How coffees are sold at wholesale—The wholesale salesman's place in merchandising—Some coffee costs analyzed—Handy coffee-selling chart—Terms and credits—About package coffees—Various types of coffee containers—Coffee package labels—Coffee package economies—Practical grocer helps—Coffee sampling—Premium method of sales promotion
Coffee is sold at wholesale in the United States chiefly by about 4,000 wholesale grocers, who handle also many other items of food; and by roasters, who make a specialty of preparing the green coffee for consumption, and who feature either bulk or trade-marked package goods.
Much the largest proportion of the wholesale coffee trade today is made up of roasted coffees, though some wholesalers still sell the green bean to retail distributers who do their own roasting. Most of the roasted coffee sold is ground; although in some parts of the United States there is at present a growing consumer demand for coffee in the bean. Of the coffee sold in trade-marked packages in 1919 in the United States, about seventy-five percent was ground ready for brewing.
The larger wholesale houses generally confine their operations to the section of the country in which they are located, but some of the biggest coffee-packing firms seek national distribution. In both cases, branch houses are usually established at strategic points to facilitate the serving of retail customers with freshly roasted coffee at all times.
In recent years, too, it has become a general practise for the home offices, or main headquarters, to advertise their product in magazines, newspapers, street cars, and by mail and on billboards; while the branches solicit trade in their territories by means of traveling salesmen, local newspaper advertisements, booklets, circulars, and demonstrations at food shows.
The Wholesale Salesman
The traveling salesman is probably the most effective agency in securing the retailer's orders for coffee. A good coffee salesman not only sells coffee, but he teaches his customer how he can best build up and hold his coffee trade. He acquaints the retailer with all the talking points about the coffee he handles, how to feature it in store displays and advertisements, how to stage demonstrations and to work up special sales.
If he is a good salesman, he does not permit the merchant to buy more coffee than he can dispose of while it is still fresh. And he shows the dealer the folly of handling too many brands of package coffees. If he sells coffee in bulk, the efficient salesman has also a sound working knowledge of blending principles, and is able to suggest the kinds of coffee to blend to suit the particular requirements of each grocer's trade. In short, he takes an intelligent interest in his customer's business, and co-operates with him in building up a local coffee trade.
Some Coffee Costs Analyzed
In estimating the price at which he must sell his coffee to make a fair profit, the wholesale coffee merchant has many items of expense to consider. To the cost of the green coffee he must add: the cost of transportation to his plant; the loss in shrinkage in roasting, which ranges from fifteen to twenty percent; packaging costs, if he is a packer; the items of expense in doing business, such as wages and salaries, advertising, buying and selling, freight, express, warehouse and cartage, postage and office supplies, telephone and telegraph, credit and collection; and the fixed overhead charges for interest, heat, light, power, insurance, taxes, repairs, equipment, depreciation, losses from bad debts, and miscellaneous items.[334] The average loss for bad debts among grocers in 1916 was 0.03 percent of the total sales, according to the director of business research, Harvard University, who estimated also that the common figure for credit and collection expense was 0.06 percent. The total cost of doing business has been estimated as ranging between twelve and twenty percent of the total annual sales, so that a bag of green coffee costing $16 in New York or New Orleans costs the coffee packer in the Middle West from $22.33 to $24.56, according to the expense of carrying on his business.