November 2021 - Sustainable packaging. Secret Label a walk on the dark side.

Date Posted:4 November 2021 

 

“It's choice not chance that determines your destiny." - Jean Nidetch

 

 

November 2021

Welcome to our subscriber newsletter.

October was a rather strange month - starting out fast and furious in the same manner of previous lock downs but by the end of October as restrictions were eased in NSW and VIC, we could see a glimmer of light at the end of what has been a long 19 month tunnel of incredibly hard work keeping up with the relentless demand for fresh roasted quality coffee in the home.

By late October consumers had clearly changed gears and focus to relieve a pent up desire for spending on items that have been unavailable for so long - beauty treatments, haircuts, dining out, events, booking holidays, visiting friends and family. Lock down hairstyles be gone.

With physical retail stores opening up, we are hopeful the intense and excessive pressure that's overloaded and "brutally broken" Australia's parcel networks will start to ease.

The Xmas rush is now building with 6 weeks remaining and the big annual sales events for BFCM (Black Friday, Cyber Monday) yet to run, it will undoubtedly result in another major freight network failure from extreme congestion in the last week of November and early December.

Please be mindful of another round of frustrating delays in the lead up to Xmas - it's been the same every year since 2010 as the 1st week of December historically is particularly bad and the very worst week of the year.

This time around it's likely to be on another level, so please plan ahead and allow more time for deliveries to arrive.

Speaking of Xmas, AusPost have put a stake in the ground claiming that 13th December is the last day for lodging parcels for delivery in order to arrive before Xmas - apparently.

Although we seriously doubt whether AusPost could predict or even guarantee their performances at any time given such atrocious delays over the last 3 months. The performance in Victoria over the last few months has been utterly shocking.

On another note, the cat will be let out of the bag as we are thinking of doing something a little bit sneaky and really cheeky during November so those of you considering whether to unsubscribe from the newsletter because there's nothing in it for you, be warned you will miss out as it’s going to be a subscriber-only offer. In the current climate of rapidly rising coffee prices, this one will be a doozy and it's going to be crazy.

Way back in January, we predicted inflation was going to be a major factor in this year’s economy and true to form, inflationary metrics are now the most watched and debated topic globally as the pandemic disrupted supply chains impose higher costs on the price of goods and services.

Everything is more expensive today – it’s no longer a figment of our imagination…….cars, building materials, parts and components, there's barely any industry or product that has not undergone a price rise since the start of 2021. There's certainly been a big knock-on effect in pricing.

As we noted a couple of months ago, the price of raw coffee shot up by 40% as a direct reaction to frosts in Brazil and fears of continued droughts. Despite some recent rains in the growing regions of Brazil, the global coffee index still remains at a 7 year record high level with no signs of retreating.

Added to the 400% increase in shipping costs, there does not seem to be any valid case for coffee prices to recover and Australian coffee retailers have already rolled though price increases with more rises to come.

There are so many shortages in raw coffee now that prices are being held up with eye-watering differentials.

At mycuppa we continue to offer the most competitive value proposition in the Australian coffee market - freshness, speed, quality and price. We are essentially selling at wholesale prices in a retail environment.

Here's some interesting stats.........there are now more than 2,850 brands selling coffee into the Australian online market place with most of them running their online business as a small side-hustle, yet pretending to be bigger online than they really are (which comes a no surprise).

At least 75% of brands selling into the Australian online segment only entered in the last 18 months (ironically due to the pandemic) and 25% of them in the last 8 months due to a lack of e-commerce resources to develop and launch new online stores.

Some of the outrageous claims by these "new online brands" on social media and advertising about being the biggest and the best are indeed quite amusing.

We are safe in the knowledge that none can match our size, scale, speed and critically our 15 year legacy of invaluable experience as a true dedicated online provider of fresh roasted premium quality coffee in Australia.

As one of the only fully dedicated online coffee merchants with true enterprise grade scale, it's the reason mycuppa can offer a lot more for less.

An update appears below on our sustainable packaging program.

The pandemic well and truly put the brakes on everything relating to packaging innovation over the last 18+ months. It’s still incredibly difficult to source conventional packaging within reasonable time frames, so the development of more environmentally friendly materials has taken a back seat whilst the disruption of the pandemic played out. We are still pushing to improve but with innovation stalling it's been hard work.

Secret Label is a dangerous walk on the dark side with a fully certified Organic blend.

Hard to believe we can offer an Organic coffee when there are so many problems sourcing conventional coffees and the prices of coffee gone through the roof, but we have come up with a fully certified Organic blend. Seriously, this is a great value offering at this price.

Peach, Blackcurrant, Caramel, dark chocolate with orange blossom sweetness.

Oh, I forgot to mention we have a new low sugar powdered Chai product available in our store.
 

November 2021 Secret Label

This month's Secret Label has been really difficult.

Not just because there is a crazy shortage of coffee and we have just gone and sacrificed some of the best Organic lots we can source, but also because it's a walk into that dangerous dark side - blackcurrant and dark chocolate.

These are powerhouse flavor generators, but like anything that's a 10 on the scale of 1 to 10, it also comes with consequences of not appealing to everyone.

But then Secret Label has always been about exploration - discovering the edges and dancing on the delicate footings of what is unique and distinctive without fear.

This is certainly a different coffee and I'm holding my breathe until it proves itself in the field.

A fully certified Organic lot at this price in the current market is a bargain as it should be at least +$3/kg more expensive.

When we came across a pair of nice Organic lots we thought "A-HA" let's give this a spin.

Floral cup with peach and blackcurrants, dark chocolate and a silky juicy body.

A blend with deceptive levels of punchy flavour and our trademark long mycuppa coating finish.

**** ALL SOLD OUT ***

 

Sustainable packaging update

For the last few years we have been acutely aware of the urgency to transition packaging of coffee products into a more sustainable solution.

Yes, we confess to being tree-hugging Greenies at heart as we always try to navigate our business towards reducing waste and recycling. Some of the current initiates such as clean energy generation, all by-products from roasting converted into heat pellets, our roasting equipment utilizes heat re circulation technology and planned investments into electric vehicles, etc. all speak to the core of what we desire to achieve our sustainability goals.

Packaging of coffee beans and ground is not a huge contributor to landfill, but it seems we can't escape confrontations with climate change activists taking cheap pot shots at us for destroying the planet when in fact we are trying our best to instigate change and shift into something that's better for the environment.

It's hard when you are a willing buyer, but there are no sellers - not unlike first home buyers hunting for a house.

We are not a packaging company and to give you some insight of a typical example for the sorts of attacks we must endure - last week a one-time-only purchaser lambasted our packaging because it was not 100% aluminum.

Ironically, when I tried to reason with this activist to explain such a product was not even available for coffee packaging, anywhere, globally due to stringent food safety compliance, no supplier can produce this type of bag for commercial sale, the activist predictably refused to accept the explanation as if their eyes were closed and both hands were over their ears - a complete refusal to listen or understand which is not surprising.

Often it's these people on the attack who are not adequately informed about industry-specific conditions or constraints, they remain blissfully unaware that fresh roasted coffee requires a unique and complex design for packaging in order to provide effective barrier protection, a 3-layer composite construction and a special 1-way valve installed.

It's never as simple as a basic bag for transportation of goods, you see when it comes to coffee there's a complex array of high technology metalized layers bonded with food-grade materials to keep us safe and the roasted coffee fresh.

Coffee packaging is a precise science, everything right down to the micron coatings requires careful specification and testing so the coffee bag will perform under a broad range of rigorous conditions during production use, storage, transportation and end-user applications. The coffee packaging must be durable and reliable.

Due to the advanced demands of coffee packaging it has been relegated to a lower priority by the packaging industry as they focus on other simpler food productions where wins are easier to come by. This leaves tricky coffee bag design to last.

Other ingredients that don't require such high tech specifications for packaging can simply transition to eco alternatives with lower impact. If it was so easy for coffee, it would have happened already and this article wouldn't exist.

Applying undue pressure on small businesses that don't have the resources or capability to invent and implement new packaging solutions is just plain and simple bullying.

Small companies can't invest millions into research and development of advanced materials for packaging - even big companies can't do that in the modern economy, so we are all going to rely upon external packaging companies to keep on inventing and improving their solutions to be at the frontier of technology.

Whilst it may not be obvious, it's a bit more challenging behind the scenes as Australian coffee companies don't have abundant choices when it comes to bag packaging with just a small number of local suppliers that are in effect import distributors of products manufactured overseas. Count them on 1 hand.

Coffee companies also don't tend to make decisions based upon packaging costs as coffee bag manufacturing in Australia is off-shore as Australia's continued demise of local manufacturing capability killed off local production, just like cars it's all disappeared under the ongoing pressures of cost control leading to a total shutdown of coffee bag manufacturing locally.

With all coffee bag packaging produced in cheaper offshore economies it's difficult to assess quality, value and environmental features all at the same time.

At mycuppa, we don't purchase our coffee bags from China (not that Chinese coffee bags are bad), but our Australian-based supplier instead sources directly from Taiwan and Korea as the quality is far superior.

With coffee bag packaging, quality is everything. A few cents saved on an inferior bag is soon lost when the bag falls apart during production (filling and sealing) or the incredible beatings in transit.

So the majority of Australian coffee companies purchase packaging that is made overseas, we must then wait up to 20 weeks for delivery and in many cases we also have to suffer the consequences of quality issues and risks when the bags arrive in a condition that does not match original or agreed specification - we've seen it all - bad chemical smell from improper curing, poor pre-made seals, valves not fitted properly, inconsistent sizing, bags falling apart when filling, etc.

Coffee companies choose packaging that provides an appropriate level of protection to preserve the quality of our products. The alternatives involve rapidly staling coffee, inferior quality and disappointed customers that will look elsewhere - a fast path to commercial ruin.

Last year we implemented a major change on our key product line - 1kg bags, reducing the plastic by 35%. This also came with the added headaches of more bags being damaged and discarded during our production runs each morning so it has not been an easy nor commercially beneficial initiative, but we know it's a step in the right direction.

The pandemic has effectively put the emergency brakes on coffee packaging innovation over the last 19 months it's been incredibly difficult to source even our existing, standard packaging products let alone discover and develop new solutions that meet improved environmental credentials.

Most packaging suppliers have not been able to keep up with demand as the global shipping crisis in the last 12 months means raw materials have been in short supply so all the great new ideas have been halted until situations return to some type of normal.

As countries and economies emerge from lock downs and restrictions, there is still the ongoing shipping capacity challenge which is holding back innovation. We are also aware that some countries have selfishly stockpiled critical raw materials such as plant-based resins used in compostable and recyclable products, driving up the prices and limiting supply which has shifted the priorities to focus on other food ingredient packaging instead of coffee.

Today, we still see some Australian coffee companies trumpet their eco-packaging as a key marketing differentiator but sadly failing to adequately inform customers of the usage and disposal requirements such as the bags needing to be processed in commercial facilities, much in the same way ScoMo makes announcements without following through with implementing policy - makes for great headlines.

The other key point with new eco-packaging is a failure of the coffee company to fully educate their customers on the limitations of their eco-packaging as it relates to preserving or protecting the quality of contents, e.g. a consumer may think they have a fresh pack of coffee unopened, but the high porosity of the eco-packaging means the fresh coffee has gone stale 4x to 10x times faster than traditional packaging through a process called effusion.

Often this detail is conveniently and deliberately ignored in case it risks detracting from the appeal of making a sale.

In our other segments, we are trying to implement improvements to our Nespresso capsule plant.

Currently, our unique co-polymer Nespresso capsules are designed for the ultimate in freshness protection with similar oxygen barrier protection capability as aluminum without the high resource footprint of mining and processing aluminum.

We understand customers desire choices for capsule packaging and we are working on re-tooling our capsule plant for a more eco-friendly solution.

A few years ago we successfully used compostable Nespresso capsules manufactured in Italy, but the very nature of this product meant we had to also include an additional foil-based enclosure for the compostable capsules in order to protect and preserve freshness.

Disappointingly, we see many other sellers of these same capsules offering the capsules in cardboard packaging with scant regard or respect for freshness. It's gone stale so very quickly but that is never mentioned.

Using additional foil shipping bags defeats the benefits of a compostable capsule - there have also been ongoing problems with the compostable lids (paper) instead of foil which meant we reverted to the original foil lids that require the consumer to separate the lid from the base at the point of disposal. Lid materials are still an ongoing problem in the industry, yet so many sellers are ignoring the issue by pushing sales ahead of product quality.

We are currently working on a new solution intended to deliver an end-to-end eco friendly capsule solution. It's yet to be installed and tested, being a couple of months away, but we are excited at the possibilities this offers in what is by far the most waste intensive segment of the coffee industry.

It's important to note we continue to apply pressure upon our suppliers to "do better" in packaging solutions.

Unfortunately, coffee companies don't have the capital or resources to take control of the packaging innovation to develop breakthrough solutions so we will continue to monitor and validate all the latest materials to ensure the product integrity is maintained and our journey to net zero is realized.