Industry: Food & Beverage
Founder Dale Katechis is roasting 10 kinds of coffee and canning a cold-brewed recipe that packs a serious caffeine kick.
"It was not unlike too many of our other projects, thoughts or ideas that ended up turning into a businesses spawned by Oskar Blues," Katechis notes. "It was an interest of mine and I guess I'd always been curious about having a little tabletop roaster, just being a big coffee fan, and it was basically an outlet for the end of the day of dealing with the beer business. So I basically just bought a tabletop roaster and after work just put it in a hallway and started roasting beans for people in the office."
Today, Hotbox Roasters has a brick-and-mortar location in Denver's RiNo (River North) Art District, 10 whole bean varieties and a canned Nitro Cold Brew packed with 420 milligrams of caffeine. For those unaccustomed to cold brew, that's over two and a half times the concentration of drip coffee, so don't say you weren't warned. Whole Foods and several small grocers carry the cold brew in six states total.
Katechis is the architect of the 2002 "Canned Beer Apocalypse," when he broke with craft beer norms to can, rather than bottle, his beer. The heretical move paid off. Several years later the Crowler was born, a joint development between Oskar Blues and Ball Corporation. Like traditional glass growlers, these 32-ounce aluminum cans can be filled on site at craft breweries, allowing patrons a convenient and cheap take home option. OB has exclusive distribution rights and demand is reported to be soaring.
Now Hotbox Roasters is distributing whole beans in Crowlers, leveraging Oskar Blues' canning and distribution network as well as its retail accounts. Part of Katechis' business ethos is having different plates spinning in the air. Oskar Blues has a second brewery in North Carolina, 14 restaurants spanning three states, a charitable foundation, and a bicycle company.
"If you come to Oskar Blues, there is somewhat of the Willy Wonka effect," notes Katechis. "Depending on which corner you turn around there's something else going on."
In light of that, the move into coffee makes sense. Per Katechis, the Oskar Blues team had always wanted to make a coffee beer. Starting a roasting operation took that idea a couple steps further. Operationally it made sense, and there was no need to raise a lot of money or figure out other things like packaging. There were also overlapping skill sets. For instance, building relationships and sourcing directly from hops farmers is similar to finding the right coffee farms with the right quality of beans.
Coffee consumers have also gotten pickier. Quirky branding rife with cannabis references, small batch production and Fair Trade-plus sourcing standards have contributed to the company's early success.
Asked about his personal favorite, Katechis admits that it "changes from day to day, but I would say if I could only have one moving forward it would be Kenya Dig It. But we're also experimenting with some new roasts, some that are a little more aggressive that we've found more suitable to this younger generation of craft coffee drinkers who like something with a lot of different flavors, not just something that's kind of sweet, chocolatey and earthy and roasty. . . . We're still having a lot of fun with experimenting."
Katechis has increased production from a hobby-scale operation, to an intermediate stage startup roasting 30 to 50 pounds a day, and recently installed a new Loring S35 Kestrel roaster with a daily capacity of 35 kg. The California-made, high-efficiency roaster allows Hotbox to dial in the consistency and save energy costs. They're now roasting roughly 100 pounds a day.
"I don't know if we'll ever max out our capacity on that machine -- or anytime soon -- but it allows us to do a lot more at once and it's a very efficient machine," says Katechis.
Challenges: The biggest challenges relate to shipping and distribution. First, the Crowler can tends to crumple if not completely pressurized and cared for all the way to the retail shelf. On cold brew side, the challenge is to shelf-stabilize the product without pasteurization or some other process that degrades it. Nitrogen has some preservative qualities and helps pressurize the can, which part of why Hotbox uses it. Hotbox is working with food scientists to make sure product doesn't lose quality with mileage.
Opportunities: The flip side of the distribution challenge is that Hotbox is able to leverage a lot of Oskar Blues' assets. As noted, those include things like equipment, distribution rights on the Crowler, and retail accounts. They also include intangibles like goodwill and passion. "We're not only making our own beer, but we make our own food and our own coffee and, to some extent, we cultivate our own musiciansm" says Katechis. "And we make our own bicycles and all of the things that we're extremely passionate about. We don't just slap our name on it."
More generally, the growing consumer demand for cold brew will continue benefiting any producers who can maintain shelf space at major grocers or independent distribution networks.
Needs: As one might imagine, the 10th largest craft brewery in the U.S. isn't hurting for financial or human capital or business partnerships. With those common needs accounted for, Katechis says what he really needs with Hotbox Roasters is patience to scale organically -- and "maybe a little luck. That never hurts, right?"