Founder's Story - Bean to Bottle: Cole Shephard's Innovative Journey in Coffee and Beyond | S2: E25

Episode Date: April 24, 2024

Today's episode is brought to you by BiOptimizers, whom I LOVE their MAGNESIUM BREAKTHROUGH product that has helped me sleep better, stay focused, and feel all around healthier. Check out their products at http://bioptimizers.com/danrobbins use promo code FOUNDERS for 10% off any order. Cole Shephard, the visionary founder of the Green Coffee Company, has transformed Colombia's coffee landscape since 2017, growing his enterprise into the country's largest coffee producer. Starting with a keen insight into agricultural opportunities in Colombia, Shephard strategically used his background in mergers and acquisitions to create a thriving business that aligns with the interests of real estate investors looking for diverse portfolios. His innovative approach led to the acquisition and efficient management of over 10,000 acres of coffee farms, propelling his company's revenue from $1 million to $10 million.    Our Sponsors:* Check out PrizePicks and use my code FOUNDERS for a great deal: www.prizepicks.com* Check out Rosetta Stone and use my code TODAY for a great deal: www.rosettastone.comAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

Welcome to Founders Story, the podcast where trailblazing entrepreneurs share their extraordinary journeys, uncover the passion, grit, and vision that drive the world of business and innovation. Others are true connoisseurs. We are talking about coffee. Welcome to another episode of Founders Story. My name is Diana Lammertz. Coffee is a big business with a global market value of more than $490 billion. Cole Shepard founded the Green Coffee Company in 2017, and it has become Colombia's largest coffee producer. Welcome. Thank you, Diana. Great to be here. Cole, what inspired you to found a coffee company?

Sure. So, you know, when I came down to Columbia, we're looking at new opportunities. We had a group of real estate investors who were looking at agriculture deals, and they needed something structured, right? And so my background being in mergers and acquisitions and private equity, I structured a business really around these investors who were looking for, you know, corollary businesses next to commercial real estate. And with an ag background of Columbia, there was a lot of opportunities. We were looking at cacao and coffee, and coffee being the national product of the country, we thought it was a great place to start. And then we grew up really from there. Really the thesis being an asset management, almost a real estate project, which really grew into an ecosystem and an enterprise.

And it has become quite successful. So what were the key factors behind the significant revenue growth from 1 million to 10 million? Sure. So, you know, the big changes that we made really were in 2020. In 2017, 2018, when we launched the company, really we were creating really an asset play. In 2017, 2018, when we launched the company, really, we were creating really an asset play. We were doing things to compete with buying shopping malls or buying multifamily real estate. 2020, we made the strategic plan to really create an enterprise. What we saw were massive discrepancies and inefficiencies in the Colombian coffee market, as well as the global coffee market. And we started to invest heavily in international management teams, bring capital into buy more farms, really invest in infrastructure and really

build a platform. And so when we started buying about 600 acres, we've since grown to over 10,000 acres here in Colombia, which makes us the largest consolidated producer in the country. For listeners who don't know, you know, the national product of the country is coffee. And there's a second largest producer of Arabica coffee in the world. So really, the growth story is capital, both physical capital in terms of dollars, euros, British pounds, and then human capital, which I say is actually more important than the physical money. But you're also very focused on sustainability. So how does the use of water-efficient technology impact your sustainability goals? Sure. So I think in businesses like coffee, you're going to be driven by consumer behavior, right? Because it's always

going to be with the consumer in mind. Businesses like coffee are so far ahead, I would say, on what people are demanding, what consumers are demanding. So if you're not in the sustainability game, you're not going to be in business, I would say, in 10 to 20 years. The EU is a great example, Diana, is what you're going to see regulatory-wise in the future. You know, there's new deforestation regulation that's going to basically restrict the amount of coffee, cacao, timber that can enter the EU zone if you're not complying with

at least some portion of sustainability metrics. So you have to build that into the framework. Luckily, we've built that into the DNA of the company since we started because we think it's a key pillar of a consumer product business, actually. So we're ready to roll in that department. More and more companies are using AI when it comes to production and so forth. How are you using it?

Sure. So there is some new AI technology that's really interesting coming out with how to grade coffees. We're reviewing some technologies right now that you can actually trace coffee beans going through production strains and you can see where the actual origin of the beans are. We will return to our show shortly. But first, let's talk about today's sponsor, Magnesium Breakthrough by BioOptimizers. Did you know four out of five Americans don't get enough magnesium? Crucial for over 300 biochemical reactions in your body. Here are signs of magnesium deficiency, irritability, anxiety, insomnia, muscle cramps, high blood pressure,

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And back to the show. Now you need a massive data set. So we're working with some providers right now where you can both classify qualities of coffee, origins, and obviously final destinations. What that allow you to do is create product mixes out of the green coffees, which then become roasted coffees and consumer products. You know, I would say in the agricultural space, specifically in coffee, AI is a fairly new phenomenon. I mean, we can't get on chat GPT and suddenly create a new strand of coffee. Unfortunately, it'd be great if we could, but we can't. You know, I think a lot of the tech is going to go into agricultural technology like machineries,

and you're going to see it implemented along different parts of the supply chain. And we're in the early stages of it. But the technology is very, very promising. But I would say, you know, we're still several years out for it to go full implementation. Well, a lot of other companies are just starting as well. But let's talk about you expanding into the liquors and spirits market using coffee byproducts. What challenges do you foresee in the future? Sure.

So most coffee companies you're going to see in the world, one, aren't doing anything with byproducts and two, definitely aren't talking about creating liquors. You know, one of the core thesis of our business is not only to move further into roasted coffee, which a lot of coffee companies want to do because the margins are higher. You could hedge away for commodity price risk of green coffees. But what you see in farming at Origin, and we're one of the few companies that do specialize at Origin, we're farmers first, and then we kind of control the whole supply chain after that, is there's a massive amount of waste. For viewers who don't know, coffee comes in a red cherry form. Only about one third of the weight is the actual seed of the coffee cherry, which you drink every single day. The rest is almost like a grape, like a hardened grape. But usually farmers don't use it for anything. They throw it in their yard, say they're using it for fertilizer, but it's really an

ineffective fertilizer. What we've done over the past couple of years is done a lot of research and development to find out what's the best use case. And after two years of study with some of the best agronomical universities here in Colombia, we've found that ethanol, pure grade human consumable ethanol, is one of the best use cases, an easy launchpad to begin the byproducts journey. So here in Colombia, we see a massive gap in consumer products of alcohol within vodkas and gins. There is no national vodka and gin. And there's really nowhere in the world that has alcohol made from coffee cherries, especially a byproduct, which is typically a negative revenue stream to us because you have to pay someone to get rid of it. It can be a contaminant for the environment.

So it has obviously negative correlations to value. And you're creating a useful product out of it. You know, where I see the biggest challenges is, you know, you have to convince the market of, you know, a new product if we go to B2C route. On a wholesale route, it's about selling volumes. You know, we have a unique business to where we are volume driven. For instance, last year, we did over 10 million pounds of green coffee. This year, we'll do over 20 million pounds of green coffee. That correlates to twice the amount we need to move in byproducts, right? So if I have 20 million pounds of green coffee, I need to move 40 million pounds of coffee cherry byproduct, which means I have a different value set in a different proposition from a typical ethanol company. When we build our full-scale distillery next year, I'll need to move 12,000 liters of pure ethanol, let's say 96.5% ethanol,

pure, I need to move 12,000 liters a day. That's how much I need to move. Whereas if you have a typical, let's say you're a startup bourbon distillery in Kentucky, maybe your goal is 60,000, 70,000, 80,000 bottles a year. I can do five to 10 million bottles of that similar proof alcohol per year. So really it's about a volume game. So you need to build a distribution channel that's capable of doing that. Wow. that is very impressive. Thank you so much, Cole Shepard, founder and board member of the Green Coffee Company for joining us today and sharing your insights. Thank you, Deanna. It's great to be here. Thank you for tuning in to Founders Story. Keep exploring,

keep dreaming, and join us next time for more inspiring entrepreneurial journeys.