Vt. Coffee Co. Sold to Stonewall Kitchen
April 2 - 2021
Coffee Geography Magazine
Vermont Coffee Company has been sold to Maine-based specialty food producer Stonewall Kitchen in a deal that will keep VCC in Middlebury, retain (and possibly grow)
the firm’s local workforce, and expand the market for its popular coffee
products.
The
transaction will also result in Vermont Coffee absorbing more space within the
Carrara complex at 1197 Exchange St., and lead to creation of a new downtown
Middlebury café as soon as this fall.
“As
a purpose-driven company, finding the right home for our brand and the friends
I’ve made was of the utmost importance to me,” said Vermont Coffee founder Paul
Ralston, who for the past year has been looking to ease into retirement while
turning over the business reins to a company that would, in his words, be a
“good legacy owner for the brand.”
Paul Ralston, CEO and Founder Vermont Coffee Company
“I
am extremely happy that Stonewall Kitchen will be the new home of Vermont
Coffee Company and will continue roasting with our entire team here in
Middlebury,” Ralston added.
It’s
a deal that will pay local dividends for years to come. Ralston has promised to
use some of the proceeds from the sale to create a nonprofit that will address
food insecurity in Addison County (see sidebar story on this page).
Ralston
began roasting coffee in 1979 after purchasing an antique Royal No. 4
slotted-drum roaster that he set up in the window of his bakery in Bristol. Two
decades later, Vermont Coffee Company was born, and today offers more than 25
blends from its 40,000-square-foot, state-of-the-art facility in Middlebury’s
industrial park. In 2018, the company became the first roaster in the nation to
roast coffee using 100% renewable biogas.
Born
in 2001, Vermont Coffee has 37 full- and part-time employees, according to
Ralston, who himself will stay on through the end of this year to help with the
Stonewall Kitchen transition. He’ll then re-evaluate his status for 2022.
Stonewall
Kitchen is a leading specialty food and home goods producer headquartered in
York, Maine. Jonathan King and Jim Stott founded the company in 1991,
establishing the Stonewall Kitchen brand by selling jams and jellies at local
farmers markets. Over time, they added sauces, condiments, crackers and baking
mixes. Today, Stonewall Kitchen bills itself as the “premier specialty food and
home goods platform in North America.”
Stonewall
boasts more than 8,500 wholesale accounts nationwide and internationally; a
thriving catalog and online division; a cooking school and café in York, Maine;
and 11 retail stores throughout New England.
“We’re
extremely excited to welcome Vermont Coffee Company to our growing family of
specialty brands,” Stonewall CEO John Stiker said through a press release.
“Both of our companies are committed to craft manufacturing high-quality
products and creating meaningful experiences for people. The Vermont Coffee
Company products are sustainably sourced, 100% organic, and — most importantly
— make a delicious cup of coffee. We believe these deeply rooted values and
commitment to quality make Vermont Coffee Company the perfect addition to our
family.”
Stonewall CEO John Stiker
It
was three years ago, at age 65, that Ralston began considering a succession
plan for Vermont Coffee. He and his spouse, Deb Gwinn, have no children, and he
wanted to play a role in writing the next chapter of his company.
“I
pursued a number of different avenues trying to figure out something that would
respect the work we’ve done, the brand that we’ve built, the employees we have,
and the customers — and most importantly, our commitment to the community,” he
said.
Ralston
transitioned to what he called “a practice retirement” in November of 2019.
“For
the last year, I personally have been stepping back from day-to-day management
of the company,” he said. “I’ve put a lot of effort over the years recruiting a
really great team of people. In the last year and a half, with two additional
senior management hires, I’ve really filled up the team. They’ve had about a
full year on their own to get used to running the company. I’ve been letting a
succession management team take over.”
Ralston
began drafting a list of qualifications for new ownership.
“It
was very, very important to me that the brand and employees ended up with a
company that valued them tremendously and had similar culture and similar
commitment to innovation, quality and customer service,” he said.
Vermont
Coffee officials compiled a list of around 100 companies and people they
admired. Six months ago, Ralston hired an investment banking firm and an
accounting firm to help vet and trim the “potential new owners” list.
“That
allowed me to stay in the background, have someone get in touch with those
folks, find out if they have any interest (in buying the company), the
financial capacity, and whether they were interested in following the path
we’ve created,” he said.
Ralston
found a lot of suitors — “several hundred” initially, and around 40 of them
measured up for further scrutiny.
The
level of interest shown in Vermont Coffee didn’t come as a huge surprise. It’s
currently a leading organic brand of coffee in the Northeast — and the fastest
growing. Since Vermont Coffee is available in chain grocery stores, all its
sales are scanned through cash registers, and companies can buy that data. So
prospects are able to use independent data to verify how the company is
performing in the marketplace.
Stonewall
Kitchen jumped ahead of other suitors when it quickly sent in a letter of
intent outlining how its management planned to handle succession, and under
what terms it would do so.
It
took only 60 days to negotiate a deal.
“It
wasn’t about the money, who was going to pay the most,” Ralston said. “It
really came down to the cultural fit and the joint commitment that our company
has that Stonewall shares. It was very, very important to me that the brand and
employees ended up with a company that valued them tremendously and had similar
culture and similar commitment to innovation, quality and customer service.
“This
was frankly an easy decision for me.”
Vermont
Coffee Company officials are already working with their Stonewall counterparts
to ensure a smooth transition. And it’s a transition that portends growth and
new jobs.
“By
joining Stonewall, Vermont Coffee Company is going to have access to a lot more
resources and a much bigger distribution network,” Ralston said. “This is a
national company. Stonewall also has a very strong online business, and we
expect to see a lot of activity there. We’re going to be busy and growing,
there’s no question about it. And we’re going to be hiring.”
Fortunately,
there’s room for the company to grow in the Carrara complex. Already, it has
moved into a portion of the neighboring space most recently occupied by
Stonecutter Spirits. Middlebury College has a short-term lease for some of that
Stonecutter space (for storage), but Vermont Coffee will need all of it within
a year or so.
“The
Carraras are a really important part of the success of the company,” Ralston
said. “They kept space available for us as we grew.
“We
expect there’ll be some major modifications, maybe an addition to that building
as we grow,” he added.
The
former Vermont Coffee playhouse space is currently being outfitted with coffee
grinding equipment.
“(A
grinding room) is a big deal for us, because whole-grain coffee is a small
sector — around 7% of the market, whereas ground coffee is almost 40%,” Ralston
said. “So we’re going to be playing in a much bigger universe.”
Stonewall
Kitchen’s Portfolio
In
addition to its own products, Stonewall sells or will sell:
•
Vermont Coffee Company’s non-GMO, certified-organic coffee