There’s the traditional way independent coffee shops grow, and then there’s the way Five Watt Coffee is doing it.
The Minneapolis coffeehouse, like many others in the Twin Cities, is a destination for java lovers who want flavor, not just a caffeine jolt.
Five Watt saw quick success shortly after opening in May 2014, drawing hipsters and coffee junkies from around the region. But what the owners didn’t expect was an offer — just three months after they opened — from a beverage distributor to take their cold press coffee national in cans.
“We thought a second shop was our next step, but instead we skipped ahead 10 years,” said Lee Carter, co-founder of Five Watt Coffee and one of five owners of its new parent company, Big Watt Cold Beverage Co.
In just about a year and a half, Carter and Five Watt co-founder Caleb Garn brought on three new business partners, formed Big Watt, acquired local bean roasting company Round Table and built a 5,700-square-foot manufacturing facility.
Two weeks ago, Big Watt cold press drinks landed on convenience store shelves in the Twin Cities. By mid-spring, Big Watt’s taproom and cafe concept will be open. By summer, the company aims to be pumping out 22,000 cases of cold press each month, and by August, its product could be on shelves in other big markets like Phoenix and Dallas.
“It was always one thing leading to another,” Carter said. “It’s all about the opportunity window and you have to get going on an idea when the time is right.”
Big Watt is capitalizing on a change in consumer food habits in favor of premium, local and handcrafted products that range from produce to meat to baked goods. This broader trend dovetails with the coffee renaissance, often called third-wave coffee, that has created an appetite for coffee beverages that are treated with attention to details — like wine — and less like a commodity.
“These third-wave coffee concepts speak to a larger trend in the market,” said Lauren Hallow, associate editor of concept analysis at Technomic Inc., a Chicago-based food industry research firm. “Consumers are really gravitating toward the flavors that are real. There’s this appeal in going back to the basics and discovering that coffee tastes great on its own.”
Cold press, called cold brew outside the Upper Midwest, is a process of steeping coffee grounds in cold or room-temperature water for at least 12 hours. It’s different from iced coffee, which is hot brewed coffee chilled over ice. Tastes vary, but cold press is generally thought to be smoother and less bitter than iced coffee.
Mentions of cold brew on food service menus have increased 25 percent between the third quarter of 2014 and the same period this year, according to Technomic, a market researcher. Caribou Coffee, based in Brooklyn Center, has offered cold brew since it started in 1992, and it is testing a variant called “nitro coffee” that infuses nitrogen gas to give the drink tiny bubbles and a creamier feel.
Three years ago, Carter and Garn were a couple of guitar-playing baristas experimenting with new coffee drinks. Carter worked at Bull Run Coffee Bar on Lyndale Avenue in south Minneapolis, a shop that Garn managed. After the two opened Five Watt Coffee, Jason Westplate, a beverage industry consultant, offered to design a beer, wine and cocktail program and a line of coffee bitters for them. “After talking to Jason, I realized this brand could be way bigger than I imagined,” Carter said.
That’s when they formed the second firm, Big Watt Cold Beverage Co., in order to build strong relationships with other coffee shops without imposing the Five Watt brand on them. Then came an offer from Core Beverage, an Edina-based wholesaler of coffees, teas and related items, to distribute their cold press to its customers across the country.
“We approached them because they are local and had the idea of putting it into a really attractive can package,” said Roger Lund, owner of Core Beverage. “We were looking for a cold coffee beverage. There’s a giant growth potential on the retail side of things.”
The Big Watt partners knew they would need more money, equipment, space and people. “We were imagining our hands falling off from handpressing that much,” Carter said. “So we started discussing how to mass produce.”
For starters, the 5-gallon buckets they were using to develop the coffees were not going to cut it. Buying an 80-gallon fermentation tank “was a game changer,” Carter said.
They also needed a lot more coffee beans. Big Watt’s primary roaster was Roundtable Coffee Works, a small St. Paul-based roasting company. Westplate and Carter knew their bean orders would fill Round Table’s pipeline and that it would be more economical to buy out the roastery. Round Table’s owner, Shawn Person, was added as a Big Watt owner, as was Alex Gese, who joined in as the finance-minded partner to help manage and connect them to capital.
And then there was the space issue. After a long search, they found their new production home at 2904 Harriet Av. in south Minneapolis and are currently building out the processing and taproom space inside. In the interim, they formed a relationship with Burning Brothers Brewing in St. Paul to temporarily lease space for development and production.
Logistics were the easy part. Now came the challenge of creating a can of cold press with a shelf life that would be suitable for retail.
Other indie coffee shops around the country, like Portland’s famed Stumptown Coffee and New York’s Gorilla Coffee, produce cold press with a much shorter shelf life, around two months compared with Big Watt’s 16 months. Starbucks is on the other end of the spectrum, making plenty of cold bottled beverages — but not cold press — with mass appeal.
Big Watt’s $3 price falls right between its peer products in the artisanal segment, which average 80 cents more, and the Starbucks segment, which average 60 cents less. The founders believe its “high drinkability” distinguishes it from some other brand’s cold press, such as Dunn Bros.’ Infinite Black, which packs a heavy flavor punch. This, coupled with a more reasonable price, could capture some customers from Starbucks, they say, while coffee purists will love its simplicity.
The ingredients for its original cold press are just water and coffee. As for its infused cold press drinks, which the owners say will hit shelves this summer and will be its signature products, only the raw flavor ingredient will be added during the steeping process. The same infusion principle that applies to homemade cucumber water applies to Big Watt’s cold press.
“We don’t need to hire a scientist to make something taste like spruce. We just need spruce,” Carter said.
Carter and Westplate spent months tinkering with the ingredient ratios, brew time and other variables — and dumped gallons upon gallons of coffee along the way.
“It’s been a painful process. We’ve done large-scale production on grass-roots money,” Westplate said. “But we hope everything the company does in the future will be made easier because this first year was done right.”
If the cans are well received by the public and Big Watt saturates the Twin Cities market as quickly as the owners hope, the company will be cash positive in a year.
After rolling out the cold press product in other U.S. markets, Big Watt will look at wider distribution of its cocktail bitters and the creation of a Big Watt soda line.