Welcome back to closing bell and cheddar news Everyone West
Rock coffee company. Closing its back deal with Riverview
acquisition corp today raising$300 million in equity. Now
trades with the ticker symbol West on the NASDAQ and
a special purpose acquisition company or SPAC is a shell
corporation that helps private companies go public faster without the
costly and rigorous process involved in a traditional I.
P. O. So joining me now is scott
ford, chief executive officer and co founder of West
Rock coffee company scott. Congratulations on the deal.
Today. We do, we're happy to have you
. So I do want to talk about this path
for you. We know SPAC merger activity falling to
the lowest point since early 2020 last quarter. That's
according to pitchbook, just 78 listings after a rip
roaring first year of the pandemic. Why was the
SPAC merger in this current environment? The right move
for your company? Well, the fact that we
did with River View, which was run by a
guy named brad martin, actually was fairly unique in
the SPAC world and that we went out and raised
really brad, raised$250 million in a pipe that
was committed to come in as common stock at$10
the day we closed, which is the exact thing
that we offered to the public, uh, and
that$250 million and the public vehicle that the SPAC
would allow us to then assume unlock another$350 million
from our, our lenders, which allows us to
refinance the business pay our debt down and continue to
grow. So it wasn't a SPAC where we were
really dependent upon the proceeds of the SPAC at all
. In fact we assumed we would get none.
And in fact we got almost$50 million from SPAC
Partners. So we were thrilled with that. Okay
. I think the biggest question is what makes your
coffee unique? What do consumers love about West Rock
coffee company? Well, for the most part we
are a brand behind the brand. So the large
, you know, drive through restaurants, large retailers
, big box retailers, club stores, we do
private label and other people's um brands. And we
were the first company and I think still the only
one to have a fully digitally traceable supply chain.
So our customers can read the carton with a QR
reader and I can tell you the name of the
woman's coffee that is in that product, the date
we bought it, the quality, the quantity that
she brought in, what price we paid. Whether
her farm has been audited for child labor that year
. No one in the world provides that end to
end beyond us. And it's why we've got the
number one market share in the country today with the
major brands that for whom that kind of traceable insight
is important. Talk to me more scott about some
of the supply chain challenges that you've been navigating these
past 2.5 years of the pandemic and how prices,
higher prices have played a role in your business.
For the most part, coffee is a pass through
price for us. So we, we, we
provide the services of buying it, blending it,
bringing it into the U. S. Um and
at that point the before we process it here in
the US that see price, if you will,
the coffee futures chart that you're bringing up. It
was about a dollar 40 a year or so ago
. Today. It's a, you know, roughly
2 40. That is a price that gets pass
through to our end customers who then set the retail
price for their customers and prices go up. We
pass it through. If prices go down, we
passed that through as well. Mm hmm. What
are the expansion plans? Obviously you've raised a lot
of money in this. I know it's to shore
up to make the business continue to grow basically,
as you explained earlier. But what are those tangible
steps scott that you're looking to grow the company?
Well, this is the money that comes in between
the, the equity that came in roughly 300 million
and the$350 million COVID, it gives us a
balance sheet and it gives us the growth trajectory if
you will around two things that are our key focus
. Number one, we're building the largest roast to
ready to drink facility in the country. So we
will roast it, grind it extracted, concentrated,
add milk sugar flavors, put it in a bottle
can and ship it out. The other end of
the factory. That is the biggest construction project of
its type anywhere in the U. S. And
this offering will number one fund that the second thing
it will do by giving us a clean balance sheet
and a currency that we think is very attractive to
other people in our industry. It will allow us
to start to grow our business internationally, where we've
had a lot of people that have been interested in
partnering with us but we didn't have a balance sheet
that would allow us to go do that. So
we will pursue both of those two thing. Have
you seen a shift in consumer habits at all scott
? I mean, one thing that I've been picking
up on is that even as inflation rises and the
price of a cup of coffee rises. People generally
are still willing to pay for that cup of coffee
on a regular basis. Is that what you're finding
as well? Yeah, absolutely. Coffee is very
stable. Good times and bad. Um Good times
people have a lot to do and they need more
coffee. Bad times people have nothing to do and
they tend to drink more coffee. Uh So the
big consumer ship is the transition from hot coffee too
cold. Uh, 70 something percent of the people
that walk into a coffee shop today are there to
buy a cold based coffee drink. And that's gonna
go not only through the coffee shops, but through
the drive thru restaurants, the seated restaurants, retailers
and all the way through the private label. And
as it works its way through that waterfall, that's
really where our business model comes into play. And
um, probably the greatest consumer growth product in grocery
stores today are cold based coffees. Is climate change
, impacting the way that you do business at all
. We've had some companies come on the show and
say that they are looking at their own supply chains
. We've seen some of this extreme weather, especially
in the south just in the past few months or
so. And it is impacting their own supply chains
. How is your company thinking about climate change and
making a strategy potentially around that. Yeah. So
the, the good thing is in the coffee industry
, if you um look at our entire footprint,
we are a net capture of almost two million tons
of carbon a year because we finance the coffee trees
that are much more absorb absorbent of, of uh
of carbon than, you know, the maze or
the pasture that it's replacing. If you look really
at coffee specifically, it's really dependent upon brazil and
Colombia in the United States. Most of the coffee
that comes in here comes out of latin America and
brazil, brazil is over half the traded coffee around
the globe comes out of brazil and as their weather
goes and they had a freeze last year and a
drought in the spring. That's why I largely coffee
has doubled in the last year because as the weather
goes in that part of the world, so go
will the price of coffee as so will the price
of coffee scott some of these emerging markets though,
of course dealing with their own challenges. How are
you couching for that in the emerging market in terms
of as as a as a product that we sell
or as a place where we source, I would
say as a place where you source considering that they
do happen to have their own climate change challenges that
they're dealing with different governments. We've seen every company
I think kind of look at their own global supply
chain and think, okay, if it's Apple for
instance, I can't rely solely on china based on
the lessons that I've learned during the coronavirus. So
I need to look at plans elsewhere. What is
what's that happening for your company? Yeah. That's
actually more insightful question than I get in the normal
band or Q. And A. That's a good
question. And and what we specifically done with some
of the major brands in the U. S.
That we serve whether you think about a drive through
burger restaurant or a large uh big box retailer.
We have been introducing them to coffees from Africa,
specifically East Africa and Indonesia and that part of the
world so that they have some palette acclimatization if you
will for something other than just Brazilian and Colombian because
they are gonna need it over the next 20 to
30 years scott, we gotta leave it there.
So good to have you on the show. I
hope you'll come back. Congratulations on the deal.
Look, I'm always fueled by coffee and so I
appreciate what you're doing. That scott ford Ceo and
co founder of West Rock Coffee Company.