The CRU Kafe mantra – coffee and content are king
Friday 30th June
With coffee culture booming and Nespresso machines revolutionising the way we consume coffee at home, the coffee pod market is not only the fastest growing category of coffee but worth more than $13bn worldwide. However, these single-serve pods have a mounting environmental backlash as the waste piles up. We spoke to Colin Pyle, Co-founder of CRU Kafe, a coffee pod company committed to great taste, environmental responsibility, and a zero tolerance to waste, to pick his brain on CRU’s success and growth.
CRU Kafe was founded in 2013 by Colin Pyle, John Quilter and Bodil Blain, who were dissatisfied with the standards of coffee pods on the market – from both a quality perspective and in terms of their environmental impact. With the expiry of Nestlé’s Nespesso patent on the horizon, they saw an opportunity to provide coffee tailored to taste and convenience but without sacrificing ethics – their premium, eco-friendly Nespresso-compatible pod business was born. Their journey began on Kickstarter with a campaign that raised £15,000 from over 100 customers. Now, just over 3 years on and a few angel investors later, they are taking the market by storm, continuously improving their product range with their newest addition Coffee Flour and soon to come compostable pod.
Distributing across their website, supermarkets, Amazon, hotels, offices and an array of distribution channels internationally alongside pop-ups and events, CRU have truly harnessed the advantages of going multichannel. Combining both online and offline so that consumers can choose how to engage and touch as well as being convenient and integrated, is a significant factor to creating a brand for a consumable product. With the likes of Graze thriving on this approach and smashing the retail sector, the old chime ‘focus focus focus’ isn’t always the case, especially where brand creation is concerned.
Amazon – not just a market place
When building a luxury brand Amazon may not seem like the obvious market place, yet CRU see its potential beyond just being a marketplace but also an effective marketing channel.
“I wouldn’t not pay for PPC the same way I can’t not be on amazon… I would just miss out on my customers”
Amazon not only acts as an effective product search engine for consumers but CRU have also found it to be a cost effective method of testing out new markets, for example when they launched into the US. Trialling the product on Amazon presents a way to scale and understand market places before landing on the ground.
Content marketing and solidifying your brand
Whilst others shy at the thought of content marketing, CRU captivates their audience through great storytelling, from a spoof of Nespresso’s George Clooney adverts to their latest documentary in Columbia in partnership with the Jamie Oliver Group. Content marketing has and will continue to be a crucial part of scaling and growing the company, helping them to differentiate themselves and engage their customers to create a strong brand rather than just selling a commodity.
“Technology is an incredible tool to cut through all the corporate BS and allow brands to talk directly to consumers and create an honest, authentic and transparent relationship.”
Colin wants people to buy the story, not the product. Of course, product quality is essentially as well and while the first purchase is all about brand, the second is about the product, and as a compatible product the entire business model relies on retention. Although taste is a salient retention factor the user-experience created by the brand is part of that product. The overall advice? Create content that is authentic and consistent to make people buy into what you do.
The new subscription models
Subscription models today present a new twist on an old standard. Signing up and subscribing is no longer a long-term commitment but simply an automatic reorder that can be cancelled at any time. Even though there is still scepticism to subscribe by older demographics, many tech startups have flourished with this approach.
Initially sold on this method, CRU quickly realised that coffee, being a product consumed both habitually and socially, caused really volatile consumption behaviours. This drove them to rethink their business model because even with the advantages of a ‘re-vamped’ vertically integrated subscription model, which was more responsive to the varying needs of their customers, sticking to a subscription route would require a remarkably flexible and robust model too complex to implement.
Funding and relationships with investors
Following Kickstarter came 5 investment rounds from 24 investors (most of whom are Angel investors), totalling just over £2 million in funds. Crowdfunding provided funds for the embryonic stage to set up CRU’s supply chain but also acted as a tool for market analysis and a means of justifying the business to investors.
“I love using Crowdfunding to prove a concept, to prove an idea…having any form of justification helps!”
In Food Tech, unlike other tech sectors, profitability comes later – profit margins for a 2 year Food Tech business are unattractive to investors with a private equity profile. So it is key to form a cohesive relationship with investors – setting out detailed monthly updates with coffee catch ups on a quarterly basis to maintain a constant dialogue. The CRU investor’s role goes beyond merely being a source of finance but helps to steer decisions.
Colin shared his insights with us when he came to talk at YFood Tech Wednesdays on 31 May 2017. YFood Tech Wednesdays is our free monthly meetup held every last Wednesday of the month. We get founders, startups, futurepreneurs and larger brands coming together over their interest and passion for Food Tech and we’re always welcoming fresh and familiar faces. Be sure to join us next month for another exciting instalment!
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