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“We will be ready to take advantage of the market shift” – Westrock Coffee CEO, Scott Ford

World Coffee Portal caught up with Westrock Coffee CEO Scott Ford to discuss navigating a complex global trading environment, tapping into a new generation of coffee consumers and why the US ready-to-drink market is primed for extraordinary growth

Scott Ford, CEO, Westrock Coffee (centre)



Westrock Coffee was co-founded by Scott and Joe Ford in 2009 after an influential trip to Rwanda that sparked their mission to source high-quality coffee from smallholder farmers while guaranteeing a living wage and ensuring traceability.

Fourteen years later, the Arkansas-headquartered company provides coffee sourcing, supply chain management, product development, roasting, packaging, and distribution services across the retail and hospitality industries, sources coffee from 35 countries and has offices worldwide.

The last 18 months have seen Westrock embark upon significant new developments, including going public in a $1.1bn deal, acquiring cold brew and RTD brand Kohana, and specialty coffee roaster Bixby. Westrock has also expanded its production capacity globally, opening a 90,000sq ft manufacturing and packaging site in Malaysia and starting construction on one of the largest RTD facilities in the US.
 

From coffee roasting, tea, single-serve, ready-to-drink and green coffee sourcing, Westrock has many strings to its bow – how well are these divisions performing currently?


We just released our Q1 earnings, and the total company net sales for the first quarter increased 10% year-over-year to $205.4m. Our sales growth was driven by a 44% increase in single-serve volumes and increased pricing from the pass-through of higher underlying green coffee prices during the quarter.

Our Beverage Solutions segment contributed $181.2m of net sales and $8.4m of Adjusted EBITDA for the first quarter of 2023, compared to $148.4m and $10.4m, respectively, for the first quarter of 2022.

Our Sustainable Sourcing & Traceability (SS&T) segment, net of intersegment revenues, contributed $24.2m of net sales and break-even Adjusted EBITDA for the first quarter of 2023, compared to $38.1m and $1m, respectively, for the first quarter of 2022. We aren’t surprised at this reduction, as our customers normalised their coffee inventory levels coming out of the pandemic and as coffee roasters worked through their buffer stocks.


Westrock has had a year of significant development and multiple project timelines –have there been challenges?


Over the past year, Westrock Coffee has faced many of the same macroeconomic challenges others have had to deal with. The surge of inflation last year, particularly during the summer, had a significant and negative impact on US consumer spending, which impacted our business in the form of lower product sales in our away-from-home channels, particularly restaurants and convenience stores. Inflation also impacted labour, freight, and material costs across all our products.

The other challenge we have faced is in our single serve business was equipment delays for key pieces of machinery which negatively impacted our volumes, and labour and material costs. This equipment, which we expected in October 2022, arrived and was installed during February and March 2023.

Upon installation, this allowed us to streamline our manufacturing process for single serve cups, improve our customer service levels, and turn our focus to delivering the efficiency improvements that come from being able to optimise our single-serve platform.

Westrock Coffee sources coffee from 35 countries and has offices worldwide | Photo credit: Westrock Coffee


 

“Considering that coffee consumption is expected to increase faster than any other beverage, we believe that RTD coffee will drive significant demand and growth”


Westrock went public in $1.1bn deal in April 2022, what has this enabled the business to achieve?


We entered the public markets to allow us to do two things. The first was to fund the extracts and ready-to-drink (RTD) facility we are building in Conway, Arkansas.  The second was to expand internationally with our blue-chip customer base. I am excited to report we are making great progress on both of those initiatives.

Our Conway extract and RTD facility in under construction and we expect to produce of first products in Q1 2024. Last year we opened our first coffee manufacturing facility outside the US in Malaysia. This facility has provided us with a foothold in the APAC region what will serve as a base of operation for continued expansion.  


How do you see the RTD coffee segment developing in the US over the next few years?


Considering that coffee consumption is expected to increase faster than any other beverage, we believe that RTD coffee will drive significant demand and growth. The RTD segment has been growing rapidly, and the facility we are constructing in Conway, Arkansas will be one of the largest RTD facilities in the country. As we ramp up our operations there, we will be ready to take advantage of the market shift and continue to innovate on behalf of our customers.
 

How will the recent acquisition of Bixby Coffee help Westrock reach new audiences?


The emergence of influencer-led brands has created a new sales channel in the beverage business, and the acquisition of Bixby Roasting gives Westrock Coffee the opportunity to continue to expand our omni-channel product marketing and development resources. We have seen an expansion of traditional marketing and promotional products to include more interactive, influencer-led awareness and co-creation of products and brands.

Adding this emerging channel to the Westrock Coffee portfolio is appealing to a younger target demographic, and Bixby’s expertise will help us reach this new audience. It’s all part of our efforts to be a source of innovative concepts and offerings to our customers. We look to serve them not only through traditional private label brand offerings, but also through the creation of products for specific customer segments and influencer-based brands.
 

“These kinds of incremental acquisitions expand our offerings and help drive growth as we build for and look to our future”


Westrock Coffee acquired Bixby Roasting Co. in February 2023 | Photo credit: Bixby Roasting Co.



Is further expansion and M&A activity planned?


In November 2022 we closed on the acquisition of Kohana Coffee, an extract and RTD business in Richmond, California. This acquisition was important for us, in that it allowed Westrock Coffee to add several new customers, and more importantly, it allowed us to accelerate the development, production, and distribution of RTD products in cans and multi-serve bottles for key existing customers.

In February of this year, we closed on the acquisition of Bixby Coffee which allowed us to expand our growing influencer-led sales channels and add two outstanding sales executives to our team. These kinds of incremental acquisitions expand our offerings and help drive growth as we build for and look to our future. 

While M&A will be continuing to be an important part of our long-term growth, our current focus is on launching our new extract and RTD facility in Conway, Arkansas. That is the commitment we made to our customers and shareholders when we went public, and it is best investment in the short term and long-term growth of our business. 

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