Coffee Holding announces closing of Comfort Foods manufacturing facility

Coffee Holding (JVA) announced that the Company will be closing its Comfort Foods North Andover, Massachusetts manufacturing facility at the end of the month. This facility was acquired in 2017 as the key component to the transaction that resulted in the Company purchasing the assets of Comfort Foods, which then became a 100% wholly owned subsidiary of the Company.”The Comfort Foods acquisition was initially viewed by us as a long-term strategic need for our company” said Andrew Gordon, CEO. “After closing our Brooklyn, New York facility in 2009 and moving all production to our larger facility in Colorado, we knew we would eventually need to have production capabilities on the East Coast in the future in order to remain competitive for the business opportunities which could not be serviced efficiently from a logistical and profitability standpoint from the West Coast.Comfort Foods opened the door to this opportunity for a nominal price. We acquired a “turn-key”, first class manufacturing facility, an established customer base and a well-established regional brand, Harmony Bay, for $2mm. Once again, roasting and manufacturing on the East Coast proved to be a winning strategy as we reestablished relationships with many large East Coast supermarket chains whose sales became the main component of our rebound in our annual revenues, which had been steadily declining for a number of years. However, as the coffee industry continues to evolve, we began to experience a steady decline in sales for the Harmony Bay product line, similar to what most regional brands have experienced. This is due to the fact that major supermarket chains have reduced shelf space that was once allocated to regional brands in order to accommodate the few remaining national brands, and the advertising dollars supporting them. This has resulted in a substantial decrease in our profitability at Comfort Foods which has impacted our overall results over the last few years. But we still relied on the facility for the production of products for our new private label customers, as well as our increased sales levels of both Cafe Caribe and Cafe Supremo Espressos. With the recent acquisition of Empire Coffee Company through Second Empire and its successful integration into our business, we believe that we can close the Massachusetts production facility and move all production into our Second Empire facility located in Port Chester, New York. This transfer of production location will improve efficiencies by providing us with both manufacturing and logistical cost savings. We believe that these operational improvements should have a positive effect on profitability. Also, by not operating redundant manufacturing facilities on the East Coast and transferring all private brand, Harmony Bay, Cafe Supremo and Cafe Caribe production to the Second Empire facility we expect to eventually realize additional annualized net savings on overhead of approximately $700k through the closure of the Massachusetts facility.”