Dallis Coffee, Inc.

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Dallis Coffee, Inc.

10030 Atlantic Avenue
Ozone Park, New York 11416
U.S.A.
Telephone: (718) 845-3010
Toll Free: (800) 424-4252
Fax: (718) 843-0178
Web site: http://www.dallisbros.com

Private Company
Founded: 1913 as Dallis Bros. Inc.
Employees: 40
Sales: $27.4 million (2005 est.)
NAIC: 311920 Coffee and Tea Manufacturing

Dallis Coffee, Inc., is a privately owned wholesaler based in New York City’s Ozone Park that imports green coffee beans from around the world and roasts them to produce a variety of specialty coffee blends and espresso. The company’s customers include some of the New York’s finest restaurants, such as Union Square Café and Gramercy Tavern, as well as the Metropolitan Opera House. Dallis also offers mail-order service and sells its coffees over its web site. Very much a part of the Queens neighborhood where it is located, the company is also known to sell small quantities to area residents who call in orders for pickup.

In truth, coffee beans resemble berries (or “cherries” according to the industry) more than they do beans. Commercial coffees and specialty coffees come from different varieties of the coffee plant. For producing commercial coffees, the coffea robusta plant is more valued for its durability than for the aroma and flavor of its beans. Specialty coffees, on the other hand, come from the coffea arabica species, which requires more precise conditions, ideally warm but not hot climates with moderate rainfall, volcanic soil, and high altitudes— hence the “mountain-grown” accolade associated with finer coffees. Over the decades Dallis has forged ties to growers, in particular estate growers, on small- to medium-sized farms, in some of the most important coffee-growing regions of the world, including Costa Rica, Colombia, Guatemala, and other Latin American countries, Yemen, Ethiopia, Kenya, Tanzania, Zimbabwe, Papua New Guinea, and the U.S. state of Hawaii. Dallis roasts the beans in its Queens plant, the process releasing moisture and bringing oils to the surface.

The temperature of the roasting process dictates how strong a brew the coffee will produce. A light roast, also called New England or “half city,” is completed at 423 degrees Fahrenheit; medium, or a full city roast, is roasted at 448 degrees; a French roast, or darker is completed at 458 degrees; and a temperature of 460 degrees results in an Italian roast, or espresso. To achieve the right balance of body, aroma, richness, and acidity, coffees are often blended, a process that is as much art as it is science, requiring a great deal of taste-testing, or “cupping.” Flavors can also be added, although coffee purists scoff at the idea. Dallis offers “origin” coffees that are unblended, a variety of other blended and unblended coffees, as well as organic, decaffeinated, and flavored coffees, and coffees that are fair trade and Rainforest Alliance approved (to protect both workers and the environment). The company is operated by the third generation of the Dallis family.

COMPANY FOUNDED: 1913

Dallis Coffee was founded as Dallis Bros. Inc. in 1913 by Russian immigrant Morris Dallis and his brother Abe. They started buying coffee roasted by others, packaged it, and sold it door-to-door in a horse and wagon in the boroughs of Queens and Brooklyn. Morris was taken away from the business to serve in the military during World War I, and upon his return he purchased a Model T Ford, an investment that helped the brothers to grow the business. At the time, the price of coffee fluctuated wildly, and Morris proved so adept at taking advantage of the price swings, buying low and selling high, that by 1923 he was able to buy a building on Atlantic Avenue in Ozone Park, Queens, that still serves as the headquarters for Dallis Coffee. Roasting capabilities were added in 1926, allowing the company to control the production of its own blend of coffees and spurring further growth.

The second generation of the Dallis family took over the business in 1954 when Morris’ son Herb and son-in-law Ray Gerard assumed control. Just two years after graduating from New York City’s Baruch College, Herb was running the company by 1958. Dallis Bros was very much a small enterprise, supplying coffee to local restaurants, luncheonettes, and delicatessens. America’s love affair with coffee was still growing strong, despite household reliance on the percolator, which allowed drinkers to watch their coffee being “perked” while being rendered virtually undrinkable. However, the popularity of heavily promoted caffeinated colas from Coca-Cola, Pepsi, and others soon began to erode sales, as an entire generation shied away from coffee. Per capita coffee consumption topped out at 3.5 cups per day for Americans in the early 1960s. To improve production and remain competitive, Dallis Bros. added new roasting and packaging operations to its facility. Nonetheless, the prospects for the coffee business was so poor that in the 1970s Herb discouraged his son David from following in his footsteps. Instead, David enrolled at Columbia University, earning a degree in electrical engineering. He then went to work for General Electric for five years.

WEATHER EVENTS OF 1975 PROVE PIVOTAL

By 1975 the average American was consuming just 1.5 cups of coffee a day, providing ample reason for Herb Dallis to be gloomy over the prospects of the family business, but in that year fate intervened in the form of a series of weather catastrophes that reshaped the coffee industry. Brazil was struck with a killer frost, Guatemala suffered an earthquake, and much of Central America was damaged by Hurricane Eloise. With a great deal of the coffee crop destroyed, the price of beans soared from $1 per pound retail to $4. High prices persisted for nearly three years. As a result, an old-line New York City coffee roaster, Ehlers, which was already in trouble and up for sale, was forced to close its doors. Its area customers scrambled to find a new supplier, and many turned to Dallis, which at the time was serving fewer than 200 accounts. Almost immediately that number ballooned to 1,500 accounts and continued to climb. Moreover, other smaller roasters went out of business. “It was an explosion,” Herb Dallis told the Long Island newspaper Newsday in a 2000 interview. He continued, “At one time there were three or four thousand customers on our books. Not all of them were good; a lot never paid us. But there were a lot.”

An even more important development that came out of the events of 1975 was a change in consumers’ buying habits. Because they were being asked to pay much higher prices for coffee, many people decided they were willing to pay even more if it meant they could have an excellent cup of coffee instead of just a tolerable one. This change in attitude played to the strenth of a specialty roaster like Dalli’s. Customers may not have been drinking as many cups of coffee each day as they had in the 1950s and early 1960s, but the premium they paid for a cup brewed from a specialty blend more than made up for the loss in total consumption. Coffee was moving away from mere commodity status, for which price was the chief consideration, and becoming a value-added item with reduced price resistance and offering higher profits.

COMPANY PERSPECTIVES

Since 1913, Dallis Coffee has imported and roasted coffees of distinctive character from all around the world. As a rule, we sell coffees we love and nothing else.

Herb Dallis also grew the business by following his son’s advice in the late 1970s to computerize the operation, providing Dallis Bros. with another edge. In the 1980s the company continued to grow by acquiring competitors. By this time, joining the family business became an attractive option, and in 1982 David Dallis left his job of five years at General Electric and joined his father. Around 1986 he assumed day-to-day control over the business, although his father remained actively involved, especially in maintaining quality control by regularly cupping the company’s coffee blends.

Dallis Bros. was the only company in Queens that roasted its own beans. Its plant was located on a street populated by auto repair shops, delis, and strip malls, but the family showed no interest in moving out of the city to where it could find plenty of land to build a more modern facility. At the start of the 1990s the company raised its profile and recruited new customers by hosting seminars at its plant for specialty coffee stores and others, including coffee enthusiasts, who wanted to learn how coffee beans were roasted, blends were made, and flavorings added. Dallis Bros. was generating about $5 million a year in sales, 90 percent from wholesale and 10 percent from retail sales. Some entrepreneurs recognized that the company had even greater potential and urged the Dallis family to franchise the business. However, because of the commitment to maintaining a high standard of quality, the family rejected the idea of franchising.

As the Starbucks coffee bar chain spread from the Pacific Northwest across the country in the 1990s, specialty coffees grew even more popular, to the benefit of Dallis Bros. For the first time in a decade, coffee consumption in the United States increased in 1993, despite the continued decreasing sale of commercial coffee. Dallis Bros. also gained greater industry recognition when David Dallis was named president of the Specialty Coffee Association of America for a one-year term in 1994.

In 1998 Dallis Bros. began to emphasize its Estate Grown Coffees line with beans from some of the best coffee-growing countries, including Brazil, Colombia, Costa Rica, Guatemala, New Guinea, Nicaragua, and Puerto Rico. Over the decades the company had forged ties with numerous coffee growers around the world and in recent years David Dallis had paid a number of visits to coffee plantations. As a result, the company was able to gain access to the growers’ very best coffee beans, for which Dallis Bros. paid a premium, but the higher quality blends that were then used in the Estate Grown Coffees commanded a high price in return.

Also in the second half of the 1990s, Dallis Bros. became involved with Planet Java, founded in 1995 by Larry Trachtenbroit, who owned a one-hour photo shop in Hampton Bays. For the benefit of his customers who chose to wait for their photo prints, he opened a coffee bar under the Planet Java banner. Dallis Bros. became his supplier as well as an investor. A Planet Java shop also opened on the ground floor of the Dallis Bros.’s facility. Trachtenbroit would go on to develop a line of bottled coffee drinks to challenge Starbucks’ highly successful Frappuccino, distributed by Pepsi. Coca-Cola acquired Planet Java in 2001. Another venture in which Dallis Bros. became involved was Kudo Beans. Launched in 2001 as an offshoot, it worked with the Korean-American Grocers Association of New York to upgrade the quality of coffee served by the city’s greengrocers. Later a café concept was launched under the Kudo Beans label, providing another sales channel for Dallis coffees.

BRANDING PUSH IN NEW CENTURY

As Dallis Bros. entered the new century it had not undergone a change in its packaging for about 40 years. Hired to improve the company’s marketing in 2000 was Jim Munson, who told Tea & Coffee Trade Journal, “We were being served in some of the finest restaurants in the world but the packaging seemed to say ‘diner coffee from the ’50s and ’60s.’” The company changed its name to Dallis Coffee, Inc., and developed a new logo to adorn its new packaging, a pouch made from durable, protective laminates. New packaging technology also allowed Dallis to expand beyond its core wholesaling business to become involved in the private label business. In this way it was able to help Coca-Cola market Planet Java to chain accounts, and in 2001 Dallis forged an alliance with Bodum, the leading maker of French Press brewers, to produce a line of specialty coffees under the Bodum label.

KEY DATES

1913:: Dallis Bros. Inc. is founded.
1926:: Company adds coffee-roasting capabilities.
1954:: Second generation assumes control.
1967:: Plant is expanded.
1975:: Weather causes spike in coffee prices.
1982:: Third generation becomes involved with company.
1998:: Estate Grown Coffees is emphasized.
2001:: Name changed to from Dallis Bros. to Dallis Coffee, Inc.

In 2002 Dallis expanded its Estates Grown Coffee program by building a new roasting and packaging facility in Nicaragua in conjunction with a local grower, Republic Coffee. It was essentially a newer version of the Queens plant. The coffee it produced was then marketed by Dallis in the United States as well as in Central America. In this way, Dallis gained access to low-cost production. It hoped to then make inroads in the southeastern United States with a retail brand. Associated with some of the finest restaurants in the world, well respected in the coffee industry, and much admired by coffee aficionados, Dallis was poised, after nearly a century of doing business, to gain more of a national presence.

Ed Dinger