Rocky Mountain News (CO)
Entrepreneurs to share their stories
Denver coffeemaker Yuffa among the expert advisers at StartUp BaseCamp
|By Jennifer Beauprez, Denver Post Business Writer|
|Monday, October 27, 2003 -|
If the American dream is alive at all, it's breathing deep the pungent steam rising from an Italian coffee roaster in a small Denver warehouse, where two Russian immigrants blend their own cultural heritage and a little Yankee ingenuity with quality beans from Latin America, Africa and Indonesia to feed a growing U.S. passion.
This is the home of Dazbog Coffee Co., founded in 1996 by Anatoly Yuffa and his younger brother Leonid. The company's bold red-and-black logo beckons from shiny bags of coffee at specialty markets and on outdoor umbrellas at restaurants and coffeehouses and hotels throughout the state.
Dazbog - Russian for ``God of Richness'' - roasts and sells 130 varieties of coffee to some 1,000 Colorado customers.
Tony and Leo, as they like to be called, saw an opportunity in the nascent specialty coffee market of the early 1990s. Starbucks was beginning to gain a toehold in Colorado. Few local coffee roasters - Boyers, Allegro, Silver Canyon - had visibility.
``You could go to most restaurants in Colorado and not get espresso, much less good coffee,'' Leo says.
Tony learned to love espresso in its birthplace, the coffee bars of Italy. The Yuffas' parents fled St. Petersburg, Russia, with Tony, Leo and the youngest boy, Ilya, in the mid-1970s to escape political upheaval and anti-semitism for ``a better life'' in the U.S.
Before immigrating to Denver in 1979, the family lived in a small town outside Rome, where 15-year-old Tony pruned trees in a vineyard. Every morning the workers gathered at a coffee bar in the town plaza.
``There were these beautiful coffee machines with domes of copper and gold,'' Tony recalls. ``I was the youngest one in the group. We'd have two or three shots of espresso before we got picked up and taken to the vineyards.''
Tony's love of coffee planted the seed. But it's Leo who has ``an incredible palate for coffee,'' Tony says. Leo visits coffee farms in South America, samples the offerings from small estates in Indonesia and Africa. In the language of wine, he knows the character of each region's coffee: sweet or smoky, acidic, full-bodied or balanced.
Leo, the practical partner, handles buying, quality control, the day-to-day operations.
Tony is the visionary, the entrepreneur. He oversees development and infrastructure. Tony's CPA wife, Simona, is the company CFO. A high school friend, Dan Price of Adrenaline Design, handles the marketing and helps come up with the ad campaigns and names for the coffees: KGBlend, Hermitage, Babushka, White Nights espresso.
TASTE OF THE WORLD
At Dazbog's two Denver facilities, burlap bags overflowing with green coffee beans are stacked according to region or estate: Kenya, Ethiopia, organic Mexican, Indonesia. Four days a week, all day long, the Italian brick oven roasters are fired up to roast anywhere from 5 to 150 pounds and from 20 to 30 different types and blends of coffee each day. Workers pour the roasted beans into 32-gallon plastic containers and hand- pack them in the distinctive red-and-black bags: organic Costa Rica, French roast, Papua New Guinea, Colombian Supremo, Guatemala Antigua.
Dazbog delivers to customers no later than the next day. One recent morning the air filled with the oily nose-tingling smell drifting up from a batch of beans from a Costa Rican Doka plantation, ``one of the best coffee farms,'' Leo says.
To blend different beans and roast them at as many as 10 different levels to capture the right mix is ``always a work in progress,'' Leo says.
The company also sells and services coffee makers and espresso machines, and it has an office coffee division.
Today, Dazbog has 18 employees and 1,000 customers throughout Colorado. Among them: Wild Oats, Vitamin Cottage, Hotel Teatro and the Oxford Hotel.
There's not a Starbucks at the South Pole yet, but there is Dazbog coffee. Englewood- based Raytheon Polar Services, which operates three research stations in the Antarctic, ``has been a customer for years,'' Tony says. Coffee is shipped to the stations twice a year along with other supplies. And the company trains somebody to maintain and repair the coffee equipment. ``We can't exactly make service calls.''
Dazbog's first customer, Zaidy's Deli, has never strayed. ``Their product is very good. Their support service is great,'' says Gerard Rudofsky, owner of the longtime Cherry Creek restaurant. ``We get a lot of compliments from our customers. It's not fancy. It's just a good, hearty coffee.''
Like Dazbog, Zaidy's is a family-owned independent business. ``It makes a difference,'' Rudofsky says. ``We're both doing the same thing.''
The Yuffas put Dazbog's growth at about 30 percent a year. The company plans to build another facility twice as big as its main plant. The new location will include a showroom featuring a cafe prototype for a retail division that could be in the works in 12 months. The division might also include franchise rights, carts and kiosks for office buildings, hospitals and shopping malls.
``But it's a whimsical economy right now,'' Tony says. The company's goal is to be strong in Colorado ``and then branch out,'' Leo says.
Dazbog says it has no debt. Growth is based on internal cash flow. The Yuffas decline to divulge company sales figures or the number of pounds of coffee it imports or roasts.
By comparison, 25-year-old Thornton-based Allegro Coffee Co., a wholly owned subsidiary of publicly held Whole Foods, reports that it roasts 2.5 million pounds of coffee each year and has annual revenues of $15 million. The wholesale roaster employs 54 people and distributes to about 500 retailers, restaurants and cafes, hotels and other distributors across the country. It estimates its growth at about 18 percent a year.
Competition in the specialty coffee sector is fierce. And not solely from behemoth Starbucks, with nearly 5,700 stores in some 25 countries and annual net revenues of about $3 billion.
The Specialty Coffee Association of America estimates that specialty coffee retailers that roast on the premises had about $1.4 billion in sales in 2001. Although like Dazbog, wholesale specialty roasters rarely report figures, the association estimates sales in that sector at roughly $1.5 billion. The group estimates the total size of the market, which also includes cafes, kiosks and coffee carts, at about $12 billion last year.
The industry has been bruised less from the slowing economy than originally feared, according to Mike Ferguson, the association's marketing communications director. ``Growth is between 3 and 5 percent a year,'' he says. ``It's down a little, but independents are still doing well.''
LOCAL, ORGANIC IN VOGUE
Increased consumer demand for organic coffee, fair trade and sustainability for coffee farmers coupled with growing interest from restaurants in patronizing local roasters are bolstering the industry, he says.
All trends Dazbog is committed to, as well. The Yuffas take the quality seriously, the business seriously. As for the rest: These are the guys who poke wry fun at the Russian Revolution in promotional material and whose most recent ad campaign featured billboards that read: ``Think you can find a richer coffee than Dazbog? Boleshevik.''
A new campaign is scheduled to hit radio and billboards later this month, although they're keeping tight-lipped about details.
So far, the God of Richness is smiling. ``We try to have fun,'' Leo says. ``We're a close family. Our employees are part of our family. We want our family, our friends, our employees to be successful, to be wealthy in every sense of the word, to be happy.''
INFOBOX COFFEE FACTS
* Sixty-four percent of all coffee is consumed at breakfast; 28 percent between meals; and 8 percent at all other meals.
* Thirty-five percent of coffee drinkers drink their coffee black; while 62 percent add a sweetener and/or creaming agent.
* Fifty-two percent of the U.S. population over 18 years of age drink coffee every day, representing 107 million drinkers
* A mature coffee tree will produce 1 pound of coffee per growing season.
* Approximately 4,000 beans are needed to produce 1 pound of roasted coffee.
* Coffee is the most popular drink worldwide with more than 500 billion cups consumed each year.
* It is estimated that more than 100 million Americans drink a total of 350 million cups of coffee a day.
* The United States imports 2.5 million pounds of coffee, representing one-third of all coffee exported.
* More than 25 million people work in the coffee industry.
Sources: Arabica.com, Clipper Teas, coffeeisgood.com Lisa Opsahl, Rocky Mountain News LIB3 Caption: Dazbog Coffee Co. owners Tony, left, and Leo Yuffa watch roasted coffee beans after they were dumped into a cooling tray at their company's warehouse at 1110 Yuma St. inDenver. The Yuffas, who emigrated from Russia, started Dazbog in 1996. KEN PAPALEO / ROCKY MOUNTAIN NEWS CAPTION: Coffee facts. See Infobox for additional information.Color Photo, Photo Memo:SEE END OF TEXT FOR INFOBOXCopyright (c) 2002 Rocky Mountain News Record Number: 0210160048