 stores by 2020.
“We wanted a coffee business because am a coffee lover. I can have five cups a day, but I have slowed down to 2-3 cups now. You will never go wrong with coffee because it has no seasonality,” says Dayle, who earned a degree in entrepreneurship at De La Salle University.
After its successful promotion of highlands coffee from the Cordillera region, the couple is now looking at the promotion of coffee from Visayas and Mindanao like the coffee from Mt. Kitanlad to further promote the local coffee. They would like to expand to other cities because “We want to create demand for our own local coffee. We want to be the standard of coffee.”
“We offer premium coffee and that means our local coffee,” says Dayle.
The young entrepreneur, who is managing 46 people, knows the ups and downs in business.
“There is no easy job, but it is very fulfilling to see all your efforts bearing fruits now and at the same time we are able to provide for jobs and stable income to farmers,” says Dayle.
Dayle trained his people personally. They employ those willing to learn regardless of educational attainment. They employ as young as 18-year old high school graduates. They have college drop-out managers.
TOO GOOD TO BE TRUE
While there are challenges in the coffee retailing business, there is nothing more fulfilling than be able to raise awareness about the local coffee. Thus, there is a need to ensure proper drying processes and storage to preserve the quality of local coffee.
“There are many coffee shops, but I do not consider them my competitor because we are the only one with this concept,” he adds citing that most coffee chains, especially those foreign brands are using imported coffee beans.
Most coffee shops have expensive coffee drinks because they need to compensate for the high cost of the imported coffee and rental.
The high cost of coffee would also make up for the long hours that Filipinos spend in a coffee shop. “In other countries, coffee is technically a product on the go, that is why we prefer the kiosk type. It is only in the Philippines where people hang out in a coffee shop,” he observes.
Even if they are still small, the Little Farmers Coffee already participates in helping create a better environment. They do not use plastic cups anymore. Customers who bring their own coffee mugs are given discounts.
The Little Farmers Coffee business model is working well.
“We did not expect our business to grow like this, but we are glad for being able to provide employment and steady income to small coffee farmers,” he adds.
Whatever they may have now, the devout Christian couple believe they are just simply blessed.
“It is cliché but it is too good to be true really. So, we keep our advocacy to help others because as Christians this business is not ours. We are used by God to help others,” he concludes.