Why was a top coffee house in Taiwan involved in coffee fraud?

By | December 17, 2019

You can find out about Barista Coffee's stupid decision to engage in a race to the bottom of coffee quality, some of the immediate consequences of being discovered, and why it is always a bad idea. In short, if you're interested in starting up a coffee shop, focus on coffee quality!

 

What Barista Coffee House did was really stupid, and why

PurelyCoffeeBeans worries because this story about coffee quality fraud makes me sad on so many levels... There was absolutely no need to adulterate Arabica with Robusta WITHOUT changing your ingredients label.

Taipei, Nov. 26 (CNA) One of Taiwan's largest coffeehouse chains on Tuesday made a public apology after admitting the company has been mixing relatively cheap coffee beans with a more expensive variety and selling them at the higher price since last year.

Read the entire story at: http://focustaiwan.tw/news/afav/201911260025.aspx




To do this was just a real shame for a coffee shop that I like. Of course, I don't usually buy their coffee beans... the coffee quality isn't there. Now I know why. But I suspect that they are not the only company doing that! In the same breath, let me reiterate something the Italians have known for years:

The irony is that Italian coffee companies usually add Robusta to their coffee anyway for that extra 'kick' and 'body' that is missing in many Arabica beans. It's a perfectly legitimate way to make coffee! They don't pretend it's 100% Arabica when it's not.

Why Cost Down kills coffee quality and risks fraud

But it is the eternal 'cost down' fallacy of doing business here. How does your company respond to the eternal 'cost down' directive that gets sent to every business person in Taiwan?

Taipei Times also reports the story "Full Fill Industrial allegedly made illicit gains of about NT$10 million by mixing Arabica and cheaper Robusta beans and selling them as pure Arabica..." (source).

Is it a common practice in Taiwan?

Well, I don't think it's the only company playing games with coffee quality here. But this was a whistleblower case of coffee fraud... and coffee fraud is a hard fraud to detect. But unfortunately, you will see there are others. If Arabica is too expensive for their brands, they'll just junk the coffee quality and try to keep the brand positioning.

One very big company did that a few years ago. I bought the first bag. Lovely. 2nd bag was just gross. Same bag from the same company. 100% different coffee. I won't buy coffee from that company again. I still suspect all of their coffee is junky. That was one of the top players in the local beverage market. OK, how about this for an alternative, instead of tricking your customers?

Why standards mean Everything

Once a company's product standards get diluted, there is nothing left for the company except making money. So roasting and mixing in the wrong beans is a really bad excuse as is poorly trained workers (why blame the workers?).

Based on the information in the Taipei Times' article, the company made a decision to allow to go to market a substandard product for a considerable period of time. For it to be a mishap, the company should have found out and made its own decision to change policy, branding or recall the product as faulty. Why the company didn't will be revealed, I hope.

Full Fill Industrial Co (馥餘)'s brand reputation is now under the spotlight. Taipei Times reports that many of its products are no longer available in supermarkets, several managers are under arrest, and the charges cited include fraudulent labeling and contraventions of the food hygiene act. No idea if they will be found guilty, I'll leave that decision to the courts.

Insist on Your Standards Always

Let's compare with another recent but much worse case. It has taken the milk brand, Weichuan (味全) years to recover its market position, and they didn't do anything wrong themselves. It was by association through co-ownership with Tingshin, an affiliate company that tainted the oil.

How Value Up transforms your coffee business

'Value UP!' adds value to your products. If you can't think of a 100 ways to add value to your products, then perhaps you shouldn't be selling coffee.

I'd like to finish with a story that shows what the power of Value Up can do, Taiwan News reports that "Taiwan coffee shop chain to expand in Southeast Asia" saying,

The Taiwanese coffee shop franchise cama café is planning to expand its business in Southeast Asia in 2020. Established in 2006, cama café (sic) has opened more than 120 branches across the country, generating a total annual revenue of approximately NT$700 million, reported CNA. The coffee shop chain will open its first store in Southeast Asia in the first quarter next year, said founder Benny Ho (何炳霖). (source)

If you're interested in reading more about Arabica Coffee's importance, check out these articles:

Are you dreaming of a coffee shop business?

Lessons to remember if you're starting a coffee shop!

Many people dream of starting their own coffee shop. I do, too. But it's a hard road to travel. Being an entrepreneur in my own field, I've worked in restaurants and customer facing jobs for years. I thought I'd chime in on Quora with my own answers.



Assuming that you know about coffee basics (how to grind, make coffee, do espresso, etc..) I'd say two to three years to learn all the management skills needed. Of course, you won't learn much as a part-timer... but try get a job there and take all the training you can get. Be like a sponge!

Plan B: Start small, focus on quality & build up from the ground

Of course, if you intend to start really small, then why bother? Just get started with a simple menu, simple drinks, and learn by doing it yourself. Starbucks does a good job at running a coffee shop, that's not saying they are the best.

In fact, you could fly several Airbuses through the openings in the market that SB doesn't cater to: regional coffees (a coffee of the day? huh!), better quality food & cakes, specialty coffees.

In the area I live in, I've seen several coffee shops do it that way. The owners either bought an underperforming coffee shop and refitted the entire coffee shop & menu or they opened a small location on a busy thoroughfare, focusing on a few things and doing them really well at great prices.

Why do so many new restaurant start up fail?

Many people dream of running their own coffee shop, but the casualty rate of new restaurant/food type businesses is very high. Restaurant Failure Rates Recounted: Where Do They Get Those Numbers?

After the first year 27% of restaurant startups failed; after three years, 50% of those restaurants were no longer in business; and after five years 60% had gone south. At the end of 10 years, 70% of the restaurants that had opened for business a decade before had failed.

The usual reasons are obvious: but where I live, I often see the biggest threat to a new business - running out of money before you've got enough customers coming through the door. It's hard to know how long start up takes, but it could be a while. So plan for at least 12 months different scenarios: a high customer volume, a medium volume, and a lower volume.

In the tech industry, it's called the burn rate. The business runs out of cash before it starts to make itself viable. That's not to say a particular business couldn't be viable at some point, they just run out of time/money.

Why cashflow management is vital to learn!

So, if you've ever had any entrepreneurial experience, you'll know that cashflow management is vital, esp. in the first couple of years. You'll also need to keep a handle on your start up costs: Starting a Coffee Shop? Consider your location, your money, and your coffee!

You should also consider your location, your selling proposition (what makes you different from the other businesses in the neighborhood), and how you plan to market yourself to new customers.




In practical terms, this means looking for places with good foot traffic, where there is an actual cooked food and beverage market already (near offices, universities, big hospitals, etc.); what makes you different (do you plan to serve quality coffee/roast your own/make great cakes/etc...?); and how are you going to get yourself in customers' faces (literally & metaphorically) - ie. advertising, events, marketing, tastings, etc?

I hope this helps.

Kenneth

More reading at Quora on this topic

If you're into starting a coffee shop, you'll find some great coffee shop questions on Quora:

There are lots of other posts and questions on Quora about these issues! Take a look.


For more information and recipes on to our How To Make Coffee Page

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