For years, independent roasters found success in craft, direct trade relationships, and an emphasis on quality, capitalising on the growing demand for premium coffee. As the market grew and diversified, a wave of mergers and acquisitions swept the industry as specialty coffee roasters looked to scale.
Today, as coffee prices rise and operational costs go up across the board, more and more roasters are struggling to manage their profit margins and cash flow, seeking investment opportunities to stay afloat amid market volatility.
While external funding sources may help them grow and scale, they also raise questions about whether roasters compromise their independence and integrity.
I spoke to Martin Mayorga, the founder and CEO of Mayorga Coffee, about the pros and cons of operating a large coffee business without investors.
You may also like our article on why more coffee producers are diversifying their crops.
Why do coffee brands seek out investment?
Specialty coffee roasters have long emphasised quality over quantity, focusing on direct trade relationships and marketing that highlights their passion and craft.
Once dominated by smaller players who used their size to remain agile and flexible, the specialty coffee market has grown and diversified in recent decades as more brands have looked to grow their business.
To achieve this, many have sought out external funding and investment, helping them scale more efficiently.
“Scaling a coffee business without outside investment is difficult because of the capital-intensive nature of the industry,” says Martin Mayorga, the founder and CEO of Mayorga Coffee. Founded in 1997, Mayorga Coffee is a roaster that focuses on supporting sustainable organic farming practices and uplifting smallholder producers in Latin America.
“Sourcing coffee, especially through direct trade, requires well-executed planning and some risk-taking, as you have to project the volumes needed for the entire year,” he adds. “Unlike tech or software businesses, coffee has physical products with logistical challenges, perishable inventory, and tight margins.
“Roasting and packaging quality coffee also requires food-grade facilities and equipment as well as skilled managers and operators. Then you get to the expensive part: marketing and branding. Every step requires significant cash flow, and to have cash flow, you need sales.”
How investment has reshaped specialty coffee
Mergers and acquisitions (M&A) have been a hallmark of the coffee industry over the last ten years. Notable third wave roasters like Stumptown and Blue Bottle were acquired by multinationals in the mid-2010s, while larger companies have steadily absorbed a number of specialty coffee importers throughout the last few years.
Although the growth of the market signals an increase in demand for quality coffee, it can dilute the values that first defined specialty coffee. Investors often expect rapid returns on investment (ROI), which can result in cost-cutting measures that lead to a drop in quality and a compromise in ethical practices.
“Large multinational corporations have flooded the specialty coffee space with lower-quality, ‘ethically marketed’ coffee, making it even more difficult for authentic, value-driven brands to compete on price and volume,” Martin tells me. “Small roasters and independent brands have also appeared, making what I consider reckless, unfounded claims about their impact.”
For instance, some businesses which focus on direct trade and fair prices paid for coffee in their marketing strategies may now rely on commercial blends and cheaper lots to manage tight margins. Without transparency about this shift in sourcing practices, ethical claims are quickly eroded, undermining the industry’s overall values.
The coffee market is more competitive than ever
The coffee industry has always been dynamic and saturated, but recent unprecedented financial pressure is impacting everyone in the supply chain more than ever before. Over the last year, green coffee prices have more than doubled, credit rates have soared, and business costs – ranging from energy to logistics – have reached record highs.
In this landscape, managing cash flow has become more challenging, especially for roasters, which typically rely on short-term loans to cover the costs of large coffee purchases. Once fairly predictable, financial planning and budgeting are now increasingly complicated, which strains profit margins and hinders opportunities to grow operations.
“Recent years have made scaling even harder,” Martin says. “Inflation and interest rates have driven up costs across the board; freight, labour, and materials are all significantly more expensive.
“The coffee market is volatile, with green coffee prices fluctuating based on weather patterns, speculation, and production cycles,” he adds. “The current market levels are a great equaliser, in my opinion; producers will make more money, and only savvy business operators will stay profitable.
“Without outside investment, the biggest risk is cash flow management. Growth requires capital, and if you don’t have investors, you have to fund everything yourself.”
The risks of self-funding
For many smaller roasters, this proves impossible, meaning the only way to expand is through investment. Others who choose to self-fund their business growth, meanwhile, are faced with a number of risks and challenges.
“Brands can’t expand as quickly as their competitors who have millions in venture capital, most of which is spent on marketing, which I think is a massive mistake,” Martin tells me. “Larger, well-funded competitors can out-market, out-spend, and outmanoeuvre you.
“If demand spikes, fulfilling orders can become a challenge without the proper infrastructure in place,” he adds. “Moreover, many founders use personal savings or take on significant debt to fund growth.”
The pros and cons of investment
Most roasters will want to scale operations at some point in their career trajectory, and many question whether investor funding is an inevitable part of this. The decision to accept funding undoubtedly comes with benefits.
“Access to immediate capital helps businesses expand infrastructure, scale production, invest in marketing, and mitigate risk during economic downturns,” Martin says. “Alternative investment opportunities, like crowdfunding, can also build consumer loyalty and awareness while raising capital at the same time.”
Depending on where funding comes from, however, there is a huge risk that outside investment can lead to less control over internal decision-making.
“Investors, especially large multinational ones, often want decision-making power. This can dilute the original vision and priorities of the brand,” Martin tells me. Funders are likely to seek a high ROI, which often results in cost-saving measures to squeeze out higher profit margins.
“Many companies start with a strong mission but shift focus under investor pressure to maximise profit,” he adds. “There are also debts and obligations. Crowdfunding means owing something to backers, and investor deals often require aggressive growth targets that aren’t always sustainable.”
Is it possible to scale without investors?
Ultimately, the question of whether scaling and maintaining brand values can coexist remains. Mayorga Coffee, which started 27 years ago, proves that it’s possible to grow a business while staying true to its ethics and sustainable practices.
“We focused on strategic growth, modest margins, continued profitability, and reinvesting in ourselves instead of taking outside money,” Martin tells me. “Instead of taking profits and cashing out, we reinvest back into the business, whether it’s new equipment, better logistics, or brand development. We’ve grown without taking on excessive loans, which gives us financial flexibility and stability.”
This has served as a springboard for Mayorga Coffee to retain its core values of sustainable sourcing, paying living incomes for farmers that lift them out of poverty, and supporting employee wellbeing.
“We work directly with farmers and make sure our relationship provides a premium for them. Not just financially, but across the board,” Martin tells me. In July 2024, the company donated over 30,000 coffee seedlings to smallholders in Guatemala, generating US $2.8 million in income for the local farming community.
“We focus on efficiency at every stage, from logistics to roasting. We’ve built a strong brand with a loyal following, allowing us to grow without massive marketing spends,” Martin adds. “A strong, authentic brand attracts loyal consumers and can drive long-term growth and create lifelong customers.”
The company’s Latino-forward ethos and approach underscore this focus on values and roots, supporting brand loyalty. In addition to producing exceptional coffee, Latin American countries and expats also have a long-standing coffee-drinking culture. According to the National Coffee Association’s 2024 National Coffee Data Trends report, 63% of Latinos had consumed specialty coffee in the past week – the highest of any demographic in the US, signalling their huge buying power that is often overlooked in majority-consuming countries.
Maintaining brand values is essential
Although beneficial, one of the biggest drawbacks to receiving investment is how external factors can influence brand identity. Many investors are typically looking to maximise revenue, even if it comes at the expense of diluting or veering away from core values.
In the long term, this can damage consumer confidence and trust, which ultimately means less revenue and profits. According to research from Deloitte, 88% of customers who trust a brand will buy its products again. Moreover, workers who trust their employers are 260% more motivated to work (and 50% less likely to leave) and trusted companies outperform their peers by up to 400% in terms of market value.
“We’ve never compromised on who we are. Mayorga Coffee is unapologetically Latino-forward, and every decision we make aligns with our values. We prioritise cultural representation; our branding, messaging, and approach all reflect our heritage. We don’t water it down for mass appeal.”
By scaling through self-funding over the last 27 years, Mayorga Coffee has been able to retain its core values, leverage its products and services for sustainable growth, and invest in long-term relationships.
“Mayorga only works with Latin American farmers and focuses on organic, sustainable practices. We support Latino communities and ensure our business uplifts our people, from producers to consumers,” he adds. “By staying independent, we don’t have outside pressure pushing us toward short-term profit over long-term impact.”
Every business will have its own unique short and long-term goals, but finding a balance between growth and brand values is essential. Succumbing to the pressures of rapid growth often won’t result in the success that specialty coffee roasters are seeking.
“At the end of the day, scaling a business is about consistency, patience, and discipline,” Martin concludes. “Taking outside money is the easy route, but it comes with long-term costs – often at the expense of the very values that made the company special in the first place.”
Ultimately, coffee businesses need to stay true to their integrity, no matter the size they aim to grow to.
Enjoyed this? Then read our article on why more producers are choosing to diversify their crops.
Photo credits: Mayorga Coffee
Perfect Daily Grind
Please note: Mayorga Coffee is a sponsor of Perfect Daily Grind.
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