How La Colombe Made Its Canned Lattes a Hit With Retailers It sold 10,000 cans in one hour.
This story appears in the January 2017 issue of Entrepreneur. Subscribe »
There are many prepackaged coffees, but La Colombe CEO Todd Carmichael saw an opening: If he could froth milk inside a can, he could sell the world's first canned latte. But how?
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The Process
He made a crude prototype; when someone pops the can's top, a small device inside releases air into the liquid. Then he brought it to Crown Holdings, a packaging manufacturer near him in Philadelphia that was on the hunt for canning innovations. "I said, "We're going to change the beverage industry. I see a world where $10 billion a year is spent in texturized beverages,'" he says. The company was convinced: This idea was bigger than one drink. It invested millions in R&D and capital to make the can, and Crown and La Colombe worked out a mutually beneficial deal they're keeping a secret.
The Design
Rather than hiring a branding company, Carmichael created his label in-house with two trusted employees. The first big decision: Rather than print on the aluminum, he wanted to print on a sleeve that wraps around the can. "This offers an isolation from the metal, which I enjoy. I wanted it to look really crisp," he says. Then he decided on a visual architecture -- the logo at the top, and then the name, product and two features (cold-pressed espresso and frothed milk!) -- that's flexible enough to evolve as the line grows. It fits his philosophy on product design: Not every bit of information should be shouting for attention. "You need to be told one beautiful thing in a delicate way," he says.
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The Price: $3.00 Per Can
A draft latte has a price ceiling, based on how similar items are priced. So to find it, Carmichael consulted his various retailers. Then he backed into his bottom line. He began with the cost to make the latte; he insisted on buying raw milk from local farmers and pasteurizing it himself to insure a superior product rather than using cheaper rehydrated milk. He also had to factor in 3 to 5 percent of the total price for his sales broker ("Most people out of the gate don't have a countrywide distribution network; we're not Coke or Pepsi"), 5 to 10 percent of the total for his distributor, the margin for retailers and, of course, the margin he needed to grow his company. "If you're between 15 and 30 percent, and the product is heads and tails above the next level, and it's really competitive, then that's great," he says.
