Karla Contreras and Fernando Torres created Panacea Cold Brew, a brand of bottled coffee that is peeling for a place in the coffee industry. They reveal their strategies to position themselves in the market.
Karla Contreras and Fernando Torres no longer liked being in an office. For a long time they worked sitting in front of a computer in an advertising agency in Mexico City, until one day they decided to resign to turn their lives around. The reality is that the entrepreneurial spirit began to awaken in them.
After leaving the company, Karla studied a master’s degree in communication for social change, and Fernando opened a bakery after having studied gastronomy. Both were looking for a source of income that was far from an office. In fact, they thought of creating a brand of sauces and natural jams, but decided to start in the coffee industry when they saw that it was the product that sold the most in Fernando’s bakery.
This is how Panacea Cold Brew , a Mexican cold- bottled coffee brand , emerged . Unlike the hot drink, this cold brew is 60% less acid, contains more caffeine, the flavor remains shortly after ingestion and contains light notes of brown sugar, caramel, chocolate and citrus. It can be drunk directly or diluted with milk, ice and water, it can even be used for milkshakes, smoothies, cocktails and pastries.
This small company has been in the market for two years, but already has 50 points of sale where it offers presentations of 720 milliliters, in organic stores, coffee shops and specialty bars in Mexico City, Querétaro, Puebla, Monterrey and Valle de Bravo. . In addition, it is a provider of restaurants and mixologists with 20-liter presentations, and recently started a distribution scheme with companies such as Beertap that supply other establishments.
The history of this venture began in 2015, after Karla and Fernando discovered that cold brew has little competition in Mexico, while in countries like the United States it is a product that is consumed frequently. “We saw that there were no bottles with a good coffee extraction to take it at home or elsewhere. You had to go to a specialty coffee shop to have that experience, “says Fernando.
They started the business with 80,000 own pesos and doing tests of the infusion in Karla’s department, who used to drink American with ice. During the first six months of 2016, they prepared the recipe with which they went on the market that same year.
Karla says that they started selling with the idea of generating income to open a coffee shop, but they found a surprise: they sold little and it was not enough to rent a place. Although they managed to place the drink in several establishments in the Mexican capital, they received the payment until the customers bought the product, and therefore, did not have cash flow to continue operating. They had to sustain the business with money from their own pockets and change the format of purchase to payment on delivery.
Image: Courtesy Panacea Cold Brew
And just like those entrepreneurs who build a brand from scratch, Karla and Fernando have a great challenge: to win market and compete with the giants of the industry. Although there are few cold brew brands in Mexico, the coffee market is dominated by large companies such as Starbucks, Punta del Cielo or Cielito Querido, even brands of soluble coffee such as Nescafé or Legal that is sold in small stores and retail.
For this reason, one of the strategies used by Karla and Fernando to win the public’s preference is to promote the product in events such as La Lonja, a bazaar to publicize new design proposals, or to make activations (demonstrations) in organic markets. and at the points of sale. Fernando believes that the best way to promote a brand is to interact directly with customers and tell them about the benefits of the product.
Another sales strategy is to disseminate on social networks, mainly in instagram, where they provide recommendations on how to drink coffee and explain the main attributes. In this way, they are also overcoming another of the challenges they have had, that of breaking the idea that coffee is only hot and that consumers understand that the cost is high due to the production process required, explains Karla.
Thanks to this expertise, the company grew 80% from July 2016 to July 2017 and recovered the initial investment in almost a year, which they reinvested in the installation of a production center located in Mexico City, where each month they make up to 800 liters of coffee with a team of five people. Currently they sell more than 120 bottles in the consumption centers.
THE FUTURE OF THE BRAND
These entrepreneurs confess that they used to worry when they launched other cold brew brands, but now, far from seeing the situation as a competition, it represents an opportunity for more people to know the product and the market is more profitable. “We need to stop seeing ourselves as competitors and start supporting each other,” says Fernando.
Although this industry is very competitive, Karla and Fernando consider that there are great opportunities to start, especially with Mexican coffee because it is of high quality and Mexicans need to know the country’s producing areas. For now, the biggest goal they have is to place the drink in the large retail chains. “Entrepreneurship is a race of resistance, but you have to be prepared because everything is very unexpected. We are not going to let go of this dream. “
Mexicans love coffee
• 85% of Mexicans drink one to three cups of coffee per day. Source: Profeco
• 87,300 tons of coffee were consumed in Mexico in 2016. Source: Euromonitor.
• 10,000 million pesos is the market value of coffee consumption centers. Source: Euromonitor.
• 61,653 coffee shops exist in Mexico. Source: National Directory of Economic Units (DENUE).
• 2 million coffee consumers are added every year. Source: Fira (Instituted Trusts in Relation to Agriculture).
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