Yahoo Finance ‘We were wrong’: Coffee brand pulls out of Tesco after learning ‘simple truth’
The boss of an independent coffee brand has opened up about the decision to pull its products from the shelves of Tesco.
Roastworks has been available at Tesco shops across the country following a successful trial in 2022.
However, the Devon company has now decided to terminate the deal after discovering the brand’s four products were “not selling enough units to warrant having shelf space in the largest retailer in the UK”.
Roastworks was founded by husband and wife team Will and Caroline Little in 2014 while its products are still available through Ocado, Waitrose and Whole Foods Market.
The company clarified that it has not been delisted by Tesco and that the chain “made it very clear to us that we had an opportunity to improve our rate of sale”.
‘Things don’t always pan out as you’d hoped’
In a statement posted on LinkedIn, managing director Will Little said: “As of this January we’ve decided to pull the Roastworks brand out of Tesco.
“We’d like to take a moment to explain why and reflect on the valuable lessons we’ve learnt over the last year.
“I think it’s super important to talk about both successes and failures on here, as in reality things don’t always pan out as you’d hoped.”
Mr Little said Roastworks took part in trial in 62 Tesco stores in 2022 before being offered a deal to sell its products in all the supermarket’s UK shops.
The hope was to follow in the footsteps of the likes of Brewdog who had found success through selling its craft beer through Tesco in 2009.
‘Turns out that theory was wrong’
“It’s abundantly clear that most consumers discover speciality coffee in independent coffee shops, but we’ve always had a hunch that there might be another way to do this – through the grocery multiple retail space”, Mr Little added.
“Let’s face it, many other challenger brands have achieved this in other categories. Not least Brewdog who in 2009 began a revolution in craft beer thanks to a Tesco listing.
“If our memory serves us correctly, back then a bottle of Punk IPA cost £1.75, whereas a bottle of mainstream beer was around £1.25. So, for the customer, to trade up to craft beer didn’t feel like a huge financial burden.
“Conversely, in speciality coffee we often expect the customer to pay up to – and beyond double – that of mainstream brands.
“We’ve often wondered, is the price of speciality coffee the limiting factor in getting customers to trade across from mainstream brands? Would a bag of speciality coffee at £5 be the game changer? Turns out that theory was wrong. We were wrong.”
‘It was simply too compelling to turn down’
Mr Little said that the “simple truth” is that Roastworks is not selling enough units to “warrant having shelf space in the largest retailer in the UK”.
He added: “Don’t get us wrong, we’re happy with the rate of sale, consistently hitting three units/branch/week (UBW) on average, which is about the same as in Waitrose (which we think is pretty decent). However, to be in the running in Tesco you need to be hitting at least four to five UBW.
“It’s important to clarify, we haven’t been delisted and the buyer made it very clear to us that we had an opportunity to improve our rate of sale (RoS).
“However, the amount of money we’d have to pour into brand activation to improve our RoS would make no financial sense as a small, self-funded business.
“When the Tesco opportunity was first presented to us, it was simply too compelling to turn down. In hindsight we now know it’s not the right opportunity – and time – for our brand, but that’s a process we’ve had to go through.”
