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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.

43 Comments

  1. Crazy!!! Was it UNFI? Was it Kroger? Spill the beans yo!!!

    Good luck with the sale and a big FU to the man. Shitheads have no soul.

    1. Lol I’m a complete stranger who stumbled on this from a social share by a friend and all I have to ask you is who hurt you? I’m a small business consultant in the foodservice/restaurant industry and the sheer number of small business owners who are simply trying to find their way and just need a helping hand is unbelievable. My clients trust me implicitly to guide them in the right direction and provide ethical advice that will keep their livelihood safe. Only those who were party to this transaction know exactly what happened, but it’s 100% believable that a small business owner didn’t realize that distributors deal in cases, not individual retail sell units. Seriously, take a look in the mirror and have a little empathy.

  2. I am familiar with your company name but not your coffees…is there a description for the modest, enthusiast and the dark? I will order some but would like to know about the different varieties. Thanks!

    1. This is absolutely heartbreaking. My husband and I own a small scale coffee roasting company and I can’t even imagine the heartache and stress you must be feeling.

  3. What happend was bullshit and we have lived through it for the past 6 months. Maybe we do suck at business, we are just trying to make specialty coffee more accessible to people. Hope you have a good one.

  4. I’m so glad you all have gotten the coffee to move so fast, only 142 cases of dark left? The enthusiast and modest are both sold out. I’m glad it’s starting to work out for you!

  5. So the good news is you are selling all the coffee.
    Just tried to order, including entering my credit card, and it said out of stock. So good luck to you.
    Might want to update your site. Or edit the article. To Indicate this. Thanks.

  6. I’m not from Chicago, and i have 21 pounds of coffee in my storeroom now. I belong to a forum, AmazingRibs.com, and one of the other members from Chicago posted a thread about your plight, and needless to say it pissed me off what happened to you. So even though I don’t need any coffee, I ordered a case just to help out. I hope you make it through this. Remember, it’s better to be small and keep your nose over the rim, then to try to go big and sink to the bottom of the cup.

  7. Glad to see it is moving for you.

    We too had a nightmare with a large natural foods distributor and a 30 store upscale grocery store chain. We were played by the distributor rep to gain favor with the coffee category buyer. Screw the small vendor game. I threatened to take the distributor to court and call the grocerey buyer as a witness. They settled without needing an attorney. Took back several pallets and firesaled them through.

    Big business lesson. But not grasping the huge cash flow burden on small grocery margins may have been the killer eventually. Still learning and still here.

  8. I’m glad to see this is improving somewhat, but please consider changing your perspective a bit. If servicing your debt is a burden then do not take our donations and return them in kind to a food pantry or any other perfectly deserving cause. We are donating to you because we want to see you in the future. You’re in a rough spot but you can recover and you can be a positive force in the community AFTER you are stable. Mistakes happen even huge mistakes, but your community is invested in helping you through this so understand our donations and purchases are to help keep you going next year not for you to give to others.

  9. Sounds like they made some bad business decisions, but I don’t really see the grift. This is a pretty small-time operation and the fire-sale prices can’t possibly be yielding much profit. Selling coffee at $7/bag with free shipping probably means you are breaking even. If you go on Amazon, a bag of Tim Hortons goes for $6, and they are operating in a whole different league in terms of volume. And nevermind the fact that Amazon pays a fraction of what pretty much anyone else pays to ship directly to you.

  10. 100% Legit.
    For anyone that doubt this story as a regular customer I saw the highs and lows of this playing out.
    I pick up coffee at Modest every few months. (Premium coffee at a fair price) When I stopped by over the summer It as frantic and exciting. They told me of what they were working on and it as all hands on deck. You could tell they were exhausted but I was excited for them as I could see their excitement. I went back in the fall asking about the “big order” and they explained what has happened. Braves faces were on but you could feel the disappointment and frustration. Looks like I missed the boat on caffeinated but going to grab a case of their decaf. Happy to see this is getting behind them. Life is good.

  11. So sorry you are experiencing this. Crazy how rude and heartless people can be. Business is cut throat and everyone is always trying to take advantage of the smaller guy. Screw that big company and screw the fools on here talking out of their butt. You should have put their name on blast, but I know that would blackball you. Hope your business grows and get out of this mess. Everyone thinks business owners just roll around naked in the piles of cash but reality is small businesses struggle so much. I used to own a business and it was crazy hard. I left it cause I didn’t want the rest of my life to be a constant hustle to survive. Good luck to you, wish you prosperity.

  12. Crazy business “adventure”, worked for a (medium size)coffee company packing, mixing, forklift driver etc.
    Seen, heard a lot of stories like this (Not that bad). It’s a tribute that you manage to find the cashflow to pay for all that green coffee – without payment. Worked lots of overtime because of fire, acquiring two other coffee companies, etc.

    Third party label production always seems like a lopsided business partnership. Great volume, but margins are ehh – building up other ppl brand, not much leverage in negotiations – they always have backup to supplier vender.

    The plus, is great film, roasting specs. Circulating large amount of green coffee(fresh, volume discounts)

  13. Oh brother, this was a gut wrenching read. Fucking A! By the time I finished reading I think I was grinding my teeth so much, I need new enamel. Boy! I really hope you guys can pay all that debt. See? That’s the reason I never wanted to have my own business: first one in, last one out, got all the risk and responsibility, on the hook for everything and the last one to get paid. That, to me, is a lufe if misery. I hope for a great and Happy New Year to you all. … I need a coffee …

  14. Really happy for you that this worked out and hopefully you’ll get some customers for life.

    There does appear to be some negative comments online and I think it would really help if you could explain one thing – because it’s a question that keeps getting asked – especially on hackernews.

    If you had a contract for $250,000 for 6000 units – which you thought meant bags, then:
    6000 “units” for $250,000 is $41/unit. At wholesale. For a product that retails for $16/bag.

    Why were there not red flags at this moment? Surely you didn’t think a big grocer was going to pay $41 per bag for a product you sell at $16?

    1. It is actually explained in the blog posting. If you read it again, you will note they never intended to recieve $250,000 for 6,000 bags. They Did expect to be paid for the bags they delivered. As they continued to deliver material, past the 6,000 bags, and had not recieved any funds… they were informed about the bag vs unit difference. They would not be paid unless they completed the order of 36,000 bags.

      There were checks on the account on hold. Each check for an installment of the product recieved. In the food industry these contracts can run annually or even over a 3 year period. It is not unheard of for a larger chain to contract for a material over the course of multiple years. 6,000 bags a year would be reasonable to consider in their end.

      Pricing on contracts is usually marked per pound and not per unit (definitely not price for contract entirity). The debt, probably, had to be taken out when they were not receiving funds for the already delivered material and still had another 30,000 bags to create. – I am speculating based off of what was explained. But, I have witnessed these things play out and can see that they did everything they could to fulfill their promise. They stayed good to their word – even when others did not. They delivered!

      Wishing Modest Coffee nothing but the absolute best! You delivered, pulled through, and will hopefully now have new long time fans!

      1. It isn’t explained hence why you wrote:

        “I am speculating based off of what was explained”

        I have no doubt this is genuine, but it’s not well explained.

  15. I’ve made a similar units vs items mistake a few times while ordering things for pharmacy, so I can totally see how it’d happen here. People saying this is a grift have never had to order things or manage inventory for a business and it shows. Shame on them, and on the distributor and food broker who weren’t at all clear with you about their expectations! I’ll see what I can do when I get paid on the 3rd.

  16. The unit vs case thing is a problem I experience in the medical field as a supply tech. It’s called “unit of issue” and you’d be amazed how even in a life or death scenario these simple descriptions are rarely standardized. I ordered a case of decaf. I’ll let yall know how that turns out. Best of luck.

    1. I just got that decaf order and I really like it. I am not a coffee aficionado or anything like that. Really delicious black, better than Costco decaf, and the best part it tastes great.

  17. As someone who works in a big small-business company, I can’t tell you how many times our ordering guy has either mis-ordered, thinking he’s asking for units and being given cases, or the distributor misships – sending cases when we asked for units. Both of these things happen at least 3 out of 4 of our weekly shipments every month. Each brand is different and uses different language, same with each distributor, even each employee. I can’t imagine navigating that for the first time.

    Like, I understand people being sceptical of this story, as folks do scam on the internet, but. This is completely feasible. And literally the worst thing that could happen by helping is you get six bags of coffee.

    Looking at these comments, it seems like they’re sold out. I’d be interested to see if there’s a follow-up anywhere! I hope things are turning around!

  18. I just happened to see this story as a suggested article, so I did not know anything about your company before (but I had heard the name). Clicking around your website I very much support what you are doing. I tend to buy my coffee from some local roasters (we have a disproportionately large number of them, including many who are trying to do similarly awesome things), so I am not someone who would likely be one of your customers, but I appreciate good quality and great ethics.

    Reading this article brings up a few questions/thoughts. I have not personally been heavily involved in any businesses that sell physical products, just services and intellectual property (I did work for a hardware store in college, but I was not involved in any purchasing), but I have done several business deals and signed many contracts.

    Did no one every ask what they meant by “units” or say “bags” or “cases” or “pallet” anything like that, on either side, to indicate the understanding of scale? Even “case” seems to indicate differing quantities – a simple online search comes up with a variety of quantities- 4 bags, 6, bags, 12 bags, etc. How did they indicate that a case was to be 6 bags, or was that just the size that you had been doing already? There was never a conversation like “wow, 6,000 bags is a lot for us to do, but we could make it happen.” “What? 6,000 bags? No. We want to order 6,000 cases.”

    Was there nothing in the contract talking about pricing, profits, total amounts or anything that would indicate the volume in the equation?

    I am only basing this on what was shared here, but with the information provided, it reads like this was more misunderstandings and poor communication, maybe even some incompetence on the part of the broker, than an intentional “grift.” If the product was returned to you and you were not paid, who was it that tricked you and how did they benefit? I’ve had my share of business dealings go sour, and it can sometimes be hard to tell the difference between maliciousness and incompetence. If no one actually gets something out of it, it is probably more the latter than the former. As it sits currently, who benefitted from this the way that it played out?

    With selling off the 34,000 bags at a discount, did you end up being able to make any type of profit or even just recoup the losses?

    I hope this doesn’t end up causing your business to close. There needs to be more placing doing things for good reasons. Toi many have closed over the past 3 years.

    1. Hi there, thanks for your well thought out response. Of course over the course of 9 months (from the initial order) there is a lot of information and details that would fit inside of a book, rather than a blog post. As it is, this blog post is lengthy. With a distributor there is not a contract for a certain amount of product. There are contracts that indicate the policies that we will abide by. How it works is they order and are invoiced for what they order. The 6000 units was what they told us their estimate was. In every other business dealing in the grocery industry we dealt in units as an individual item so this is not something we thought to question. We were told, expect 6,000 units in 2 months, we prepared for 6,000 units.

      As for the semantics over what constitutes a grift, if someone tells me they have a buyer for a product, that they will pay for that product, and then they come back and say nevermind and now this is your problem, yes, to me that’s a grift. They also tried to charge us over $30,000 to take the coffee back, on their mistake, which I also consider a grift and actually extortion. This is where we got lawyers involved. We may have differing definitions but at least you understand my usage.

      We will not profit on this coffee and after shipping costs we will likely still be somewhat in the hole. But that is ok because we are much better off than we were before. We couldn’t be happier that this coffee had found a new home with so many amazing people when we were at a point of dispair.

  19. Thanks for the reply. I definitely get that there would be some left out with condensing so much into such a small space (I’ve had a few myself that have been hard to explain to people who didn’t live the same crazy experiences that I did – some I couldn’t even fully retell a decade or so late since it was so much that happened so fast and it was traumatizing enough that I’ve apparently blocked some of it from my memory). I appreciate the wisdom of not sharing any more details than you did, both from the perspective of wanting to not “name names” and burn any unrelated bridges or damage any potential lawsuits, but it does sound like you have a lot of good notes in case it comes to that.

    With the past experience of it always being by the bag with others, it makes sense to think that is what they wanted, since they didn’t clarify.

    I can understand your use of terminology. It does still make me wonder – did someone end up profiting because of happened? It looks like the distributor didn’t actually end up selling anything since they sent it back to you (and tried to charge you for it, which I can see why they tried it, but it does look like they are the ones who couldn’t deliver on their end of the deal). Was there a reason why they didn’t try to move a smaller amount of it, since it looks like they were the ones to misorder? Did someone end up making money on this somewhere (other than where you took out loans, credit cards, etc)?

    It is great that so many people were able to jump in and buy the coffee. I hope that you end up with some new customers as a result. And I hope that it is a least a small enough hole that you can see an obtainable way out.

  20. Whats the estime on shipping all of these cases? Understandably it will take some extra time but curious about a time frame. Thanks!

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