Black Medicine, a brand of premium coffee drinks brewed hot and under nitrogen pressure, has opened a new 18,000 sq. ft. facility in East Oakland, Calif. Company founder Chris Cooper said that the capital investment was necessary because he views ownership of the production process as the optimal way to maintain a consistent level of quality and control profit margins in the long term.
Marketed as “pressure brewed” iced coffee, Black Medicine uses a nitrogen atmosphere to keep oxygen out of the brewing process. The company believes that the method allows for fuller extraction from ground coffee beans and a more complex flavor as compared to others. Once brewed, the coffee is cooled down in small, concentrated batches and blended with water. Black Medicine drinks come in three varieties: Original, Latte, and Mocha, each packaged in 11 oz. aluminum bottles. They require refrigeration and have a shelf life of about 12 weeks.
Cooper, a former Internet entrepreneur who founded financial news website Quote.com, developed Black Medicine in 2014 after experimenting with ways to brew and bottle cold coffee “that wouldn’t compromise quality while remaining consistent and repeatable.” Cooper launched Black Medicine in the back of his cafe in Oakland and later moved operations into a 2,000 sq. ft. warehouse, where he and his team managed the entire production process, including roasting of coffee beans, brewing and bottling.
The company began self-distributing to a handful of local retailers in Northern California. Within a short time, the brand gained placement in hundreds of accounts, requiring Black Medicine to hand off most distribution to natural food wholesalers UNFI and KeHE as well Seattle-based DSD house R&K Foods.
By mid-2015, the company had outgrown its facility and had a decision to make: turn over production to a co-packer or invest in the construction a new plant.
“It [came] down to control over quality and control over cost,” Cooper said. “We’re kind of like a craft beer brewer,” he said. “We consider ourselves a craft coffee brewer, and quality matters an awful lot to us. So trying to have a good tasting product with quality ingredients under those constraints makes it very difficult to go to a co-packer.”
Cooper self-funded the build-out and purchase of new production equipment. The new facility includes a fully automatic bottling line, tunnel pasteurizer, Loring roaster and a large walk-in refrigerator. It also has separate rooms for brewing, cupping, offices and a lounge.
Cooper said that the total investment cost reached six-figures, but declined to give an exact number. However, he noted that the new facility would enable Black Medicine to maintain the kind of margins that it needs to succeed, especially when compared to costs associated with co-packing.
“Although there is a fairly large capital outlay in the beginning, it allows us, once we’re up and running to keep our margins in a good place for a beverage company, where it would be much more difficult given the emphasis on quality ingredients that we have otherwise,” Cooper said.
While the new plant has 10 times the production capacity than Black Medicine currently requires, the company has no plans to offer co-packing services to other beverage companies, despite interest from a number of other coffee brands.
“If we were to be a co-packer, that would be a big change in our business model,” he said. “And we would have to focus our efforts and our time and everything we do on something that’s very different from trying to establish a brand in the iced coffee business.”
For now, that means extending awareness and education of Black Medicine by way of added distribution. The brand is represented in the Pacific Northwest and Los Angeles, including at Whole Foods, Safeway, New Seasons Markets, PCC, Bristol Farms, and a number of independent grocery chains along the West Coast, and the drinks often share shelf space with cold-brew coffee products. The company is planning to add Idaho, Montana, Alaska, Colorado, Arizona, New Mexico and Utah to its distribution footprint in the months to come.