Four years ago, Pernell Cezar called his childhood friend Rod Johnson with a simple question that would end up changing their lives: Do you drink coffee?
âI didn’t do it back then,â Johnson told CNBC Make It, adding that he was really more of a tea lover.
It might not seem like the catalyst that prompted two longtime friends to quit their jobs and start their own brand of coffee – which in just three years has hit seven-figure annual sales and dropped out. leading partnerships with Amazon, Target, Ben & Jerry’s. and even the NBA.
Yet that’s exactly what Cezar and Johnson, both 34, did. In 2018, the duo launched Des Moines, Iowa, BLK & Bold Coffee, which touts itself as the country’s first black-owned, nation-distributed coffee brand. It is built around a social mission, say the co-founders, by donating 5% of total profits to nonprofits supporting children in underserved communities across the country.
In May, BLK & Bold became the first black-owned food and drink brand to sign a licensing agreement with the NBA, partnering with a coffee flavor called The Warm Up. And on September 20, the company partnered with Ben & Jerry’s to develop a new cafe ice cream called Change Is Brewing.
CNBC Make It estimates that the startup made a profit of $ 840,000 last year, which the company has declined to confirm. Cezar and Johnson say they are set to double BLK & Bold’s annual sales this year, and the brand’s coffees and teas are available at more than 5,600 outlets across the country.
Today, the friends face two difficult obstacles: growing their still young business in the face of fierce competition, and using their success to help children in underprivileged communities like the one where they grew up.
Draw inspiration from their childhood
Prior to 2018, Cezar and Johnson had already built solid careers. Johnson worked on fundraising at the University of the Pacific in Stockton, Calif., and Cezar was sales manager for beauty retailer Sundial Brands.
But, like many millennials, the two friends wanted more personal growth in their jobs and dreamed of starting a business together. Cezar would be the CEO. Johnson would be the director of marketing. And no matter what they sold, they decided, their business would revolve around a “social impact model,” with a percentage of the proceeds going to charity.
âWe wanted to make sure we found a way to reinvest in those who just need a boost, who just need a helping hand to overcome and move beyond their respective circumstances,â Johnson said.
Their inspiration came from their own upbringing in Gary, Indiana, a city about 25 miles southeast of Chicago with consistently high rates of poverty and violent crime, and a reputation for being among the most disadvantaged. from the country.
Shelia Carpenter, a home economics teacher who knew both Cezar and Johnson as high school students, explains that the two friends, whom she calls “leaders and role models,” spent a lot of time after the sports school or local Boys & Girls Club. . She says it helped them avoid falling “with the wrong crowd.”
âIt gave them another choice to get out of trouble and do the right thing,â Carpenter said.
This Boys & Girls club gave the two friends firsthand insight into the importance of youth-focused nonprofits. In 2020, BLK & Bold donated $ 42,000 to 14 community organizations like No Kid Hungry, which fights child hunger, as well as educational programs in Des Moines and a black youth coding initiative at Miami.
One of the organizations, Youth Guidance, is a nonprofit student counseling organization in Chicago. Rebecca Langan, Director of External Affairs for Youth Guidance, says BLK & Bold donated around $ 2,500 last year and, perhaps more importantly, helped more children learn about programming of the association.
âThese are young people who do not [otherwise] have access to this kind of intervention and the support of a qualified counselor within their school, âsays Langan.
From a small garage to thousands of stores
Johnson is no longer a stranger to coffee. The two co-founders say they have “fallen into the rabbit hole,” growing their business from a single roaster in Cezar’s tiny garage to a 20,000 square foot commercial facility.
While doing their market research, Cezar and Johnson learned that black Americans are significantly under-represented in the coffee industry, both as customers and as entrepreneurs. In the United States, African Americans are the ethnic group least likely to drink coffee on a regular basis, according to a 2019 study by the National Coffee Association, a market research and lobbying organization.
Cezar further attributes the shortage of black entrepreneurs in this space to a lack of information and resources, including funding. It’s “wild” how few black-owned coffee companies are distributed nationwide, he says. “Coffee has been around since the Boston Tea Party, pretty much.”
Of course, BLK & Bold did not achieve this goal overnight.
The company began by selling bags of homemade roasted beans to independent coffee shops and midwestern retailers. Cezar and Johnson mainly relied on social media for marketing and spent around $ 22,000 of their personal savings on costs such as building their website and attending trade shows, to showcase their product to retailers.
Their big breakthrough – or, really, a series of them – came in 2020. First, in January, BLK & Bold’s products landed in 200 Target locations across the United States. Partnerships with Whole Foods, the Midwestern grocery chain Hy-Vee, and other retailers put their products – which now also include tea – in thousands of stores later that year.
Then the pandemic struck. Online sales have taken off, especially on Amazon, where BLK & Bold was part of the e-commerce giant’s Black Business Accelerator last summer.
And when consumers from across America flocked to support black-owned businesses after the George Floyd murder, BLK & Bold received another financial boost.
âIt’s all about consumers making a very conscious choice to make sure their dollars go exactly where they want them,â Cezar says.
Planning the hard way to go
BLK & Bold’s initial momentum means the startup is now competing in a crowded market, alongside other specialty coffee brands like Blue Bottle, Stumptown and La Colombe, and coffee behemoths like Starbucks, Peet’s and Dunkin ‘.
In other words, sustaining that growth is about to get much more difficult – especially if the surge in online orders fueled by the pandemic or the nationwide wave of support for black-owned businesses eventually wanes.
Cezar recognizes the challenge. If consumers’ priorities change, he says, BLK & Bold can change with them.
This likely means the addition of new products, including âready to drinkâ bottled coffee options. Cezar also wants more partnerships with big brands, like his company’s ice cream âcollab-slash-mashupâ with Ben & Jerry’s.
The goal, he says, is for customers to keep buying his coffee because they like it. At the same time, he hopes that “the interest and intention to understand and support black businesses will not wane.”
âI like to hope that this dynamic doesn’t get lost,â Cezar says. “Because it is a larger societal problem, more than a challenge for a brand or a product.”
Register now: Be smarter about your money and career with our weekly newsletter
How Brex co-founders went from teenagers hacking iPhones and video games to running a $ 7 billion startup
How Amazon Prime Day was born and its very first bestsellers