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Baronet Coffee Still Growing Amid Competition

By JANICE PODSADA | Courant Staff Writer

May 14, 2008

Like his father and grandfather before him, Bruce Goldsmith, president of Baronet Coffee Inc., knows his company can't be content to sit still.

The 78-year-old coffee roasting and supply company in Hartford has had to constantly reinvent itself to remain competitive, Goldsmith said.

"It's a very mature industry, but changing very rapidly," said Goldsmith, 43.

While the basic formula for turning a 150-pound bag of pea-green coffee beans into a steaming cup of Joe hasn't changed much since the 1930s, the business side of coffee has been transformed in the past 10 years.

Companies like Starbucks and Dunkin' Donuts have introduced coffee and coffee-based drinks to a wider range of people, Goldsmith said, and technology has altered the way we turn our beans into brew. The old stove-top percolators and countertop drip machines are being replaced by feature-laden, single-serving coffee machines and espresso makers that have infiltrated both the home and commercial markets. That's been reflected at Baronet.

"In the last 10 years, our business volume has quadrupled," Goldsmith said.

Coffee drinkers have gotten more particular about the coffee they consume. They expect to find it at the office, at convenience stores or the local gas station. In the past few years, single-serve brewing systems, often referred to as pod brewers, have begun popping up both at home and in the break room at the office, Goldsmith said.

Single-serve pods allow people to choose the coffee of their choice, any time, any place, whether it's a dark roast or a flavored coffee.

When one of Baronet's local distributors asked the firm to come up with a method to deliver single-serving coffee easily and efficiently, Baronet turned to an Italian-made pod-making machine.

In 2004, Baronet purchased one of the machines, which can cost up to $750,000. Pod makers package a single serving of coffee in a lightweight, biodegradable pod. The firm has purchased another three pod-making machines that together produce 400 pods a minute, or 5 million pods every month.

Baronet now sells single-serving pods filled with all sorts of coffee, from flavored to free trade, to wholesale distributors and online to consumers. Retail buyers can purchase 18-pod packs for about $7.25. Online, a pound of Baronet's Donut Shop Blend sells for $8, while a pound of Hawaiian Kona sells for $28.

Ten years ago, Baronet doubled its 16,000-square-foot facility at 77 Weston St. Now at 32,000 square feet, the firm is feeling squeezed again.

"We're running out of space," Goldsmith said. "Since the beginning of the year, we've added four employees."

Executives with the family-owned company, which now employs 40, would not reveal any financial details about the firm.

Goldsmith's grandfather, Isedore, started the Manhattan Coffee and Sugar Co. in New York City in the early 1900s. "He actually started by selling sugar," Bruce Goldsmith said. Because most people like to add a little coffee to their sugar, Bruce Goldsmith said, Isedore began selling java, as well.

In 1947, Isedore Goldsmith bought Hartford's Baronet Coffee Co. from its founder, Dave Baron. For the next decade, Baronet focused on the wholesale trade, supplying restaurants, hospitals and hotels in Connecticut, Massachusetts and Rhode Island with fresh ground coffee.

By 1958, when Bruce Goldsmith's father, Leon, took over, a new group of potential clients appeared: corporate America. Tired of seeing workers stream out the door to grab a cup of coffee at the local luncheonette, many firms realized that making coffee available to its employees in-house was a necessary and cost-efficient benefit, Bruce Goldsmith said.

In response, Baronet launched a service that supplied coffee to companies within a 100-mile radius of Hartford.

Bruce Goldsmith went to work for the family business in 1988 after earning a mechanical engineering degree from Union College and working in Procter & Gamble's manufacturing management program for three years. He said that within a month of joining the family business, his former boss at Procter & Gamble sent him a newspaper article that said by 1993, specialty or gourmet coffees would represent 23 percent of coffee sales.

Goldsmith took heed, and began focusing on roasting single-source coffees, such as Sumatra or Ethiopian Sidamo.

He built a small retail coffee shop and showroom inside the company's headquarters. The shop is open Monday through Friday from 6:30 a.m. to 4 p.m. There, customers can enjoy a cup of coffee or pick up a pound of any of the company's coffees, from Brazilian Bourbon Santo to Fair Trade Guatemala or one of its many flavored coffees, from eggnog- to babka-flavored.

"My goal was to make Baronet coffee a household name," said Goldsmith, who is on the National Coffee Association's board of directors.

Today, Baronet coffee packs its coffee in an oxygen-free environment to reduce spoilage. The company's inventory of unroasted beans is limited to a seven- to 10-day supply to ensure freshness. Light spectrum analysis ensures that the beans, which are roasted in 500-pound-capacity vats, are roasted correctly, said Steve Wall, the company's executive vice president, who oversees the roasting.

Baronet continues to supply hotels and restaurants, and its office service now supplies companies nationwide. In recent years, Baronet has begun supplying a network of distributors that sells coffee to 3,000 independent convenience stores in 21 states.

And now it's selling pods.

"That's four channels," Goldsmith said. "It diversifies our distribution mix. It allows us to ride out the ups and downs."

What's next for Baronet? How about bigger pods?

More Americans are preferring a stronger cup of coffee, and Baronet is packing a bigger punch into its pods, Wall said.

"We're making 10-gram and 12-gram pods," Wall said. "A lot of coffee pods contain 7 grams, and that's just not strong enough for a lot of people. We've even started experimenting with a 14-gram pod."