When a handful of companies dominate a market, any new entrant to the space must find a niche.
That niche can grow into something big, but the effort is a major challenge that often ends in despair.
Take the fast-food hamburger space. It's dominated by McDonald's, Burger King, and Wendy's, but some smaller players have carved out places in the market.
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Five Guys and Shake Shack may not be as big as the industry's big three, but they found an unserved model by offering a better product at prices that aren't dramatically higher than their lower-end rivals.
Still, those are rare cases of new players breaking into a market in a major way when established players dominate. That's hard to do in fast food and it might be even harder to do in beverages, especially coffee.
Starbucks clearly dominates the business of people buying a cup of coffee or a drink made with coffee. It's a badge of honor for hotels, airports and restaurants to serve the brand, even though it's not top-tier coffee.
The ubiquitous chain also partners with another dominant brand, Nestle, for ready-to-drink beverages that fill supermarket and convenience store shelves.
Starbucks, however, buys only about 3% of the world's coffee. A number of major players you may not know about are in the market, including Neumann Kaffee Gruppe, a huge company operating under dozens of brands that control 10% of the global coffee supply.
Coffee is a space dominated by players like Kraft Heinz, Nestle, Keurig Dr Pepper, and a handful of others,
Breaking into it is a major challenge that one upstart brand with big ideas has struggled to do. It had filed for bankruptcy and now faces a new problem.
Coffee brand brought growing beans to California
California's Frinj Coffee had filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Central California. The company said in its late January filing that it expected to have funds available for unsecured creditors.
The Goleta, Calif., coffee company described itself on its website.
"Frinj evolved from a unique working relationship between its co-founder, organic farmer Jay Ruskey, and Mark Gaskell, PhD, a California Cooperative Extension Farm Advisor," it says.
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"Ruskey had worked with agricultural scientists since his college days, in the early 90s, collaborating on plant trials of tropical fruits with market potential. Gaskell had previously worked with the U.S. Agency for International Development in Panama, introducing crops, and he wondered if coffee could be a viable crop in California."
Basically, the dream was growing coffee in California, an area where it has not traditionally been grown. It was a long process to prove viability.
"In 2002, Gaskell gave Ruskey 40 coffee plants from Costa Rican seed. Jumping at the chance to explore the possibilities, Ruskey planted the coffee among his avocado trees, enabling the two plant species to sustainably share water and nutrients," according to the website.
"It takes three to four years for a young coffee plant to bear fruit, and another two years before it produces a viable harvest."
It has been a long journey for the company, but it now supplies coffee to a number of area restaurants and sells it directly to consumers.
Frinj Coffee, in Chapter 11, faces another problem
At the time of its filing, Frinj reported $215,000 in assets and nearly $2 million in liabilities. It has been operating under Chapter 11 bankruptcy since then.
"The company’s former head roaster, Paige Gesualdo, is suing the company as well as Ruskey and two more executives for fraud, breach of contract, and various employment-related claims," according to a report in the Santa Barbara Independent.
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That lawsuit alleges that Gesualdo invested $1.2 million into the company after Ruskey and other executives misled her about the company's finances. "Her father, Ralph Gesualdo, also loaned the company $200,000 and has filed a second lawsuit over that unpaid promissory note," according to the paper.
Ruskey likened the lawsuits to a family dispute and he expects the company to move forward.
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"Frinj opted for a strategic semi-pause, seeking protection through reorganization to address these matters comprehensively and fairly," he said.
"This step represents not an end, as the company is still selling coffee, trees, and helping farmers, but a necessary interlude, and we are optimistic that we will return to putting our full focus on pioneering California coffee very soon."
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