Sean Ryan thinks you might be drinking yourself into the poorhouse with lattes, that is.
The former Nestle SA executive founded L.A.-based Stomping Grounds Beverage Co. to bridge the price gap between $3 lattes and the cheaper instant powder versions.
Stomping Grounds is essentially a latte in a box, meaning espresso plain or flavored with vanilla, caramel or mocha. Customers can pick up his products at a grocery, add milk and microwave it for one minute to get a latte beverage.
“There’s nothing like it on the market.” Ryan said. “The reception from the grocery chain buyers has been great, because they’re not trading one sale for another.”
Ryan was inspired after serving as chief operating officer of Oregon Chai, a $50 million company that sold to Kerry Group PLC in 2004. The chai was sold directly to coffee shops in a box, and it was blended with milk when the customer ordered. When the company was sold, Ryan decided to go out on his own.
After nearly a year of research, Ryan settled on lattes. He determined that of the 15,000 coffee shops in the U.S., about 40 percent of sales were from lattes. Part of his motivation was the fact that for “hardcore latte drinkers,” including Ryan and his wife, it can become an expensive proposition.
“There were no alternatives,” he said. “You get up, grind your own beans, steam your own milk, or you can buy a powdered instant product. I figured there had to be an opportunity in there somewhere.”
So Ryan decided to put his money where his thirst was, putting up $500,000 to start the business in late 2005. He added an investor late last year, but still owns 90 percent of the company.
Stomping Grounds’ revenues were $500,000 in 2006, its first year on the market. Ryan expects about 30 percent growth in 2007 and to see black by the end of the year.
Ryan acknowledges that while saving time and money, his product may never cut it with true coffee snobs.
“To put milk in and throw it in the microwave and have it come out a taste sensation sounds suspect,” said David Heilbrunn, show manager for Coffee Fest, an industry trade show. “But if it works, he’ll be a millionaire.”
Heilbrunn added that in Japan, where there are twice as many coffee shops as in the United States, coffee vending machines are also immensely popular. So the idea could work.
Ryan’s company has three employees. He has the espresso boxes manufactured in a Michigan facility. The products are sold in 500 locations including some Whole Foods Market Inc. stores, Target Corp. stores, Albertsons LLC’s Bristol Farms and Fred Meyer stores, which is a division of Kroger Co. in the northwestern United States.
