The coffee industry is quietly breaking the mold in Minnesota markets
When thinking Minnesota coffee, Caribou Coffee, the behemoth founded in Edina, is what mainly comes to mind, but that could be about to change.
A herd of new coffee businesses is rising in the north, many aiming to find a niche place in a lucrative yet saturated market. Many of these companies are finding success thanks to the Twin Cities growing population and the Minnesota agricultural landscape.
“Minnesota has a long history in coffee, throughout the supply chain as well as the end product,” said managing director at Grow North Lauren Pradhan. “I think this comes from our strength and passion for food and agriculture.”
One group of local entrepreneurs are explicitly trying to capitalize on the needs of a growing group of young professionals in the Twin Cities. They argue that with to-the-minute schedules, gone are the days of a relaxing morning brew for those in the workforce.
“We wanted a simple product that didn’t take a lot of time to make, had a low price per serving and we just started drinking a lot of it,” said Bizzy Coffee founder Alex French. “So, we launched a cold brew concentrate. It was a perfect solution for us, and we feel there are a lot of people out there like us.”
Part-time entrepreneur, part-time endurance runner, French launched Bizzy Coffee in 2015 with his business partner and long-time friend Andrew Healy. What started as a personal product brewed out of their kitchen is now being sold by the duo nationally.
“For us, success was found off the bat by going to Amazon right away because that allowed us to scale much faster as opposed to retail where that takes a very long time,” French said. “We took that Minnesota feel and approach and built that into an internet brand that sells very well on Amazon.”
Being from Minnesota places the brand in a unique spot. After their online success, the corporate world dropouts turned to what they said is their most valued outlet of sales: local retail.
“We love local retailer support and, in turn, consumers support you because you’re the local guy,” French said. “But when you’re in the national retailers that card doesn’t work anymore — you need a great product at a great price with a fun brand that stands for something. Moving into that capacity is super different than the local angle.”
Once a coffee startup reaching this stage in development, they have a choice to make about how the way they approach the marketplace. The company can choose whether to stay distribution only or to open a shop of their own, or decide on a combination. These go-to-market decisions often have significant impacts on the scaling ability of each brand.
“There are a lot of types of businesses I wouldn’t classify as a startup because their growth trajectory is very different,” French said “Say, a restaurant; it’s not a startup because it’s never going to achieve this level of hyper-growth or scale a startup needs. It’s eventually going to be at maximum revenue and output. With us, we found our product and now are trying never to stop scaling.”
Minnesota has a particular advantage which allows coffee startups with ample growth opportunities that are not only profitable but also sustainable. The state’s farmland plays a quintessential role in the coffee startup market — putting those in the bean business ahead of those from other states.
“The beautiful thing about being in Minnesota is that we are a farming state, and so we have a lot of spent coffee grounds (a.k.a. waste material) and ground coffee that no longer has caffeine in it and we donate it to local farmers to use as fertilizer,” French said.
While Bizzy’s interaction comes at the end of their production process, another MN startup is incorporating farmland into the start of their production line.
Inspired by his time spent living in South America, Dan Linstroth launched Kindly Coffee in Minnesota in April of this year. Not-the-average cold brew, Kindly’s blend takes old world coffee and mixes it with an ingredient taking many markets by storm: hemp oil.
“Hemp is interesting here. I can’t think of another industry other than the world of tech that is being created in real time here, where an entire supply chain can happen within the borders of Minnesota,” Linstroth said. “Everything from farming, manufacturing production, retail is happening in real time here, and then you get all of the complimentary business that supports these businesses. This is an old industry being reborn.”
Hemp farming has been happening in Minnesota for almost a century, but blending it with coffee is a new idea. Kindly Coffee is using the state’s strong agricultural industry to fuel its brand.
“Minnesota has a long history in farming, and we have the infrastructure and resources in place to support Minnesota grown agricultural products,” Linstroth said. “We have a lot of things going for us — from the history and knowledge, to support organizations AURI (Agricultural Utilization Research Institute) and Grow North there’s a lot here to help the food startup economy. Coffee is an extension of this.”
With the support of AURI and Grow North, Kindly is repositioning productivity drinks. With the idea of mitigating the jitters and elevating productivity with its hemp differentiator, Kindly Coffee places itself as a new-age drink for open-minded consumers.
“We have seen two different uses cases our customers have for drinking Kindly,” Linstroth said. “One is most certainly in a wellness category. We have people who drink it before a workout, or after a workout or yoga class for recovery. And we also have people who want to focus and do creative work on the go.”
Both Bizzy and Kindly’s founders agree that without local agriculture support, their businesses would not be where they are today.
Backed by a booming startup culture, the coffee industry is percolating here in the north. In few other places do farming and business collide as beautifully as they do here in Minnesota. Farming culture encourages innovation here, and business catalyzes development—cold brew or otherwise, bean by bean.