How we got grifted by a multi-billion dollar distributor and need to move 30,000 bags of coffee

UPDATE, 10:56PM CT: THE POWER OF THE INTERNET SAVED THE DAY. All of the bags of caffeinated coffees sold out. That’s approximately 24,000 bags of coffee. You all are amazing! We are overwhelmed with gratitude and will update tomorrow. Hopefully we can find these lonely bags of decaf a good home, too.

We’ve had a story we’ve wanted to tell for some time now, but had to wait to see how it would end before we could tell it. We had hoped we would have really exciting news when this time came. It has indeed, to our dismay, ended in just about the worst case scenario and we are now ready to share. It is really hard for us to be publicly vulnerable like this, but here it goes.

TLDR: We got grifted by a multi-billion dollar distributor for $250,000 and now we’re over $200,000 in debt and need your help to move 5,000 cases of coffee at half price. You can find that coffee here.

You all may remember a rather large order that we were working on over the summer. That order was 34,000 bags and was supposed to be our big break. Everything went very terribly and now we need your help. Here’s the story:

In January 2021 we hired a grocery consultant, known as a food broker, to help us transition into nationwide distribution. This was someone we’d worked with before and someone we thought we could trust. At the time, after exploring various options for growth, working with one of the largest distributors of specialty goods made the most sense. Self distribution locally in grocery stores was becoming a lot for us to manage and this transition would not only alleviate us of that in order to focus on other aspects of the business, but would also help us expand into new markets. 

Throughout the course of 2021, we went through the process of becoming a vendor with this distributor but had not yet transitioned any customers as of spring 2022. It is important to note for a later part in this story that we had not transitioned any existing customers over, so put a pin in it that we are still considered a new vendor.

In April 2022, a representative from this distributor reached out to us to see if we would be interested in participating in an online specialty coffee program for a major nationwide retailer. The opening order would be approximately 6,000 “units”. At the time we knew that 6,000 bags of coffee would be more than we had ever done in one order but we knew that we could handle it. Us, with our food broker/consultant’s support, agreed to participate. Again, note this 6,000 “unit” figure and that our food broker, who was hired to guide us through this transition into larger orders, was on the same email and helped us accept this proposal. We were so excited for what we thought would finally be our big break. Coffee is a hard business and so full of challenges, but we have always optimistically felt that hard work begets big accomplishments. 

We were told to expect the order in June 2022 and we were also told that the distributor would need to receive all the coffee that they ordered, every last bag, before they could ship it out to the retailer. A side note to make, the grocery business is a difficult business. One challenge is that vendors guarantee their products. That means we are responsible for returns, product that has aged past its prime, etc. Distribution is this on a much larger scale. This is where the point that we were a new vendor becomes important. With this distributor, that also meant that as a new vendor, we were subject to payment hold. Payment hold means that we would not get paid on our first order until it leaves their warehouse in its entirety. After that first order leaves we are subject to normal terms for all orders, even if they haven’t sold through yet. Since this was a rather large order, we asked our food broker if this applied and he said “no, this order is a [grocery world term for exception] so you will be paid right away.” Turns out he was wrong.

June 2022 comes, and the orders for this retailer start coming in from the distributor. This coffee was shipping to five distribution centers so we were receiving multiple orders. The orders were large but we thought we could handle it. Then the orders kept coming, spread apart by days. Soon we were well past the 6,000 units we thought the order would be and we were starting to freak out a bit. We were frantic looking for help and frantic trying to figure out what was going on. The food broker just advised us to keep on going with the orders but was generally unconcerned. Then, 3 weeks into the process, with the orders still coming, Marcus pointedly asked him about why they were ordering so much more than the 6,000 bags they had originally predicted. The food broker laughed and said “I wondered why you’ve been so upset and concerned. When they said ‘units’, that was cases. They’re right on target so far.” You can imagine how we felt in that moment, realizing that the person we hired to make this a smooth transition and to guide us and to tell us the things we don’t know failed to ever ask us if we were ready for a 36,000 bag order. This is equivalent to a year and a half’s worth of coffee for us. We would NEVER have agreed to this had we known. It was more than we could physically or financially handle. We immediately severed our relationship with this food broker figuring at this point we were better off figuring this out without him.

So, we are midway through this order when we learn that it’s going to get much more difficult for us. Meanwhile we can see in the distributor’s system that payments for the first orders have been approved for payment but there is a hold on the checks. We reach out to the distributor and are informed that we are indeed on payment hold and that the food broker was incorrect when he told us that this order was unique because it was for a specific retailer and supposedly had a place to go. We were now in too deep to stop and we knew our only way to get paid would be to finish the order so it could leave the distributor and go to the retailer. 

Mid July, after 6 weeks of roasting 21 hours a day on the roaster in 3 shifts, working 12-16 hour days, regularly working until 11 pm to finish bagging and boxing, bringing in every friend, young and old, to help get this order done, we sent off the last pallet. In the end we produced 34,000 bags of coffee, an insurmountable feat. We were exhausted, mentally, physically, and emotionally, but we did it. We figured it would take a couple of weeks to move to the retailer’s warehouses and then the payments should be released. To make this order happen, we had to take $45,000 in personal loans from friends and family, $65,000 in business credit card debt, $35,000 from a business loan, $60,000 in personal credit card debt, $20,000 in outstanding invoice debt, and $11,000 in loans from us personally to the business, for a total of $216,000 in debt. We maxed out every credit card and depleted our personal and business savings. We had no other choice but we reassured ourselves that the $250,000 that this opening order would pay us and continued future orders from this retailer would be worth it in the end. 

But then the weeks ticked by without any movement on this coffee. Weeks turned into months. Our emails to the distributor were cagey and vague. The person managing this went on maternity leave and the reps filling in blamed that on the lack of information. The person on maternity leave came back, and this coffee still had not moved and we still had no answers. Finally, at the end of October, we got the answer we expected but dreaded. The distributor made a mistake and overestimated the needs of the major retailer and the deal was off. We could arrange to have the coffee shipped back to us or donate it for a tax write off. I know the FAQ that you are wondering right now, and yes, they can do that. Going back to how the vendor guarantees product, according to the contract that we signed, this is now our responsibility. It didn’t matter that they made a $250,000 mistake, it was on us to figure out what to do with this coffee. They were no longer going to warehouse it, it is now our problem. This is what multibillion companies with teams of in-house lawyers can do to small businesses that don’t have endless financial resources. To answer another FAQ that you are probably thinking, yes, we do have a lawyer and we are currently following the advice of our lawyer in everything we are doing. We can challenge the contract but legal fees could run over $30,000 and take years. Moving this coffee is our best option.

So, now 2 months later, after negotiating away a lot more fuckery that this distributor tried to pull on us (like trying to charge us over $30,000 to take this coffee back due to transportation and holding fees, etc.) this coffee is in the process of being returned to us. We have to rent an additional temporary unit in our complex because it is an insane amount of coffee. This is an additional monthly cost that we cannot afford in addition to all the debt payments, but we are thankful our landlord is only charging us for the square footage that the pallets will occupy, not the whole space. 

We have explored every wholesale avenue we can think of to move this coffee. We tried finding new accounts within the distributor’s network with some meager success, we tried an overstock retailer, an overseas connection, and a new discount store. We reached out to a discount grocery connection and he offered us $2 per bag, which would still leave us $150,000 in debt. It is hard to move 6 month old high end coffee and be able to cover its costs.

This is where we need your help. We have approximately 30,000 bags of coffee, 5,000 cases, that we are going to sell for half off and offer free shipping. The amount of coffee is mind boggling. It would take a person drinking one bag a week almost 600 years to drink all this coffee. We don’t have that kind of time. This coffee is still good. It was roasted in June and July 2022 with a one year best buy date. If we can find 5,000 people to buy a case we can put this whole experience behind us. Or 2,500 people to buy 2 cases. Or any other combination of people and cases. Each case contains 6 bags. The Modest and The Dark we are selling for $42 and The Decaf and The Enthusiast we are selling for $48 plus free shipping. That works out to just $7 and $8 per bag. 

We are hoping that you will not only buy a bag but that you will tell a friend, or many friends. It is an amazing deal on amazing coffee. And you will be able to help us get out of this bind that we are so upset to have found ourselves in. There is a financial aspect to this, as just the minimum payments on this kind of debt are crushing, but there is also a huge emotional component. Figuring out how to make this happen is one of our biggest accomplishments. It was supposed to be our big break, our opportunity to build the ethical company we strive to be on a larger scale. We had temporary co-workers that we had hoped to hire on permanently that we had to let go. We had a dream of hiring refugees that were new to the country and single mothers that have a hard time finding flexible work. We wanted to be an outlet for good, to pay a living wage, and to give back to our community. The loss of these dreams has been the hardest pill to swallow and the one that still brings us to tears. We don’t know if this fire sale will work, but it’s our last ditch effort. We have to do something, anything, to make this right. If you’ve made it this far, thanks for making it to the end. Even if you can only hold space for this story of ours, it means a lot to us.

Go here to buy: Fire Sale! Half Price! Case of 6 Bags

Jenni’s sister setup a GoFundMe to manage those who would like to make a coffee donation. For every $50 donated a case will be donated. You can nominate a recipient or we will donate to a local food pantry. That link can be found here.