Magnum Coffee expands its production facility
Nunica roaster produces private-label brews for retailers nationally.
Kevin Kihnke wrote his master’s thesis on the rise of specialty coffee.
He took that thesis to the bank, received a loan and started Magnum Coffee, a specialty coffee roaster that has grown into one of the largest in the Midwest.
Magnum is currently expanding, adding another 45,000 to 50,000 square feet of space to its facility in Nunica, partially to make room for its growing single-serve, Keurig-compatible abilities. The growth in the single-cup market is new, but the company is already filling cups for the clients it’s had for years.
The company roasts more than 500,000 pounds of coffee every month, but due to the nature of the business, most of it will not be labeled with the Magnum name.
In the mid-1990s, Magnum became a full-line custom roaster that specializes in creating coffee programs for retailers across the United States. Its coffee can be found in stores in all of the lower 48 states and on three continents, according to Robert Johnson, Magnum’s vice president of sales and marketing.
“It’s been an interesting ride,” Johnson said. “We’ve developed a lot of great programs that the retailers really hang their hats on.”
One of Magnum Coffee’s significant programs is the one built for Rochester, N.Y.-based Wegmans, a regional East Coast supermarket chain. Johnson said it’s a company famous for its quality products, and it chose Magnum as its roaster.
Johnson said Magnum works with more than 4,000 clients, but not all are large regional grocery chains: Some are as small as four or five stores. He said it’s becoming a necessity for those smaller grocery businesses to establish their identity, in light of the presence of large retailers such as Walmart, Costco and Kroger.
“You’d be silly to be a store with five locations and not have a private label,” Johnson said. “You have to define yourself, and that’s what a private label does. It allows retailers to have something so they don’t have to compete with the guy next door.
“It allows them to become unique.”
One of Magnum’s unique offerings, according to Johnson, is its focus on quality. Magnum roasts its beans to order, and Johnson said some new clients’ jaws have dropped when he explains there is a 15-day lead time.
“They’re not used to a company getting all its ingredients following the order,” he said. “But the proof is in the pudding. When they get the coffee to the distribution center and out to stores, you’re talking about only three-day-old coffee.
“Most people in grocery don’t get their hands on that.”
Quality is so important to Magnum, it’s said no to potential clients who tried to get a little more out of the coffee, Johnson said.
“It only takes one bad cup of coffee to lose a customer forever,” he said. “Quality is everything, and unfortunately, we’ve had to pass on very large business opportunities because of that, because they said, ‘We just need a little bit more,’ and there’s none to be had.
“We’re going to walk away because we didn’t want to compromise quality.”
To source its coffee, Magnum has a team of three employees who are on the ground in coffee-growing countries across the globe. The team members send in coffee samples to be tested several times, including a final one once the full order is in, to ensure a “bait-and-switch” hasn’t been pulled. Johnson said some coffee growers will do anything to make money, including sending a product that is inferior to the one that was selected. Some of Magnum’s orders are as large as 37,500 pounds of coffee at a time.
“We wanted to build a system to buy direct from the farms and cherry-pick the best coffee that’s out there without leading to a financial disaster,” he said. “If I’m buying $3 or $4 grade coffee for a customer at that amount, that’s a large expense.”
Once coffee is secured, Magnum does everything for its customers in-house — not just the roasting. With 54 employees, everything from packaging to label design is done in Nunica. The company even has its own line, Magnum Exotics, which is often used for testing at new stores looking for a private line.
Magnum Exotics acts as a control brand that can be tested in the marketplace so a grocery store doesn’t risk exposure with its name on an unproven private label.
Sometimes, the Magnum line sticks, and the tropical-looking label can be seen on shelves at stores such as Marshalls and Home Goods.
“People say, ‘I’ve seen the Magnum stuff here, here and here,” Johnson said. “It kind of stuck when we did a test for them and they’re doing so well with it, we kept it.”