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Initial response to single-serve pour-over product is the driver behind NuZee’s business: CEO

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NuZee, Inc. (NASDAQ: NUZE) is a leading coffee technology and co-packing company that provides end-to-end sustainable solutions for clients ranging from small roasters to large global brands. The company is looking to expand in the single-serve and private-label categories.

NuZee was launched after the tsunami that hit Japan more than a decade ago, with a mission to provide safe bottled drinking water from New Zealand to help in the recovery effort. Later, the humanitarian effort led to the launch of NuZee products worldwide. In an email conversation with AlphaStreet, NuZee’s founder and chief executive officer Masa Higashida spoke about the business and its operations.

After NuZee’s inspiring launch, how was the journey so far?

The initial response to the launch of our single-serve pour-over product is the driver behind NuZee’s business today. It was well-received by coffee roasters and store brand managers who asked NuZee if we can co-pack or private label on their behalf. Fast forward to today, we’ve proudly manufactured for over 200 coffee companies in North America and 250 in Korea and have established NuZee as the go-to manufacturer in the single-serve pour-over & brew bag space.

Please provide insights into your product portfolio and the customers you serve

Our customers are startup brands to national brands and everywhere in between. Typically, the early adopters who embrace and leverage new technologies and who also dedicate resources to the growth of those initiatives are the ones who succeed and are ultimately the long-term customers and future clients of NuZee. NuZee’s current customers include Chamberlain Coffee, Stumptown Coffee Roasters, Verve Coffee Roasters, Lion Coffee, Cuvée Coffee, Lifeboost Coffee, Ethical Bean Coffee, and Vesta Coffee Roasters. We also recently signed a 5-year global license with STONE Brewing to go to market with a full end-to-end line of specialty coffee products which are expected to be available in Q4 of this year. The STONE Brewing coffee line is expected to include single serve pour over, brew bags, 12oz whole bean, 12oz ground coffee, ready-to-drink & single-cup capsules.

What is the revenue share of single-serve and private-label customers, and what is the market share trend?

Our revenue share by volume is a pretty close split between our single-serve brew bags and pour-over formats. Currently, a vast majority of our volume is specialty coffee roasters, but we see this starting to shift to non-specialty brands and private labels for regional and national grocery chains.

Can you shed some light on your expansion plans for the long term?

We plan to continue to expand upon our core business, single-serve coffee co-packing / private label and continue to introduce innovations that run parallel to the coffee industry and that are significant opportunities.

Going forward, what are the challenges and tailwinds for the business?

Some current challenges include consumer education, which we have identified and are working with our roaster partners to help them educate their customers on the formats. Our strongest tailwind is that the bricks have been laid regarding retailer adoption. The products we manufacture can now be found at Walmart, Costco, Whole Foods, Sprouts, HEB, ShopRite, and many more.

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