1. Major problems and issues

Mystic Monk Coffee connect David L. Turnipseed University of South Alabama As Father Daniel Mary, the prior of the foundation for those wishing to donate to the monks Carmelite Order of monks in Clark, Wyoming. cause. Father Prior Daniel Mary did not have a great walked to chapel to preside over Mass, he deal of experience in business matters but considered noticed the sun glistening across the four-inch snow. to what extent the monastery could rely on its Mystic fall from the previous evening. Snow in June was not Monk Coffee operations to fund the purchase of the unheard of in Wyoming, but the late snowfall and ranch. If Mystic Monk Coffee was capable of making the bright glow of the rising sun made him consider the vision a reality, what were the next steps in turn the opposing forces accompanying change and how ing the coffee into land? he might best prepare his monastery to achieve his vision of creating a new Mount Carmel in the Rocky Mountains. His vision of transforming the small THE CARMELITE MONKS brotherhood of 13 monks living in a small home OF WYOMING used as makeshift rectory into a 500-acre monastery that would include accommodations for 30 monks. Carmelites are a religious order of the Catholic a Gothic church, a convent for Carmelite nuns, a Church that was formed by men who traveled to retreat center for lay visitors, and a hermitage pre the Holy Land as pilgrims and crusaders and had sented a formidable challenge. However, as a former chosen to remain near Jerusalem to seek God. The high school football player, boxer, bull rider, and man men established their hermitage at Mount Carmel of great faith, Father Prior Daniel Mary was unaccus because of its beauty, seclusion, and biblical impor- tomed to shrinking from a challenge. tance as the site where Elijah stood against King Father Prior had identified a nearby ranch for Ahab and the false prophets of Jezebel to prove sale that met the requirements of his vision perfectly. Jehovah to be the one true God. The Carmelites led a but its current listing price of $8.9 million presented life of solitude, silence, and prayer at Mount Carmel a financial obstacle to creating a place of prayer, wor- before eventually returning to Europe and becom- ship, and solitude in the Rockies. The Carmelites ing a recognized order of the Catholic Church. The had received a $250,000 donation that could be used size of the Carmelite Order varied widely throughout toward the purchase, and the monastery had earned the centuries with its peak in the 1600s and stood nearly $75,000 during the first year of its Mystic Monk at approximately 2.200 friars living on all inhabited coffee-roasting operations, but more money would continents at the beginning of the 21st century. be needed. The coffee roaster used to produce pack- The Wyoming Carmelite monastery was founded aged coffee sold to Catholic consumers at the Mystic by Father Daniel Mary, who lived as a Carmelite her Monk Coffee website was reaching its capacity, but a mit in Minnesota before moving to Clark, Wyoming larger roaster could be purchased for $35,000. Also, local Cody, Wyoming, business owners had begun a Ci 2018 by David L. Tunipeed. All rights reserved. CASE 1 Mystic Monk Coffee to establish the new monastery. The Wyoming again for prayer and worship. The monks then Carmelites were a cloistered order and were allowed returned to work until the bell was rung for Vespers to leave the monastery only by permission of the (evening prayer). After Vespers, the monks had an bishop for medical needs or the death of a family hour or silent contemplation, an evening meal, and member. The Wyoming monastery's abbey bore little more prayers before bedtime. resemblance to the great stone cathedrals and mon- asteries of Europe and was confined to a rectory that The New Mount Carmel had once been a four-bedroom ranch-style home and an adjoining 42 acres of land that had been donated Soon after arriving in Wyoming, Father Daniel Mary had formed the vision of acquiring a large parcel of to the monastery There were 13 monks dedicated to a life of prayer land-a new Mount Carmel-and building a monas and worship in the Wyoming Carmelite monastery tery with accommodations for 30 monks, a retreat center for lay visitors, a Gothic church, a convent for Since the founding of the monastery six years ago, Carmelite nuns, and a hermitage. In a letter to sup- there had been more than 500 inquiries from young porters posted on the monastery's website. Father men considering becoming a Wyoming Carmelite. Father Prior Daniel Mary wished to eventually have Daniel Mary succinctly stated his vision: "We beg your prayers, your friendship and your support that 30 monks who would join the brotherhood at ages 19 to 30 and live out their lives in the monastery this vision, our vision may come to be that Mount Carmel may be refounded in Wyoming's Rockies for However, the selection criteria for acceptance into the glory of God." the monastery were rigorous, with the monks making The brothers located a 496-acre ranch for sale certain that applicants understood the reality of the that would satisfy all of the requirements to create vows of obedience, chastity, and poverty and the sac a new Mount Carmel. The Irma Lake Ranch was rifices associated with living a cloistered religious life. located about 21 miles outside Cody, Wyoming, and included a remodeled 17,800-square-foot residence, The Daily Activities of a a 1,700-square-foot caretaker house, a 2.950-square- Carmelite Monk foot guesthouse, a hunting cabin, a dairy and horse barn, and forested land. The ranch was at the end of a The Carmelite monks' day began at 4:10 a.m., when seven-mile-long private gravel road and was bordered they arose and went to chapel for worship wearing on one side by the private Hoodoo Ranch (100.000 traditional brown habits and handmade sandals. At acres) and on the other by the Shoshone National about 6:00 a.m., the monks rested and contemplated in Park (2.4 million acres). Although the asking price silence for one hour before Father Prior began morning was $8.9 million, the monks believed they would Mass. After Mass, the monks went about their manual be able to acquire the property through donations labors. In performing their labors, each brother had and the profits generated by the monastery's Mystic a special set of skills that enabled the monastery to Monk Coffee operations. The $250,000 donation independently maintain its operations. Brother Joseph they had received from an individual wishing to sup- Marie was an excellent mechanic, Brother Paul was port the Carmelites could be applied toward what- a carpenter, Brother Peter Joseph (Brother Cook) ever purpose the monks chose. Additionally, a group worked in the kitchen, and live foot, four-inch Brother of Cody business owners had formed the New Mount Simon Mary Little Monk) was the secretary to Father Carmel Foundation to help the monks raise funds. Daniel Mary. Brother Elias, affectionately known as Brother Java, was Mystic Monk Coffee's master roaster, although he was not a coffee drinker. OVERVIEW OF THE COFFEE Each monk worked up to six hours per day: how. INDUSTRY ever, the monks' primary focus was spiritual, with eight hours of each day spent in prayer. At 11:40 a.m., About 150 million consumers in the United States the monks stopped work and went to Chapel drank coffee, with 89 percent of U.S. coffee drink Afterward they had lunch, cleaned the dishes, and ers brewing their own coffee at home rather than went back to work. At 3:00 p.m., the hour that Jesus purchasing ready to drink coffee at coffee shops and er blandt diadatbalstand tech. Starbuck Danie easy to find in any grocery store and typically car- dramatically in the United States, with retail sales ried a retail price of $4 to $6 for a 12-ounce package. increasing from $8.3 billion to $13.5 billion during About 30 million coffee drinkers in the United States the last seven years. The retail sales of organic cor preferred premium quality specialty coffees that fee accounted for about $1 billion of industry sales sold for $7 to $10 per 12-ounce package. Specialty and had grown at an annual rate of 32 percent for coffees were made from high-quality Arabica beans each of the last seven years instead of the mix of low-quality Arabica beans and bitter, less flavorful Robusta beans that makers of value brands used. The wholesale price or Robusta MYSTIC MONK COFFEE coffee beans averaged $1.15 per pound, while mild Mystic Monk Coffee was produced using high-quality Columbian Arabica wholesale prices averaged $1.43 fair trade Arabica and fair trade organic Arabica per pound beans. The monks produced whole bean and ground Prior to the 1990s, the market for premium- caffeinated and decaffeinated varieties in dark. quality specialty coffees barely existed in the United medium and light roasts and in different lavors. The States, but Howard Schultz's vision for Starbucks most popular Mystic Monk flavors were Mystical of bringing the Italian espresso bar experience to Chants of Carmel, Cowboy Blend, Royal Rum America helped specialty coffees become a large and Pecan, and Mystic Monk Blend. With the exception thriving segment of the industry. The company's pur- of sample bags, which carried a retail price of $2.99. suit of its mission. "To inspire and nurture the human all varieties of Mystic Monk Coffee were sold via the spirit-one person, one cup, and one neighborhood at monastery's website (www.mysticmonkcoffee.com) a time," had allowed Starbucks to become an iconic in 12-ounce bags at a price of $9.95. All purchases brand in most parts of the world. The company's suc from the website were delivered by United Parcel cess had given rise to a number of competing spe Service (UPS) or the U.S. Postal Service. Frequent cialty coffee shops and premium brands of packaged customers were given the option of joining a "coffee specialty coffee, including Seattle's Best. Millstone. club," which offered monthly delivery of one to six Green Mountain Coffee Roasters, and First Colony bags of preselected coffee. Purchases of three or more Coffee and Tea. Some producers such as First Colony bags qualified for free shipping. The Mystic Monk had difficulty gaining shelf space in supermarkets Coffee website also featured T-shirts, gift cards, CDs and concentrated on private-label roasting and pack featuring the monastery's Gregorian chants, and cof- aging for fine department stores and other retailers fee mugs wishing to have a proprietary brand of coffee. Mystic Monk Coffee's target market was the Specialty coffees sold under premium brands segment of the U.S. Catholic population who drank might have been made from shade-grown or organi- coffee and wished to support the monastery's mis cally grown coffee beans, or have been purchased sion. More than 69 million Americans were mem from a grower belonging to a World Fair Trade bers of the Catholic Church-making it four times Organization (WFTO) cooperative. WFTO Coop larger than the second-largest Christian denomina- erative growers were paid above-market prices to tion in the United States. An appeal to Catholics to better support the cost of operating their farms for "use their Catholic coffee dollar for Christ and his example, WFTO-certified organic wholesale prices Catholic church" was published on the Mystic Monk averaged $1.55 per pound. Many consumers who Coffee website. purchased specialty corfees were willing to pay a higher price for organic, shade-grown, or fair trade Mystic Monk Coffee- coffee because of their personal health or social con- cerns-organic coffees were grown without the use Roasting Operations of synthetic fertilizers or pesticides, shade-grown After the morning religious services and breakfast, coffee plants were allowed to grow beneath the cano- Brother Java roasted the green coffee beans deliv- pies or larger indigenous trees, and fair trade pricing ered each week from a coffee broker in Seattle, made it easier for farmers in developing countries Washington. The monks paid the Seattle broker to pay workers a living wage. The specialty coffee the prevailing wholesale price per pound, which C-5 CASE 1 Mystic Monk Coffee fluctuated daily with global supply and demand. The Mystic Monk's Financial Performance capacity of Mystic Monk Coffee's roaster limited pro- duction to 540 pounds per day, production was also At the conclusion of Mystic Monk Coffee's first year limited by time devoted to prayer, silent meditation, in operation, its sales of coffee and coffee accessories and worship. Demand for Mystic Monk Coffee had averaged about $56,500 per month. Its cost of sales not yet exceeded the roaster's capacity, but the mon- averaged about 30 percent of revenues, inbound ship- ping costs accounted for 19 percent of revenues, and astery planned to purchase a larger. 130-pound per hour roaster when demand further approached the broker fees were 3 percent of revenues for a total cost current roaster's capacity. The monks had received a of goods sold of 52 percent. Operating expenses such as utilities, supplies, telephone, and website maintenance quote of $35,000 for the new larger roaster. averaged 37 percent of revenues. Thus, Mystic Monk's Marketing and Website Operations net profit margin averaged Il percent of revenues. Mystic Monk Coffee was promoted primarily by REALIZING THE VISION word of mouth among loyal customers in Catholic parishes across the United States. The majority of During a welcome period of solitude before his Mystic Monk's sales were made through its web- evening meal, Father Prior Daniel Mary again con site, but on occasion telephone orders were placed templated the purchase of the Irma Lake Ranch. with the monks' secretary, who worked outside the He realized that his vision of purchasing the ranch cloistered part of the monastery. Mystic Monk also would require careful planning and execution. For offered secular website operators commissions on the Wyoming Carmelites, coffee sales were a means its sales through its Mystic Monk Coffee Affiliate of support from the outside world that might pro- Program, which placed banner ads and text ads vide the financial resources to purchase the land. on participating websites. Amliate sites earned an Father Prior understood that the cloistered monastic 18 percent commission on sales made to customers environment offered unique challenges to operating who were directed to the Mystic Monk site from their a business enterprise, but it also provided opportu. site. The affiliate program's Share A Sale participa nities that were not available to secular businesses. tion level allowed affiliates to refer new affiliates to He resolved to develop an execution plan that would Mystic Monk and earn 56 percent of the new affili- enable Mystic Monk Coffee to minimize the effect ate's commission. The monks had also just recently of its cloistered monastic constraints, maximize the expanded Mystic Monk's business model to include potential of monastic opportunities, and realize his wholesale sales to churches and local coffee shops. vision of buying the Irma Lake Ranch