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Consumers tend 'to not downgrade on premium coffee': Black Rifle Coffee CEO

Black Rifle Coffee Founder and CEO Evan Hafer joins Yahoo Finance Live to discuss how his company has been impacted by inflation and supply chain disruptions, and the impact of politics on the business.

Video Transcript

DAVE BRIGGS: Though we celebrate coffees seven days a week, 365, today is officially National Coffee Day. Hopefully you got your free cup at your various coffee shop across the country. Black Rifle Coffee is no exception, offering up buy one, get one 50% off online. That, however, is where the comparison ends to all other chains.

Black Rifle Coffee founder and CEO, Evan Hafer, with us now to talk about all this. Evan, good to see you. I want to talk about the branding in a moment. But let's start with the economy and what you're seeing with inflation. How much have prices risen? Are you seeing any recent relief?

EVAN HAFER: Yeah, I think over the last year, we've obviously seen that across categories. This is a commodity. We've seen Green Bean come up. We've made the adjustment. So we took price a little bit later because we were looking for process improvements within the company. We were less apt to pass that on to the customers. We took it a little bit later than some of our competitors.

But what we saw is with the omnichannel model that we currently have and with the customers that we have, we didn't see a lot of our direct-to-consumer subscription. That didn't churn out. Customers were prepared for some of the price increases. Ultimately, I think, for us, we've prepared and made internal process improvements in order to compensate with that for that without passing that on to the customer too much.

DAVE BRIGGS: Trimmed your margins a bit. Are you seeing those prices begin to come down?

EVAN HAFER: Yeah, yeah, we're starting to see, I think in the previous section, what we've seen, or at least heard, is that some of your shipping rates, for instance, container, container prices are coming down. It looks like coffee stabilizing, coming down. But shipping still remains high. But we've seen some packaging stabilize, if not come down. So we're seeing it come down in different categories. But we're seeing that still the supply and demand issues, for instance, in aluminum and some of the raw goods are still high because of the demand.

DAVE BRIGGS: You're both brick and mortar and online. Are you seeing a shift there, pandemic and out of, and what are your percentages there?

EVAN HAFER: The exact percentages, as we start to expand, we're just new into FDM, so we've moved into grocery. This is our first quarter into grocery. I'll be releasing those, obviously, in the next earnings report as far as those numbers are going. But what we're seeing is that consumer purchasing behavior is relatively consistent with the history of coffee consumption, which is people tend to not downgrade on premium coffee. What they'll do is they'll take away a stop.

And so, with us having a subscription, that's actually strengthened, I think, our brand position. And we've concentrated on, really, the customer experience within the retail or coffee shops. And then we've expanded into the grocery section, or at least, FDM for coffee, which I think more people are looking to take that dollar out of their purchasing behavior on their drive to work, but they're not willing to downgrade from their coffee.

DAVE BRIGGS: And brand loyalty is everything for Black Rifle. Wall Street Journal has a piece calling you a socially conscious, but politically incorrect company. How would you describe it?

EVAN HAFER: You know, I'm a mission oriented guy. I spent 20 years in the military and the intelligence community. Mission is everything. Mission success is everything. And for us, we focus on how do we give back to our community? How do I support and empower veterans to not only buy the best coffee in the world, but also, how do I inspire them to go out and start their own businesses? How do I help in a successful transition out of the military into the professional workforce?

For us, our mission is about supporting the subculture of the veteran, the first responder community, empowering them to make successful transitions out of the military, and then the people that have been physically injured through war, both physically, psychologically. How do we turn some of our profits into something really good, as far as support? Some of those things are hard truths, as I like to tell people. When you're mission focused, you maintain. You don't deter. I think that you're going to have a great winning combination.

DAVE BRIGGS: Good to see you, sir. Unfortunately, we got to leave it there. Happy National Coffee Day. Love to have you back, talk further about the brand. Evan Hafer is the founder and CEO of Black Rifle Coffee. Thank you, man.