December 2015
www.CoffeeTalk.com Vol. XXVIII No. 12
CONNECT. GROW. PROSPER!
2016 State of the Industry The Future of Coffee
Welcome
C
• Erin Meister, Sales Associate, Cafe Imports, LLC • Mike Doherty, Owner, Sunshine Coffee Roasters • Karl Wienhold, Specialty Coffee Trader, International Trade, Rural Development, Direct Origin Trading • Tracy Allen, President, Brewed Behavior • Howard Chapman, President, Office Beverage Div and NAMA Board Chair, Royal Cup Coffee • Marty Curtis, CEO, Just Quantify Coffee Academy • Tony Salas, Founder, Agribusiness Consulting and Management • Dan Ragan, National Sales Manager Pod Pack Int’l • Ken Shea, Owner, Ken Shea Consulting • Roberto Vélez, CEO -Colombian Coffee Growers Federation (FNC) • Randy Anderson, Marketing & Development Consultant, Procreos Consulting • Kate Seung Eun Lee, Sr.Analyst, CJ Foodville • Melanie Rutten-Sülz, Executive Director, 4-C Association • Rocky Rhodes, Owner, International Coffee Consulting Group • Luis “Pilo” Gonzalez, Chief Executive Officer, Parlevel Systems
offeeTalk Media is honoured to bring you our 2016 State of the Industry in which dozens of the most influential thought leaders in the coffee, vending, and food-service related industries each address the issues of identifying and addressing vulnerabilities to our industry. The topics addressed are wide ranging from climate change to technology, aging producer populations to marketing to millennials. Enormous thanks to our industry contributors: • Timothy J Castle, President, Castle and Co. • Donald N. Schoenholt, President, Gillies Coffee Co. • Steve Mangigian, President and Managing Partner, Zingerman’s Coffee Company • Lucas Alberg, Marketing Director, Hydro Flask • Bill Fishbein, Founder and President, The Coffee Trust • Bill Murray President & CEO National Coffee Association • Sharon Tett, Sr. Market Development Manager, Georgia-Pacific Food Services Solutions (Dixie) • Rick Peyser, Sr. Relationship Manager, Coffee & Cocoa, Lutheran World Relief • Danny O’Neill, Bean Baron, The Roasterie • Bill Walters, Executive Vice President - Packaging Technology, Pacific Bag, inc. • Julia Leitner, Project Manager, Sustainable Harvest Coffee Importers • Spencer Turer, Vice President, Coffee Analysts January 2015 www.CoffeeTalk.com Vol. XXVIII No. 1
We hope you find the articles thought provoking and useful! Cheers and wishing you all an extremely successful 2016!
Kerri Goodman, publisher coffeetalkMAGAZINE
February 2015 www.CoffeeTalk.com Vol. XXVIII No. 2
CONNECT. GROW. PROSPER!
March 2015 www.CoffeeTalk.com Vol. XXVIII No. 3
CONNECT. GROW. PROSPER!
CONNECT. GROW. PROSPER!
See Exhibitor Highlights page 26
page 8
company can be in the next Buyers Guide
page 8
This Month:
16
The Crowd Funding Phenomena
12
Coffee & Technology
14
How to Run a Successful Crowd-Funding Campaign
18
Social Media for Business Top Five Twitter Trends
18
When Projects Fail to Deliver
22
David versus Goliath: Using Competitive Advantage
What's Your Story?
28
Comfort, Community, and Culture: Ebrik Coffee Room
Preventing Bad Online Reviews Your Reputation is On the Line
20
June 2015 www.CoffeeTalk.com Vol. XXVIII No. 6
CONNECT. GROW. PROSPER!
Water Filtration
page 8
page 10
This Month:
This Month:
12
Charcoal Roasting
8
14
Private Label Sucess: Changing Times
12
Through the Lens: Dukale's Dream
20
CONNECT. GROW. PROSPER!
The View: Inspirational
See Exhibitor Highlights page 22
page 6
This Month Roasters Rock — Growing Up
08
Commercial Brewing Systems
MAKING A DIFFERENCE
OCS Survival Strategies — Pricing for Profit
September 2015 www.CoffeeTalk.com Vol. XXVIII No. 9
October 2015 www.CoffeeTalk.com Vol. XXVIII No. 10
CONNECT. GROW. PROSPER!
The Future of Coffee
page 18
page 16
This Month
This Month
24
8
El Salvador: Finca Miravalle
22
Roast Ratings
CONNECT. GROW. PROSPER!
Sustainable Choices
See NCA Exhibitor Listings page 18 See Exhibitor Highlights page 14
Innovations Should Be More than Cool
Roasting Tools and Technology
16
November 2015 www.CoffeeTalk.com Vol. XXVIII No. 11
CONNECT. GROW. PROSPER!
New World Coffee
Retailer Tools & Technology
See NAMA Exhibitor Listings page 42
August 2015 www.CoffeeTalk.com Vol. XXVIII No. 8
Vol. XXVIII No. 7
CONNECT. GROW. PROSPER!
Packaging and Private Label
16
See SCAA Exhibitor Listings page 40
page 8
See NCA Exhibitor Listings page 26
This Month:
May 2015 www.CoffeeTalk.com Vol. XXVIII No. 5
8
Single Serve Coffee Solutions
This Month:
20
20
CONNECT. GROW. PROSPER!
Cups, Lids, Sleeves & Disposables
Frozen Assets Fire Up Profits
See page 4 for instructions on how your
April 2015 www.CoffeeTalk.com Vol. XXVIII No. 4
page 10
This Month 8
Preparing for an Origin Trip
Coffee & Acidity
10
Connecting the Dots: Technology
14
Small Locations, Big Opportunities
Work Hard, Play Hard
22
Water Avenue Renaissance Using Technology to Succeed
18
Know Your Ingredients
See Listings page 20
Contents
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 42 44
From the Publisher Advertiser Index The Future of Specialty Coffee and the Next Wave Timothy J Castle, President, Castle and Co.
#3rdWaveGoodbye A Specialty Coffee Soap Opera Donald N. Schoenholt, President, Gillies Coffee Co.
The Future of our Industry Steve Mangigian, President and Managing Partner, Zingerman’s Coffee Company
The Millennial Mindset Lucas Alberg, Marketing Director, Hydro Flask
What the Future for Coffee Could Be Bill Fishbein, Founder and President, The Coffee Trust
2015: Ten Challenges and Collaborative Solutions Bill Murray President & CEO National Coffee Association
Coffee & Cocoa: +/- 20 Years Rick Peyser, Sr. Relationship Manager, Coffee & Cocoa, Lutheran World Relief
Know Your Disposable Cup Ingredients Sharon Tett, Sr. Market Development Manager, Georgia-Pacific Professional
Cheers Danny O’Neill, Bean Baron, The Roasterie
The Future of Coffee Packaging Bill Walters, Executive Vice President - Packaging Technology, Pacific Bag, inc.
Millennial Coffee Drinkers, Meet Millennial Coffee Farmers Julia Leitner, Project Manager, Sustainable Harvest Coffee Importers
When Exceptions Become Commonplace Spencer Turer, Vice President, Coffee Analysts
The End of the Rockstar Barista Erin Meister, Sales Associate, Cafe Imports, LLC
How Technology Is Enhancing the Future of Coffee Mike Doherty, Owner, Sunshine Coffee Roasters
Smallholder Survival Karl Wienhold, Specialty Coffee Trader, International Trade, Rural Development, Direct Origin Trading
What it Takes to Deliver a Winning Cup Howard Chapman, President, Office Beverage Div and NAMA Board Chair, Royal Cup Coffee
The Future of Coffee in 2016 Tracy Allen, President, Brewed Behavior
Let Technology Quantify What Artisans Qualify Marty Curtis, CEO, Just Quantify Coffee Academy
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Contents
46 48 50 52 54 56 58 60 61
Remodeling the Future Tony Salas, Founder, Agribusiness Consulting and Management
The Future of Coffee is Strong Dan Ragan, National Sales Manager Pod Pack Int’l
The Evolving Future for Coffee Service Ken Shea, Owner, Ken Shea Consulting
Coffee with Content: Creating Trust Amongst Consumers Roberto Vélez, CEO -Colombian Coffee Growers Federation (FNC)
Nitro- The Evolution of Cold Brew Coffee Randy Anderson, Marketing & Development Consultant, Procreos Consulting
The Future of Coffee in Korea Kate Seung Eun Lee, Sr.Analyst, CJ Foodville
Working Together to Build a Thriving Sector Melanie Rutten-Sülz, Executive Director, 4-C Association
Expansion and Perfection in 2016 Rocky Rhodes, Owner, International Coffee Consulting Group
Office Coffee in Transition - OCS Providers Need to Step Up Their Game Luis “Pilo” Gonzalez, Chief Executive Officer, Parlevel Systems
WHO WE ARE Phone: 206.686.7378, see extensions below
Publisher / Advertising Inquiries Kerri Goodman, ext 1 kerri@coffeetalk.com
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Mailing Info Mail: HNCT, LLC, 25525 77th Ave SW Vashon, WA 98070 Phone: 206.686.7378 Fax: 866.373.0392 Web: www.coffeetalk.com Disclaimer
CoffeeTalk does not assume the responsibility for validity of claims made for advertised products and services. We reserve the right to reject any advertising. Although we support copyrights and trademarks, we generally do not include copyright and trademark symbols in our news stories and columns. CoffeeTalk considers its sources reliable and verifies as much data as possible. However, reporting inaccuracies can occur, consequently readers using this information do so at their own risk. Postmaster: Send address changes to HNCT, LLC, 25525 77th Ave SW, Vashon, WA 98070 Subscription: The cost of a subscription in the U.S. is $47.50 per year; in Canada, the cost is $72.00. Free to qualified industry professionals. Non-qualified requests may be rejected. Publisher reserves the right to limit the number of free subscriptions. For subscription inquiries, please call 206.686.7378 x1 or subscribe online at www.CoffeeTalk.com. Copyright © 2015, HNCT, LLC, All Rights Reserved
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Publisher’s Prologue
Kerri Goodman by Kerri Goodman, Publisher CoffeeTalk Media
T
he coffee world is changing. The tsunami that was the Third Wave has run out of steam and a new Forth Wave is washing over the industry bringing a different focus and measures of success. Consolidation is creating a new playing field with JAB taking controlling interests in Jacobs Douwe Egberts (JDE), Caribou, Peets, Intelligentsia, Stumptown, and now Keurig (see industry leader reactions below). The only companies that will survive and thrive in the future will have found success in marketing to the Millennials. And one thing is guaranteed: Unless we as an industry can find a way to ensure producers are more fairly compensated for their work in growing excellent coffee, the product will cease to exist. Don’t take my word for all of this. I invite you to read the thoughts of 27 leaders representing numerous segment of the industry from all over the globe. And finally, below are a few of the reactions of the news of Keurig’s sale by our State of the Industry writers. We would value your opinions as well! Rick Peyser, Lutheran World Relief “I hope that the acquisition will expand the company’s capacity to provide consumers with high quality coffee sourced from a sustainable supply chain. This has been the company’s history and is still the basis its success to this day.” Andy Newbom, IP Coffees “I greatly fear that this along with the Douwe and Masters plus Peets etc will mean more
pain and lower prices to farmers. They already announced that they are extending terms from net 30 days to net 180 days to IMPORTERS. This will reflect back to producers who will get their payments extended even farther than they already are. and it will very likely push prices down even farther. importers and exporters have to account for 5 months loss of working capital into their cost of sales and since the client won’t pay, the farmer will” Howard Chapman, Royal Cup This investment follows many more by this same group, which seems to be seizing an opportunity to grab a significant stake in the evolving high end coffee market, both through the shop segment as well as complimentary single serve. My takeaway is that this is another affirmation that coffee is “hot”, and is a great industry to be in. We noticed at CTW this year that there were “investment types” mingling and checking out the show floor, so this isn’t a complete surprise. Darron Burke, Burke Brands LLC “I think the continued consolidation in the coffee industry by the large international food conglomerates represents a significant opportunity for the smaller, more qualityfocused coffee roasters, especially at a time when Millennials are driving a shift towards independent, more transparent, artisan food manufacturers.” Donald Schoenholt, Gillies Coffee “JAB Holding has become a coffee version of Toru Iwatani’s Pac-Man eating everything that falls in their line of sight.”
8 December 2015
Marty Curtis, Artisan Coffee Group As I read the release about Keurig being purchased, I have mixed feelings about it. It kind of reminds me the good OLD Days of Ma Bell. If you dig deeper, it’s probably a good thing for JAB and their target market. It is a really good thing for the Artisan Style Coffee Company’s out there. Randy Anderson, JoeTap This is more than just a game changer. It changes the rules and muddies the waters a bit. Starbucks and Keurig have about 3 years left of a fiveyear agreement they signed almost 2 years ago. It will be interesting to watch how Starbucks responds. The Keurig/Starbucks relationship was a bit shaky anyway when they amended their agreement in 2014. Starbucks had spent a lot of money on their line of Verissmo machines and single serve capsules. In fact, I think the whole world will be watching as this will be the first time since Starbucks has defined and dominated the market both domestically and globally that there has been any true competition for them. This leaves three major players globally I think - Starbucks, Nestle and now JAB holdings although it will be interesting to watch how JAB plans to either consolidate any or all of their interests or allow them to function autonomously as they are currently doing. It will also be interesting to see how they leverage newer technologies like the JoeTap cold brew dispensing system going into the Caribou stores. While JoeTap is a blip on the radar screen, I think it is a microcosm of the strategic move JAB had in purchasing Keurig. I believe JAB wants to be the market leader and will watch for any opportunities to trump Starbucks.
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�e Professional’s Guide to
Nitro Cold Brew The realities of serving nitro cold brew go far beyond press hype and internet buzz. If it’s on your menu, it needs to be available, consistent and profitable. We’d like to offer some professional guidance to make the journey a little easier as you consider serving this amazing coffee product to your customers.
1. Will you be able to dispense on-demand? There are two methods for creating nitro cold brew; time or on-demand infusion. Only the JoeTap serves nitro coffee in-line and on-demand.
2. Will you have enough on hand? With the JoeTap, as long as you have cold brew and nitrogen, you’ll have as much nitro cold brew available as you want - instantly and without waiting.
3. Will your nitro be consistent throughout the day? Since the JoeTap infuses in-line, you achieve consistent and dependable quality assurance with each and every pour.
4. Is the amount of nitrogenation adjustable? Unlike pre-nitrogenated kegs, the JoeTap is adjustable. Because infusion happens in-line, adjusting PSI for optimal nitrogenation can be done at any time.
5. Can you adjust for different dilution rati�? No other solution offers the ability to adjust for different dilution ratios. The amount of nitrogen for optimal infusion can be changed as needed.
6. Can you dispense still and nitro from the same keg? Once a keg is “charged” you can only tap nitro from that same keg. The JoeTap system with a dual faucet allows you to pour either still or nitro cold brew from the same keg. No other system can do this. One keg - two choices.
7. Is the dispense solution scalable? One of the most common issues with pre-nitrogenated kegs is scalability. Will your nitro solution grow with you? The JoeTap can!
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The Future of Specialty Coffee and the Next Wave by Timothy J. Castle, President, Castle and Company
P
redicting the future of specialty coffee, especially when it comes to the part of its history that has not yet occurred, is difficult. OK…so is channeling Yogi Berra... ANYWAY, the fact is that when I started off in this business 35+ years ago, no one knew there was a Specialty Coffee Industry; the term had perhaps just been coined a few years hence by Erna Knutsen. However, while not as commercially significant as some categories, specialty coffee as a grocery category or foodservice staple is big business and is talked about a lot, at least by the people who depend upon it for a living. Assessing the future for specialty coffee involves first identifying all the factors that might exert change, including: the relevant business entities, the people working for them, the factors impacting production (such as climate and varietal development, and diseases that are or may spread. The investment in and evolution of new technology is also important. Finally, there is the culture of the industry to consider. Forty years ago the culture of the industry was much more tradition-based, rather than changebased. The various technologies applied to coffee production, such as agronomics, roasting and packaging, were just beginning to shift to a culture based on innovation. This prepared members of the specialty coffee industry for the current, more transient environment. One pattern that has been repeating is the process of little coffee companies growing up to slightly larger companies and then gobbled up by bigger coffee companies. The nature of the
companies being acquired and those buying them, and the reasons for those acquisitions, have all been changing and will continue to evolve. The first half of the 20th Century acquisitions were based on circumstances that included the evolution of packaging, improved transportation lanes across North America, the advent of radio and television, and the necessary population growth making nation-wide marketing programs not only possible but much more efficient. It used to be the norm for large metropolitan areas to have local coffee brands, but the above factors allowed for the acquisition and consolidation of coffee production, distribution, and marketing. Thus companies were acquired and brands were either enhanced or extinguished. During this period, it was not unusual for a company to acquire another company with the express intention of “killing” the brand and replacing it with one that the acquirer already owned. The national brands could and would compete with local brands because the market was just becoming big enough to accommodate both scales of marketing. Now, however, as our nation has tripled in population over the last 125 years, there are enough people to support several different types of brands across different levels of quality and brewing platforms and the “micro” roaster who was once viewed as antiquated a hundred and twenty-five years ago is now seen as a cutting edge. Now, though, the opposite is occurring: large roasters, even those known for their strength in and understanding of specialty coffee, are
reaching out into the marketplace to either acquire or partner with smaller companies; not to kill the brands of those companies, but to learn from them or broaden the appeal of their own. So, when in December of 1999 I first wrote about a Third Wave of coffee, I used the term a little differently than it came to be used a few years later: I was referring to three waves that included the first, being a wave of packaged coffee washing across the U.S. as our nation grew and became more interconnected. During this period, from the late 1800s to the 1960s, coffee went from a raw ingredient that was roasted at home, to a product that was roasted locally, often in the grocery store, to a product that was pre-roasted, pre-packed and finally pre-ground. As a reaction to that consolidation within the industry and the homogenization of products, a second wave of coffee rolled across the country as companies sought to recreate freshness, quality and variety that used to be available before national and large regional brands existed. These companies were sometimes the rejuvenation of older companies but mostly the creations of entrepreneurs in the 60s, 70s and 80s that realized that many local markets across the US were now large enough and sufficiently sophisticated to support local specialty brands. These companies focused on whole bean sales and exhorting their customers to brew their coffee at home, brew it strong, and brew it often. The most successful of these companies sold what now would be considered staggering amounts of whole bean coffee in one pound bags on a regular basis to repeat customers. Slowly, however, they began to promote in-store consumption of brewed drip and espresso. But even these companies, those of the 2nd Wave, started to consolidate and acquire other companies. In the meantime, the market for specialty coffee grew. During this period, population density increased and as coffee consumption patterns began to change, people began drinking more coffee outside of the home. These conditions opened an opportunity for another set of roasters, which I called the 3rd Wave (and a couple of years later, other people, most notably Trish Rothgeb in 2002, did as well, but for different reasons.) The 3rd Wave characterized itself by devoting even more attention to quality than the 2nd Wave while trying not to make the same mistakes of those that failed, or, to the minds of those starting 3rd Wave businesses, grew too large. 3rd Wavers
12 December 2015
Roasters Retreat where the challenge was to produce the best roast for cold brewed coffee, a method of extraction that was much-shunned by early second wavers and old-fogey specialty coffee persons.
devoted unprecedented resources to sourcing and started the now fully-realized trend of buying microlots — small lots of single estate coffees especially prepared for one roaster to highlight to their customers. They also worked hard to improve quality control at all levels, both on the side of roasting and preparation of brewed beverages. At the same time the 3rd Wave blossomed, the World Barista Championship came into being and provided incentive for baristas to compete on the basis of quality and professionalism. 3rd Wave roasters managed to remain independent until the past few months when two prominent 3rd Wavers (Stumptown and Intelligentsia) aligned themselves financially with Peet’s Coffee & Tea, which was, itself, acquired a few years ago by a large European holding company. As we see the era of the 3rd Wave Roaster come to a close an argument will be made for a 4th Wave, which has been defined in varying ways. These roasters will distinguish themselves with the descriptors, “local, independent, and small,” whenever convenient; but many of the up-and-coming roasters today will not be underfunded. 4th Wave Roasters, due to the success of 2nd and 3rd Wave roasters, will have more capital available to them if they can show their investors that they have a grasp on the market and can motivate at least a few consumers to buy in to their gestalt (and buy their coffee.) They will be even more precise in terms of their green coffee buying habits as even 2nd and 3rd Wave roasters increasingly are themselves. This will be more in an effort to define a specific and differentiating flavor profile for their coffees rather than to just ensure a high level of quality. Farmers and green coffee processors at origin will be asked increasingly to produce specific lots with special techniques to ensure these unique flavor profiles. 4th Wavers will not be as shy as 3rd Wavers with regard to bending the rules, if not breaking them outright. Even some 3rd Wavers have started to do it by bottling, canning and cartoning brewed coffee. This trend was clearly apparent at the 2014
These roasters will also flavor their coffee beverages and packaged liquid concoctions if they see an opportunity to widen the market appeal of certain coffees, but they will use the best ingredients they can find and try to start from scratch, rather than buy syrups and other flavorings. The idea of applying flavoring to beans themselves, particularly with flavorings based upon ethylene glycol flavor carriers, is not something the 4th Wave will adopt with gusto except in particular cases, such as aging green coffees in old whiskey barrels. Speaking of alcoholic beverages, there will be more mash-ups between beer brewers and distillers (and maybe winemakers) and “4th Wave” roasters. Due largely to the increasing availability of information and technology, the 4th Wave will include an element of scientific awareness on the part of its practitioners. Many 3rd Wave roasters were involved in helping to found and fund World Coffee Research and their involvement with this organization and others like it will become more typical as the industry continues to evolve. So too, with public/private partnerships that involve governmental agencies and nongovernmental organizations in producing countries. Programs that include research, education and marketing, but that depend upon the revenue produced from that coffee, will increasingly have to tie their funding more directly to the pennies per pound they add in value. The work being done on the coffee genome by public and private entities is one example of this, as well as such programs as the New Generation Coffee Grower initiative in Antioquia, Colombia to increase the revenue of coffee farmers and the quality of their crops.
first, and it is a sword that cuts in many directions… retailers and the marketers who own the brands take the biggest share, but they also have the most face time with the coffee drinker who pays for the coffee. In the meantime, each sector of the business will play to its strengths… but as long as it is played as a zero sum game, even when coffee in some formats is selling for over forty dollars a pound, the process will drive toward lower quality and lower net revenue for the farmer. The “Fairness” Dilemma — if more time had been spent arguing that coffee farmers are great, and that they could do an even better job if they were paid more money for better quality — rather than that they are pathetic and need more money because they can’t make a decent living growing coffee — then coffee would be in a better place today and in the future. The evolution of language in the coffee business — Even before the development of a “coffee lexicon,” that is being spearheaded by World Coffee Research, other trade organizations and participants have been pushing for a more precise language with which to describe coffee. Recent efforts to do this can be seen as an outgrowth of previous attempts at defining the flavors found in coffee over the years, most notably the Coffee Cuppers Handbook (by Ted Lingle,) the tasting wheel published by the Specialty Coffee Association of America, and the tasting set Le Nez du Café produced by Jean Lenoir. Finally, the 4th Wave won’t necessarily be characterized by a particular group of companies as clearly as the 3rd Wave. The 4th Wave will embody an approach to specialty coffee that many roasters may hew to, and eventually become an ethos that the specialty coffee industry will adopt as a whole, or in part.
Specialty coffee roasters will become more aware of the agronomics and genetics of coffee, the study of the diseases that threaten coffee and effects that climate change will have on the production of coffee in the future. Increasingly, the production of coffee will be viewed as a group effort with exporters, importers, and roasters trying to ascertain which varietals are best for all the factors at play including climate, disease, availability of labor, and the palate of the specialty coffee drinker. The 4th Wave of the specialty coffee industry will have some other challenges to deal with and those will likely be dealt with in a more public manner than past challenges. Three come rapidly to mind. The issue of price transparency comes up
Timothy J. Castle, Castle & Company, Castle Communications
#3rdWaveGoodbye A Specialty Coffee Soap Opera by Donald N. Schoenholt, President, Gillies Coffee Co.
the young aggressive specialty roasters who entered the trade in the 1990’s and shook up the market with catch such phrases as Direct-Trade, artisanal, and cold-brew. Sellout may reference a company’s financial equity changing hands, or all the tickets to a Tigers game being sold. In the parlance of the Sixties, Sellout was an insult hurled at a rock band for signing a lucrative contract with a mainstream recording studio. In a broader sense Sellout entered the vernacular as an epithet for someone who negated their credo in exchange for financial gain. It is a synonym for traitor.
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anny Tauber of Hena Coffee (Brooklyn NY) was fond of saying, “What goes around comes around.” And here we are again. More of the world’s roasted coffee products are being controlled by fewer companies. The cycle of expansive entrepreneurism, followed by a winnowing, and consolidation that have marked the trade throughout its life, again seems to be reshaping the roasted coffee world. In Europe, Jacobs Douwe Egbert, a new brand created from two old names in the trade, is flexing its muscles. In the United States several of the brands that have set the pace for specialty coffee’s advancement in the new century have ceased to be independent roasters, choosing instead to cash out, rather than to continue the good fight as independent smaller operators. Todd Carmichael and JP Iberti, founders of Philadelphia’s LaColombe coffee roasters, have sold a majority of their business to Hamdi Ulukaya founder of Cherbani Yogurt who now controls La Colombe (Phila. PA,) leaving Carmichael more time to spend on his new Travel Channel show, Uncommon Grounds which debuted in September. Carmichael had been very critical when his competitor, Duane Sorenson, sold most of his Stumptown stake back in 2011. The tempestuous Mr. Sorenson appears to have changed his mind.
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In recent weeks I’ve been hearing the word Sellout bandied around quite a bit followed or preceded by the names Stumptown, La Colombe and Intelligentsia. These three roasters are each identified with that rare breed of coffee roaster referenced by the media, The Third Wave;
No one who is a student of the specialty coffee landscape wants to believe that Doug Zell and Emily Mange sold out in the pejorative sense. Still, the changes of ownership at Intelly and Stump are a discouraging surprise to the faithful. Several companies that were at the heart of a generation of coffee are no longer independent companies helping to define the American coffee scene with the character of their coffee and their business personality. It will be interesting to see how Stumptown will fare as the brand is now just another corporate nameplate. Sorenson sold out to private equity firm TSG Consumer Partners LLC in 2011. TSG flipped Stumptown to Peet’s, themselves the North American front-man (2012) for Joh. A Benckiser. JAB, an acquirer of top end brands such as Jimmy Choo and Bally (Labelux,) has been feeding on some of Europe’s better known coffee brands in recent years, and shortly after buying Peet’s, acquired US based Caribou Coffee in 2013. With so much activity, the question of what happens next is an open one. There are giants in these woods, and it remains to be seen who will prove to be predator and who will be prey in North America. The world’s second largest brand, Maxwell House, owned by Mondelez International, appears dormant at the moment. J. M. Smucker looks to be the satisfied manufacturers of Folgers, Millstone, Medaglia D’Oro, Dunkin’ and Pilon. Keurig Green Mountain is in turmoil, having fallen off its pedestal in in the last two years. Mother Parker, the quiet but powerful Canadian coffee roaster, has a foothold in single serve, and brands that include Savarin, Martinson, and Brown Gold in the US, and has been gaining shelf space for the Martison brand in US grocers. Farmer Brothers, is still digesting its 2008 acquisition of Sara Lee’s domestic foodservice brands including
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Cain’s, Continental, Wechsler, Greenwich Mills, and Superior. It also owns the Coffee Bean International specialty brand. Other larger US Roasters such as S&D (Concord NC,) Royal Cup (Birmingham AL,) Reilly Foods (New Orleans LA,) Community Coffee (Baton Rouge LA,) Boyd Coffee (Portland OR,) Coffee Holding Co. (Staten Island NY,) and Tata’s Eight O’Clock (Montvale, NJ) all may find themselves active participants in the merger and acquisition dance. The surprises will come as they have this past year in the specialty area, where reputations are made quickly, and rapid growth, which is needed to push the brand forward, requires large infusions of cash and outside talent. Here brands disappear as fast as melting butter; remember Handsome coffee? Traditionally smaller, more agile and more vulnerable than more established larger roasters, specialty brand owners often find it advantageous to bail either because they have made their point and it’s time to move on, or because their success in brand building has brought them to the point of economic collapse where only new money and the security of dispassionate talking suits can save the growing success of their company. In the meanwhile, while no one was apparently watching, Peet’s purchased Mighty Leaf tea. Historically, the cycles of the coffee world keep repeating. Only the players change with the passage of time. I don’t know if Lanny Tauber could sing, but he was in pitch with Peter, Paul and Mary, as we are all called to “Take your place on The Great Mandala, as it moves through your brief moment of time.”
Donald N. Schoenholt, President, Gillies Coffee Co. He can be found at coffeeman@gilliescoffee.com
The Future of our Industry by Steve Mangigian, President and Managing Partner, Zingerman’s Coffee Company continue but we have achieved a high degree of mass consumer education around coffee that did not exist before. So now it’s time to take it to the next level (while not ignoring that every coffee consumer is at a different point in their journey). We will no longer tell the customer what they can receive but rather they will be able to articulate THEIR preferences to us. We will need to operationalize this transformation by including as part of our daily offering alternative brew methods (chemex, pourover, siphon, French press, etc…) available in tandem with a range of different coffees (and various roast profiles), representative of the entire coffee experience. Of course, at its foundation is the ever-perfecting art of espresso. Everything available at all times.
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he specialty coffee world has undergone many changes over the course of the last 10 years. We evolve at a lightingfast pace and this fast pace requires a coffee professional to adapt so as to be able to provide excellent coffee and a tremendous experience to our guests who are on the cusp of discovering and developing more discriminating palates, experiences, and choices. As coffee professionals, we need to position ourselves to welcome those on that pilgrimage. On the part of the coffee professional, that requires an authentic desire and mindset at all levels of our industry to agree on 1.) what that experience is, and 2.) How does it get delivered? We need to first ask our selves the foundational questions: Do we believe that coffee is a warm welcoming beverage? Do we believe that coffee ought to be approachable and serious, but not pretentious and isolationist in nature? Does the latter draw those on their pilgrimage and discovery towards a great coffee experience or further away? How do we protect that which we care about so deeply and draw others into our craft and passion? How do we usher in what I like to call the “fourth wave”?
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The fourth wave of coffee will be, in my opinion, the integration of everything we have done over the last 20 years, led with a clear vision including an amazing customer focus. In the same way as the third wave was loosely defined around Barista craft, preparing exquisite drinks, letting the bean speak for itself, the fourth wave will begin on the other side of the counter. The evolution of customer choice. The education will
To me, what makes specialty coffee exciting is the reaction that I get to see on the faces of people who are discovering this amazing beverage in a way they never have before: From the fruit one gets from a great Ethiopian to the earthiness one might get from a Sumatra. These reactions are priceless and serve as the foundation for the future of our industry. For me, at a personal level, it validates why I am in this business. At the core of this experience, in my humble view, is the mindset that coffee is warm and welcoming. It is synonymous and evocative of community. When I ponder these questions I am reminded of a proverb: “where there is no vision the people perish” The vision part: In my experience and that of my organization, a vision is what drives everything we do. We recognize the importance of understanding and directing our future in the present and taking the steps necessary NOW to achieve that which we envision success to be. At my company and that of our entire community of businesses, a vision of success is articulated in the following recipe: Ingredients • Belief In The Process • Your Gut • Some Time • Willingness To Make Yourself Vulnerable • Readiness To Do Something Great • You’ve Gotta Wanna • The Willingness To Stick With The Process Procedure Step 1—Pick Your Topic
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Step 2—Pick Your Time Frame Step 3—Put Together A List Of “Prouds” Step 4—Write The First Draft Of The Vision • Go For Something Great • Write From The Heart • Get In The Future • Go Quickly • Use The “Hot Pen” Technique • Get Personal Step 5—Re-View And Re-Draft Optional: Step 6-A, 6-B and 6-C—More Re-drafts Step 7—Get Input From ACES Step 8—Let’s Go—Start Sharing The Vision I believe our industry needs a vision of greatness as that guidance will direct the success we achieve together and bring any outlying components that we currently suffer from, together. At my company whenever we are faced with challenges or come to a crossroads, we write a vision of success. We recently completed our 2020 vision. It was a process that took us many months to complete but the result was nothing short of amazing! The entire staff participated in the process. We corralled all of our diverse energies into one steeled focus understanding first and foremost our differences are where our strengths are. It was good for newer staff to go through the process with more seasoned staff so that they could see more “outside of the box” together. We all now know where we are going. We are ALL bought in because we ALL created it. It was not a top down exercise but rather a “bottom up” process. Perhaps our industry could consider a similar process? Perhaps the various member groups of the SCAA and beyond could consider this process on behalf of creating that amazing customer experience. I would posit, after all, whether we like it or not, as long as we are engaged in specialty coffee, our livelihoods and passions are inextricably linked.
By Steve Mangigian, President and Managing Partner: Zingerman’s Coffee Company
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The Millennial Mindset by Lucas Alberg, Marketing Director, Hydro Flask
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eady or not, here they come. In 2015, Millennials surpassed Generation X as the largest share of the American workforce. Born between 1980 and 2000, Millennials now make up over one-third of the American population and are the most diverse group in the nation’s history. They’re also the savviest. Which means, for businesses, they’re both an opportunity and a force to be reckoned with. Millennials stand apart from previous generations of consumers. Over 60% of Millennials attended college and as a generation, they were the first to grow up with the Internet. As digital natives, many live in an always-on digital world through their smartphones, tablets and proliferation of social media accounts. In short, Millennials are smart and they’re connected with their peers and the world around them. What does this mean for businesses, and for coffee brands in particular? For starters, Millennials’ affinity for technology is changing the retail landscape and how they engage with shops. Through the usage of reviews, product information, price comparisons and peer-to-peer recommendations via social media, Millennials are prioritizing brands and locations that can offer maximum convenience at the lowest cost without sacrificing quality. Millennials are also connecting with brands like never before. No longer is a brand’s image solely what is portrayed on packaging and what’s in magazine or newspaper ads. A brand can now be comprised of everything from consumer reviews, product plugs in social media posts and #hashtags in selfies to (and this is if you’ve really made it into the public eye) Internet memes and beyond.
This changing landscape brings up three salient points when thinking about marketing to Millennials. First, companies no longer have complete control over their brand. Instead, the sum of impressions that make up the brand is an aggregate of both the company itself and the consumer. Because of this, it’s more important than ever for brands to be consistent in their messaging, creative and vocal on the web and social media. This is where the brand starts, and if done consistently and tightly, consumers will continue this message into their peer networks and around the web. If done inconsistently, the brand will come across looking like a disheveled mess and consumers will never truly see the brand as it was intended. The second point is that brands must be interactive and adaptable with consumers. Having a social media account for a company and posting once or twice a week is no longer acceptable. Brands and stores need to engage frequently and in a manner aligned to their brand. If there’s a negative tweet, quickly respond to remedy the situation. If there’s a poor review, post a reply and try to get the customer to give the shop a second chance. In a world sped up with technology, when consumers (and Millennials in particular) do not receive a reply within 24 hours on social, they’ve not only forgotten your store or brand, but also moved on to a competitor’s. The last area where shop owners should take note is in maintaining transparency and honesty. Nowadays, Millennials and tech-savvy members of previous generations can see through a façade quicker than the time it takes to pull an espresso shot. The marketing gimmicks and guises of old are now just that – old, outdated and unwanted. Time and time again companies are exposed for hiding or bending the truth from their consumers and when this happens, it is devastating for a brand. Word spreads via social media and the Internet and soon enough the shop may as well have caution tape around its premises. Because of this, it’s imperative that
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brands are honest and transparent with their customers. The good news around the Millennial mindset and the changing landscape of purchasing is that if done right, brands will be valued like family. Though pickier and more scrutinizing than their parents’ generations, Millennials are very loyal customers if treated right. In fact, nearly 80% of Millennials reported participating in loyalty programs and similarly, 80% reported being more likely to purchase from brands with loyalty programs than without. There’s no doubt that as Millennials enter the workforce and become the prevailing purchasing group, the retail landscape will change. Though myths abound regarding Millennial purchasing, studies show that Millennials are just as loyal, just as brick-and-mortar driven consumers as previous generations. The only difference? They’re smarter and more connected. And with that, businesses must be too.
By Lucas Alberg, Marketing Communications Manager for Hydro Flask Though born a Gen-X’er, Lucas Alberg both appreciates and identifies with many Millennial qualities. He puts these to good use as the Marketing Communications Manager for Hydro Flask in Bend, Ore.
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What the Future for Coffee Could Be by Bill Fishbein, Founder and President, The Coffee Trust
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t has been widely recognized that hunger is commonplace at origin. Yet, specialty coffee continues to use the term ‘sustainable’ as an important marketing tool. Given the reality at origin, a remarkable amount of coffee is sold as sustainable. Hunger is unsustainable. It will continue to eat away at any attempt toward a sustainable future at origin until the trade stops believing its own rhetoric, and sets upon a responsible course toward that ambitious goal. What does a more sustainable future for specialty coffee look like? Here are a few of my own thoughts. There are more. Men and women would treat each other with equal respect, be able to live in decent housing, feed their families, provide an education for their children, take care of their family’s health care needs, have a voice in their own homes and their own communities, and all of this regardless of the price or production of coffee. If income from coffee were good, it would be a great year. If income from coffee were not so good, all of the above would still be true. Impossible, you say? The coffee producers from San Gaspar Chajul in Guatemala are on a path toward that sustainable future right now. No, they are not there yet. Hunger is still all too commonplace. However, the goals are clear, the directions set, and the long-term commitments made.
The Coffee Trust partnered with Asociacion Chajulense in 2008 and together we took the first steps to accomplish these goals. Coffee Trust resources are modest. However, The Coffee Trust has focused 100% of its resources, capital and human, on sustainable development projects in San Gaspar Chajul and only in San Gaspar Chajul. Located in the western highlands of El Quiché, and home to the ancient Mayan Ixil people, San Gaspar Chajul is one of the 20 most marginalized coffee producing regions in the world. The Ixil people were ravaged by
Guatemala’s 36-year brutal war, and further damaged after the war by well intentioned, but ill-informed development organizations that brought give-away programs to the deeply devastated and impoverished region. Built upon years of simmering mistrust, without intent, these organizations created a culture of dependency and a sense of victimization out of a strong and resilient people. The common challenges coffee producers face throughout the world are many times more difficult to overcome in the Ixil region. Knowing this, we took the first steps to help the Ixil people carve out a path toward eradicating poverty and building a sustainable future. If successful, we believe that others could learn from the experiences of the Ixil people and take similar paths in their own hometowns. If it can be accomplished in the Ixil region, it can be accomplished anywhere. Projects focus on education, food sovereignty, health, diversified incomes, and roya recovery. At the outset, The Coffee Trust bore the lion’s share of responsibility. However, over 7 years much of that responsibility has been transferred to our local partners. The Coffee Trust’s most successful partner is Chajulense de Mujeres, the women’s savings and micro-credit project, which began with 20 women in 2008, and is now 1,200 strong and growing. It has become 100% financially sustainable on their own capital fund generated from their own savings. It has arranged to secure over $500,000 of capital for future expansion. It is responsible for the development of the women’s weaving cooperative and it is slowly becoming responsible for The Food Sovereignty Project. The Coffee Trust continues to provide training in financial management and organizational development so the women can strengthen their skills. Chajulense de Mujeres has become a local, indigenous- run, self-funded financial institution for the poor while at the same time managing the women’s weaving and soon The Coffee Trust’s food sovereignty projects. The Coffee Trust has begun shifting responsibility for the Roya Recovery Project to local partner Asociacion Chajulense, the fair trade, organic coffee association in the region. The project uses organic, effective microorganisms (probiotics for plants) to defend
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the plants against the fungus along with many layers of soil replenishment to enrich the soil, which improves coffee quality and production. The project is fundamentally rooted in the peerto-peer, shared learning principles of Campesino a Campesino in which farmers learn from their trusted friends and neighbors. Asociacion Chajulense will recover more than its lost production, more than its lost income, and have the skills to defend against other blights and natural disasters that will come its way in the future. The Coffee Trust Food Sovereignty and Health Project, soon to be under the management of Chajulense de Mujeres, promotes family gardens, efficient stoves and water filters, and has recently implemented a revolutionary chickenraising system that will provide an abundance of protein from eggs and chickens and enough extras to sell for added income. Scholarship recipients from The Coffee Trust Scholarship Program are technicians for Roya Recovery and coordinators for Food Sovereignty. 1,000 women from the Micro-Credit Project have asked to join the Food Sovereignty Project. 1,000 farmers are joining the Roya Recovery Project. The Coffee Trust-supported honey farmers have become their own independent, fair trade honey cooperative. The Coffee Trust will remain a friend and consultant of the Ixil people. The vision of the future is to create a formal institute where farmers from all over Latin America and beyond will come to learn from the Ixil people, the poorest of the poor, how to pursue a responsible course toward a more sustainable future. For more information, please visit www. thecoffeetrust.org
Bill Fishbein, Executive Director, The Coffee Trust
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2015: Ten Challenges and Collaborative Solutions by Bill Murray, President & CEO National Coffee Association
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or the world of coffee, it’s been a year of challenges - reputational, regulatory, legal, agricultural, scientific, financial, and more. Among 2015’s challenges: • Four years into a two-year process, the FDA is rolling out regulations detailing the nation’s new food safety system. • Five years in, litigation continues in California against coffee companies under Proposition 65. • Climate change is pushing Arabica crops to higher elevations, threatening adequate supply. • Consumer media continue to tie much broader issues to coffee for the sheer headline value that America’s favorite beverage can generate. These are the types of challenges that can only be successfully met with the combined energy of all stakeholders, collaborating together for the collective benefit of all participants in the supply chain. Here’s 2015’s top six: 1. Advocacy with Regulators – There’s been an unprecedented focus by U.S. Government regulators on coffee and health – a real, practical example where an industry speaking with one voice can shape outcomes. The NCA has met with the FDA, as it examines caffeine in the American diet, making the case that consumers are long familiar, and comfortable, with the amounts of caffeine that occur naturally in coffee. Separately, a U.S. Government Committee has for the first time ever recommended that the Department of Agriculture formally recognize coffee
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as part of a healthy diet in the U.S. Dietary Guidelines, a position championed by NCA. 2. Telling Coffee’s Side of the Story – With the lion’s share of consumers drinking coffee, reporters, publishers and social media personalities alike all know that a sensationalistic story about coffee drives viewers. A story earlier this year implied that single serve machines posed a health hazard, while another story, based upon implication and supposition, raised questions about worker safety. These types of stories are likely to continue as long as coffee remains popular – but is it crucial that these types of stories be met with facts and a balanced perspective. 3. Working Towards Sustainability – With climate change impacting viable production of Arabica plants and feeding the spread of the roya fungus, or coffee leaf rust, sustainability has never been more critical to preserving the green coffee supply and bolstering the “good citizenship” reputation of the industry. There are a wide variety of activities and organizations working towards solutions, and many NCA members who gathered in Austin Texas to explore ideas and action at the 2015 NCA Coffee Summit. 4. Addressing the Talent Squeeze – As the economy continues to improve, it will be more crucial than ever before that the industry develop and find talent – not just for the visible behind-the-counter positions, but for the less well-known roles. For this reason, the NCA and the SCAA have entered into a partnership to create the first joint industrysupported job board specifically for coffee professionals, launching in early 2016. 5. Measuring Economic Impact – Coffee has often been cited as the largest traded commodity in the world next to oil. But what does that translate to in terms of the U.S. economy – and why is it important that we know the magnitude of
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coffee’s impact? Regulators and policymakers, politicians and market makers – all have a stake in understanding the true scope and size of the U.S. Coffee Economy, whether in terms of jobs, taxes, or the dollar volume of the overall business. The NCA, with support from the SCAA, has engaged a professional consulting firm to identify the true size of the industry, a task with wide-ranging complexities and implications. 6. Communicating Constantly – In today’s fast paced, 24/7 communications environment, it is more important than ever before that the industry stay informed, and leverage current tools to communicate. To serve that need, the NCA has completely rebuilt its website to reflect current best practices in design, content, user functionality, and member service. The site is built on a new Association Management System, which will modernize and refine member records and operational capabilities to enhance communications, product and service presentation, and knowledge delivery. These are but a few of the challenges facing the industry – and examples of how, working together, we can attend not only to our respective businesses, but find opportunities to work together for our common good.
Bill Murray President & CEO National Coffee Association
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Coffee & Cocoa: +/- 20 Years
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by Rick Peyser, Sr. Relationship Manager, Coffee & Cocoa, Lutheran World Relief
ust over a year ago, I left Keurig Green Mountain after almost 27 years, and weeks later accepted a new role with Lutheran World Relief – Senior Relationship Manager, Coffee & Cocoa. In this role I have continued to work with coffee farmers and their families, and have had the wonderful opportunity to expand my horizons to cocoa, meeting with cacao farming families in Nicaragua, El Salvador and Uganda.
longer be suitable for the production of high quality Arabica beans. We also know, that there is increasing volatility in weather patterns – with extended droughts, and localized or regional flooding becoming common in the coffeelands. The second great challenge is urban migration which is affecting all agricultural commodities. Globally, it is expected that 70% of the world’s population will live in urban areas by 2050. Already many daughters and sons of coffee farmers are moving to urban centers where they see the promise of a better life. With the average age of coffee farmers in many areas now exceeding 50 years, we have to ask ourselves “Who will grow, harvest, and process the next generation of specialty coffee?”
In my supply chain outreach work I have always found it helpful to look at how others in different supply chains address their challenges. As I look ahead to the future of coffee, I see many parallels, differences, and lessons to be learned from the cocoa world. Like coffee, cocoa (derived from the cacao plant) is an equatorial product, usually found growing in a narrow belt of +/- ten degrees on either side of the equator. Cacao thrives in a humid, tropical climate, with plenty of rainfall and few dry spells. According to the World Cocoa Foundation there are between 5-6 million cacao farmers around the world, with 40-50 million people depending on cocoa for their livelihoods. Like coffee, more than 80 percent of the world’s cocoa is produced from cacao grown on farms between two and 5 hectares. Over 70 percent of the world’s supply is grown in West Africa, from which most of the world’s milk chocolate is produced, with much of the fine-flavored cocoa produced in the Western Hemisphere, often in areas where specialty coffee is grown, but at lower altitudes. In many ways the “specialty” or fine-flavored cocoa sector is at least 20 years behind specialty coffee. To date, no common sensory standards have been adopted or disseminated globally. Many specialty (bean-to-bar) businesses are artisanal, like some founding members of the SCAA were 33 years ago. While their proprietary standards have worked for current volumes, in anticipating growth, there are now discussions underway to develop uniform global standards and even a cocoa grader system, much like the “Q.”
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In other ways cocoa is perhaps 20 years ahead of the coffee industry. Many in cocoa foresee a supply crisis within the next 5-8 years. Globally there is growing demand for cocoa, largely driven by increased consumption in emerging markets with growing disposable income. Cocoa production is not keeping pace with this growing demand due to a variety of
factors, including: poor crop management, pest infestations, low market prices leading farmers to focus on alternative crops, and a young workforce migrating to cities. Many economists are predicting a cocoa shortfall of 1 million metric tons by 2020. At the farm level, small-scale coffee and cocoa families face many of the same challenges: an aging farmer population; poor access to credit, or education for their children; limited access to medical care; and lack of nutritious food for many months of the year. In addition, they are contending with two unprecedented challenges: the impacts of climate change and youth migration. What is the cocoa industry doing to address these challenges? Over the past decade, the World Cocoa Foundation, the private sector, governments, and others have invested many millions of dollars, and are continuing to do so to grow supply and address some of the fundamental challenges that are constraining production. Nevertheless, many industry observers predict that the resources being allocated are not close to enough to avert a global cocoa crisis in the near future. What can the coffee industry learn from the cocoa industry? As an industry, we are still recovering from the first broad impact of climate change: la roya. While we don’t know what the next manifestation will be, we do know from many in-depth studies on global warming, is that as temperatures rise, many land areas currently producing coffee will no
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What can the coffee industry do to avoid a cocoa-like supply crisis? As an industry, we can ramp up our emphasis on sustainable practices to mitigate and adapt to climate change. We must take youth migration seriously, and look at ways to increase future opportunities for young people in coffee farming communities, through their eyes. The urban magnetic pull is powerful, and unless as an industry we begin to seriously invest in helping coffee farming families address the challenges they face at the household level, coffee may not be far behind cocoa in failing to meet the growing consumer demand for our product. The bottom line is the bottom line: coming generations of coffee and cacao farmers and their families must see and receive greater value if they are to continue growing coffee. More successful collaborative and convening efforts, large and small, like the World Cocoa Foundation, Alliance for Sustainable Coffee, Temu Kopi, and the Coalition for Coffee Communities, must blossom to ensure these farming families thrive into the future.
Rick Peyser, Lutheran World Relief
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Know Your Disposable Cup Ingredients by Sharon Tett, Sr. Market Development Manager, Georgia-Pacific Professional
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o matter how flavor trends or customer demographics evolve, no conversation about the future of coffee can ignore its packaging – the disposable coffee cup. A growing percentage of foodservice operators believe disposables can serve as a means of enhancing their takeout program.1 In the competitive coffee shop business, this will make choosing the right cup an increasingly important decision. Today, research shows that price and functionality are the top factors operators consider when evaluating foodservice disposables, including cups. However a third factor, environmental friendliness, is expected to continue growing in importance to consumers, regulators, municipalities, and operators.2 Looking ahead, choosing the right cup will involve balancing three key priorities: performance, price and environmental impact. Start by Understanding the Impact of Different Substrates Begin by gaining an understanding what goes into your current disposable cups. Like recipes, disposables cups have ingredients. And, like in recipes, these ingredients change over time to reflect changing costs and consumer preferences. The primary ingredients of foodservice disposables are called substrates. There are four primary cup substrates: paper, foam, plastic and plant-based renewables. Paper. Paperboard used to manufacture disposable cups is made from trees and/or recycled paper fiber. Although it is typically a lightweight and flexible material, paper substrates can be layered together to add strength, durability, insulation properties, and a printable surface to a finished disposable cup. Consumers give paper cups high marks on environmentally friendliness3 because they are made from a renewable resource, often contain recycled fiber, and may be recyclable and/or compostable. Paper cups are generally more expensive than foam cups but less expensive than plastic cups.4
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Foam. Foam cups are made from polystyrene, a petroleum-based resin. Lightweight with excellent insulating properties, foam cups are low in cost, but bulky to handle and store.5 Consumers, operators and municipalities have environmental concerns about foam. Foam will not compost, and recycling foam products has proved impractical. As a result, foam has
been banned in over 100 municipalities.6 The industry is working to develop foam products that include recycled content and biodegradable polystyrene resins to counter environmental concerns. Plastic. Plastic substrates are made from a variety of petroleum-based resins such as polypropylene, polyethylene (PET) and polystyrene. Different resins make plastic a versatile material. For operators, this means options. Plastic foodservice disposables come in a variety of shapes, sizes, colors, clarity and offer printable surfaces. Recycled materials can also be incorporated. Just as the finished product characteristics of plastic foodservice disposables vary, so does the environmental impact. PET, for example, has a well-established recycling infrastructure whereas others do not. Foodservice disposables made from plastic are generally more expensive per unit than foam or paper.7 Alternative Plant-Based Renewables. Starches derived from plants such as corn, potatoes and sugar cane have been developed that serve as substitutes for petroleum-based plastics and other traditional materials. Polylactic acid (PLA) is a commonly-used example. Typically derived from corn, PLA is used as a coating for cups that helps seal the item and prevent leakage. In addition to being made from renewable sources, PLA offers two key advantages over petroleum-based alternatives. First is its lower environmental impact to produce and second, it can make the final product compostable in commercial facilities.8 A key drawback to the increased use of plant-based renewables is its high cost relative to paper, foam and plastic substrates.
Operating Efficiency. Evaluate cups based on the complete operating solution they offer. For example, choosing an alternative with stackability and storage requirements that work in your prep areas can save time, especially during peak hours. Consider the full benefits of specific cup and lid combos for ease of use and patron satisfaction. Source Reduction. Choose foodservice disposables that contain recycled material or are designed to minimize the amount of raw material required in production and packaging. Ask where products are made and what measures manufacturers take to conserve resources in the production process. Waste Reduction. Minimizing waste reduces the costs of waste handling. A quality insulated hot cup, for example, can reduce the waste associated with double cupping or paper sleeves needed to serve hot beverages in an inferior cup. Consider the costs of waste disposal including transporting, landfilling, recycling and composting when reviewing product alternatives. Competitive Advantage. Six in ten consumers want foodservice establishments to communicate their sustainability initiatives more aggressively.9 How can disposable cups help? Many are customizable and can carry your sustainability message. Ask for stock items that include sustainability information from the manufacturer regarding third party certifications or recycled content. Take advantage of custom print options to promote your brand. Supplier Partners. Finally, look for a supplier who can deliver all of the ingredients for a successful foodservice disposables program. These include a variety of proven substrates, third party certification of manufacturing processes, use of recycled content and operating efficiencies that drop to your bottom line. Technomic: Foodservice Single Use Disposable Packaging
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Assessment, 2014 Ibid. 3 Ibid. 4 Freedonia: Industry Study, Cups & Lids, 2014 5 Ibid. 6 Groundswell.org: Which Cities have Banned Plastic Foam, 2015. mailto:http://groundswell.org/ map-which-cities-have-banned-plastic-foam/ 7 Freedonia: Industry Study, Cups & Lids, 2014 8 Ibid. 9 Technomic: Building a Better Foodservice Business Through Sustainable and Responsible Practices, 2013 2
Consider the Enhancement Opportunities Disposables Could Offer In addition to the properties of the substrates, here are some additional factors to consider in choosing the cup that will add value to your business and take out program.
December 2015
Cheers by Danny O’Neill, Bean Baron, The Roasterie
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e founded The Roasterie in 1993 with a hyper-focus on all things local; Kansas City, in our case. And I’d be less than honest if I said that the whole ‘local’ focus resonated back then in any way like it does today. After 22 years one can see how patterns have changed, whether we are talking about coffee, spirits, clothing, food, etc. The Specialty Coffee industry got a later start than fine wine, by perhaps 15-20 years, depending on whom you ask. So we were much less mature as an industry and during the 90’s we were figuring it out. Keep in mind when we started, there was no Internet. The Specialty Coffee industry was full of mostly young, passionate, energetic coffee enthusiasts hell-bent on acquiring coffee knowledge, getting focused as an organization on coffee quality and helping farmers. “Proper remuneration at the farm gate” was the mantra we all held dearly. There were some that held back information; but, for the most part it was wide open sharing with everyone helping everyone.
In the mid 90’s there was an intense focus on all things espresso and a barista movement was beginning to get traction. It seemed that much of the attention was on coffee, then the espresso, then the baristas and lastly to alternate methods of brewing coffee (pour-overs, etc.) However, the customer, and what the customer wanted, was not always the focus during the time that our industry was maturing and finding our feet. I often think of the fine wine industry in the early days and there are a lot of parallels to the specialty coffee industry across the board. I think both industries became much more attractive as they matured, as the focus shifted from a “look at me” kind of an attitude to a focus 28 on the customer. I recently visited a few wineries in Napa Valley and I was struck by genuineness,
authenticity and focus on how much they still did not know. Our group discussed these experiences and some of them had been visiting Napa since the 70’s and noted the lack of pretense, smugness, arrogance, etc. I think this comes with maturity and confidence; being confident enough to not have all the answers and not have to rush to jump onto the next fad. It was enlightening, as all of our trips to Napa have been, but even more so because of the healthy attitudes and customer focus we experienced this last trip. What’s Coming? I feel strongly that we are going to be much, much more focused on serving the customer, being of service to the customer, and being there for the customer. There is going to be less tolerance in the marketplace for anything less. In the past a lot of cafes and restaurants could get by with having awesome quality food and beverage but poor or fair customer service. I do not think anyone is going to have that option going forward. I’m a huge proponent of having both, obviously, but what we are seeing is that the customers want a healthy experience. They want to be appreciated, they want authenticity and are more and more unwilling to put up with anything less. And I’d be outspoken and say if you don’t think you can deliver an exceptional quality product and exceptional customer service, then don’t get in the business! If you’re in a city of 10 million or more people, then you can probably find enough customers no matter what. But moving forward, these are going to be the exceptions; customers are going to demand authentic, nice, friendly, customer service. The economic meltdown accelerated another trend and that is lifestyle businesses. While
December 2015
they’ve always been around, we’ve seen a hundred-fold increase in small…often tiny, cafes, roasters, restaurants, etc; accompanied by a “tiny” or minimal, small footprint lifestyle. Folks are making a living doing much less revenue than what would traditionally be required in years past. Therefore, they can be much more creative and serve the customers with much more care, and more time than in a traditional “eat it and beat” kind of an atmosphere. Our economy isn’t producing the number of $60-$80k a year jobs that it was prerecession so the opportunity costs aren’t as high. I’ve heard several of our customers say “I wasn’t making much money in my old job and I hated it. Now, I’m still not making much money but I love what I’m doing.” There is a much more deliberate, intentional focus on ‘staying small.’ Before it was local, then hyper-local and now it’s neighborhood. As a child growing up in a small town in Iowa, we had several small grocery stores in people’s houses; the store was on the main floor and the family lived upstairs. There were lots of stores and shops like this all over the country that nearly all became extinct; now, they are coming back. Furthermore, the bigger chains in all areas of the hospitality industry are responding with smaller stores, a smaller market radius, lower revenue per store with lower overhead. They are focusing on the neighborhoods that they serve. The trend toward a smaller footprint in terms of material possessions, autos, housing, etc. opens up all kinds of possibilities for owning small, local, and neighborhood shops. The owner can have a hyper-focus on what the customer wants as well as serving the customer the way the customer wants to be served. Yes, it should always be this way. But if you are swimming in overhead, then the focus all too often is just “paying the rent”. And yuck, who wants to live for that?
Danny O Neill
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The Future of Coffee Packaging by Bill Walters, Executive Vice President Packaging Technology, Pacific Bag, inc. the Doypack) with one-way degassing valve and distributed around the world. In 2011, the flexible packaging industry launched the first really new packaging style for coffee bags since the Doypack - the Block Bottom Bag. The favored look is no longer shiny, space age foil, but muted matte surfaces or even paper exteriors on a foil bag. Some barrier bags are made from renewable materials that will break down in compost. And studies have shown that green coffee beans preserved in barrier bags such as foil or EVOH retain the high coffee grading better than those exposed to the atmosphere. It is now relatively common for high quality coffee to be bagged in a plastic barrier bag inside the burlap sacks.
O
ctober 21, 2015 marked “Back to the Future” Day for fans of the “Back to the Future” movie franchise. On October 21, 1985 when Doc Brown and Marty McFly travelled to 2015, it didn’t seem terribly farfetched to think that hover boards and flying cars might exist. In 1985, thirty years seemed like such a long time, that surely anything was possible. I don’t know about you, but my car isn’t flying anywhere. On the other hand, in 1985, who imagined we would have devices in our pockets today that connect us to the world and find our global position via satellite. If Back to the Future Day taught us anything, it’s that some things don’t change as fast as we imagine and other things change unexpectedly. 1985 also happens to mark the beginning of my career in specialty coffee packaging. So, before we take a take a stab at the challenging question of what coffee packaging will be like 30 years from now, let’s consider where coffee and coffee packaging in the U.S. was 30 years ago.
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• In 1985, the can was the predominate coffee package in North America. • Decaf Coffee was still synonymous with instant Sanka. • Most coffee was sold in 1 lbs. increments. • Hanging at a coffee house didn’t exist unless you lived in select major cities and were super-cool. • Coffee brewing at home was done with an electric percolator or a Mr. Coffee automatic drip machine (where have you gone Joe DiMaggio?). • The Starbucks store at Pike’s Place Market served their first Caffè Latte and Starbucks was working towards an expansion to six total stores, all in the Seattle area.
• The stand-up pouch was called a Doypack and was quite rare. • The flexible “foil” bag that was sold in the U.S. was the vacuum packed, “not-so-flexible” coffee brick pack for Folgers and Maxwell House. • Coffee was just coffee and the only place for most Americans to get a hot coffee drink was at a restaurant or diner. It cost about $0.75/ cup. • Cold coffee was old coffee. • A handful of intrepid coffee roasters imagined a world where coffee wasn’t just coffee and U.S. coffee drinkers would choose to pay double for a better cup made from high quality green coffee beans. • Some specialty roasters adopted the flexible foil bags with one-way degassing valves for roasted coffee. Many others continued to distribute their product locally in paper bags with tin tie. • If a foil bag was used, it was a shiny as possible to show off its space-age preservation capabilities. • Most people accepted the mantra that green coffee could be stored for a year or more in burlap bags, fully exposed to the atmosphere, with no adverse effects. Now, in 2015, it is not unusual for Americans to stop at a coffee house and pay more for good coffee. The coffee they purchase might be cold. Or they may purchase good quality coffee in foil bags with one-way degassing valves at the grocery store to brew at home in their French Press, AeroPress, or other brewing method. Quality, specialty coffee is roasted and kept fresh in 12 oz. flexible foil, side gusseted bags or the now common stand up pouch (formerly
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So where will coffee and coffee packaging be in another thirty years from now? Good question. Since humans have been drinking coffee for over 500 years, it’s safe to say we will be doing it then while we fly to work in our flying cars (Note - I’ll be 82 yrs old then, so I’ll be the guy wearing the hat and flying 45 mph in the fast lane). Here are some other predictions: • There’s a good chance that in the future coffee will be packaged in materials that are more sustainable and renewable as more biobased materials are invented by industry and supported more and more by coffee roasters. • The now common foil side gusseted bag will be on the wane for coffee if machines for in-house forming/filling/sealing of block bottom bags are popularized and adopted. I have a hunch the improved stability of the block bottom bag will prove a winner over the side-gusseted bags. • Barrier packaging for green bean may become more and more viable as competition increases for high quality green coffee beans. • Packaging will be printed using digital technology which will allow roasters to change package graphics on every bag, if they wish. This will allow customization of packaging to a degree that is not possible today. • A tall caffè latte will cost $8. So, I say the heck with Back to the Future Day lessons. Those are my predictions and I’m sticking with them. Get ready to strap on your hover board, buy your $8 Latte, and enjoy the ride.
Millennial Coffee Drinkers, Meet Millennial Coffee Farmers by Julia Leitner, Project Manager, Sustainable Harvest Coffee Importers
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n every industry around the world, including coffee, companies are working hard to understand the consumption patterns of Millennials—the demographic born between the mid-1980s and the early-2000s. Millennials recently passed Baby Boomers as the largest generation in the workforce, meaning they have disposable income to spend. So what drives Millennials? I fall into this generation, so I feel equipped to comment, or at least relay the exhaustive marketing research. We are creative and technologically savvy—we’re known as the first digital generation. We want to feel connected, and we constantly seek peer confirmation. We expect the brands we consume to contribute meaningfully to society. And many Millennials also believe that we are coffee experts. We relate coffee quality to sustainability, yet we’re not always willing to pay a premium price for that. And that leads me to wonder: What about my generational counterparts in the coffeeproducing world? Do these same demographic characterizations apply? From my personal experience, yes. And if it is so important to the health of the coffee industry to comprehend and connect to Millennial consumers, what about connecting with Millennial farmers? Around the world, the average age of coffee farmers is steadily rising: In Colombia, it’s around 55. From Peru to Mexico, many regions are experiencing difficulties finding laborers. According to a Bloomberg article published in October, the cost of labor doubled in Colombia because of picker scarcity during the harvest. Producing coffee, especially specialty-grade, is a labor-intensive endeavor. Yet international prices have plummeted, and most farmers cannot even cover production costs--especially with labor costs rising--at current prices.
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So it’s not surprising that many “Millennials” in producing countries do not see a sustainable future in coffee farming. A Millennial farmer growing up on a small coffee farm has likely never experienced long stretches of stability and plenty. Unlike their parents, who lived through the coffee bonanza and high prices in the 1970s and 80s, Millennial farmers grew up around the price crash of the 1990s. Since the dissolution of the last International Coffee Agreement (ICA) in 1989, free market pricing has turned coffee farming into a volatile source of income. Many young farmers prefer to leave coffee and move to urban areas. And this is serious news for our coffee industry. To ensure our sustainability in the long term, it’s crucial that we engage with young farmers and address the growing generation gap. We can conceivably draw insights from the abundance of research on Millennial behavior. According to a Pew Research Center study, Millennials like to feel as though they’re connected to peers and to causes. We can see this reflected in coffee. At a Let’s Talk Coffee training event organized by Sustainable Harvest earlier this year in Huila, Colombia, we saw energy created by bringing together young farmers, agronomists, cuppers, and even green buyers from around the country. A large number of the attendees were between the ages of 18 and 34. We puzzled over tasting notes together, posed questions during panel discussions, and exchanged Whatsapp messages at breaks. At this unique event, youth had the opportunity to connect to a larger coffee community. The sense of participating in something global is extremely important to the young generation. “In the last few days we were able to get to know one another and access a global vision,” Alexander Contreras Henao, a 19-year-old cupper from Antioquia, said at the conclusion of Let’s Talk Coffee. “We can’t think about the personal, but rather we need to think about the big picture.” As an unprecedented and direct result of the connections forged in Huila, a cupper from Federación Campesina del Cauca will fly 850 miles to Northern Colombia this November to help another cooperative with quality control during harvest. The cooperative
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Asoanei has, for the first time, deployed its own team of cuppers to oversee harvest. Thanks to hours of training with Q Trainer Claudia Rocío Gómez, this group of young cuppers is prepared to lead lot separation and quality analysis at collection stations in the remote Sierra Nevada de Santa Marta mountain range. Lisbeth Maca, the cupper from Cauca, will spend two months working with friends in the mountain indigenous communities. Another point taken from Pew Research Center’s study on Millennials: The people of this generation seek fulfilling, creative careers. The professionalization of coffee is particularly important to young generations. Cupping and agronomy are compelling career paths and gateways into sustainable coffee farming. Knowing how to cup is a skill that opens the door to young women and men interested in coffee. As cooperatives seek differentiated markets, cupping is an important tool they can use to improve quality, reduce rejections, and access higher prices. It’s also very nuanced, influential work. At 21 years old, Ati Zeygundiba is the head cupper at Asoanei. To her, cupping combines sensory discovery with the ability to help her community. “Every day I like this work more,” she told me. “And everyday I fall more in love with coffee and cupping. It’s rewarding to be able to say to the producer, ‘You’re missing something here. Maybe we should look at your processes.’ It’s wonderful that you can help him.” Millennials, in the simplest terms, are the future. They’re the next generation of home buyers, taxpayers, and consumers, and in North America we put no small amount of energy into understanding their behavior. Similar efforts are, and can, be made to engage coffee farmers of this generation in the craft and profession of coffee farming. The sustainability of our industry may depend on it.
Julia Leitner
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When Exceptions Become Commonplace by Spencer Turer, Vice President, Coffee Analysts
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s a specialty coffee professional, it was serendipity that brought me to Vermont. The personality of this agricultural state, along with a strong desire to keep business local, be friendly, and do the right thing echoes the current state of the coffee industry. Vermont food and specialty coffee share a common trait: transparency. Vermonters have always embraced a farm-to-table approach; agricultural transparency and local sourcing is important here. We make buying decisions based on the farms that we know, and like to support the families in our communities that operate farms throughout the state. For example, the sources of my recent meals include: dairy from Vermont Creamery, vegetables from Sam Mazza’s Farm, chicken and meat from Misty Knoll Farms, La Platte River Angus Farm and Green Pasture, bread from August First and Red Hen Baking, and the coffee in my cup today is from San Rafael Urias Estate, Guatemala. The future of coffee is no longer transparent supply chains and relationship buying; what was once the exception and the point of differentiation has become commonplace in our industry. Sustainability has been a hot topic for several generations. Many would conclude that sustainability is omnipresent in our industry already. Independent programs and thirdparty certifications have progressed from local initiatives to global businesses. The specialty coffee industry has demonstrated great concern for doing good work, as evidenced by our sourcing practices and buying decisions. Social, environmental, and economic issues, combined with gender inequality and the viability of coffee as an agricultural crop are all part of today’s specialty coffee conversations. These issues are pervasive and will surely remain priorities in the industry until they are sufficiently resolved.
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The newest generation has successfully questioned the way coffee is merchandised and promoted. Specialty coffee is no longer presented in the historically efficient fast-food model, and has been elevated to a place of distinction among other hand-crafted food and beverage items. The specialty coffee industry has done a very good job presenting to the consumer an artisan approach to crafting coffee, without a rather satirical reference to Ernest & Julio Gallo’s, “We will sell no wine before its time” campaign. Consumers are learning patience and generally accept that the Barista will serve no specialty coffee drink until it is perfect.
However, we are approaching a dangerous place for specialty coffee; innovation, artisan preparation, and retail creativity require consumer enthusiasm for the business to be viable. Consumers demonstrate interest by visiting a business and making an initial purchase, but merchandising and promotion that is put in place to develop consumer interest and entice trial will not guarantee success and does not define the future of coffee. Our beloved specialty coffee industry has suffered growing pains recently as we evolve from generalists to specialists. We are no longer a narrow and deep industry with defined categories and long-standing businesses. New businesses are seeking to establish a niche for themselves in an ever-growing competitive marketplace. Essentially, generalists who provided a diversified menu of offerings have been replaced by specialists who offer a limited menu with few options for customization. Our desire to specialize and communicate details of coffee origins, coffee processing, and beverage preparation has forced us to look inward at our craft and our industry. In our zeal to establish expertise and to infuse passion about our coffee, we are in danger of leaving the consumer behind. Our newly acquired barista skills and technical coffee expertise has been met by wary customers who can be made to feel unwelcome if they appear confused by unfamiliar equipment, unique coffee and the intricacies of ordering. We have to make reconnecting with our consumers a major priority. Finding a commonality between professionals and consumers is critical for business success, but that alone will not define the future of coffee. The pervasive theme of the previous generation is still a powerful message; relationship sourcing and direct-trade! Contrary to popular reporting, coffee professionals have always traveled to origin countries and built relationships with producers and cooperatives. The emphasis on these relationships becomes important as roasters and baristas begin to utilize their trips for buying activities, not just for professional development. What evolved from describing a sourcing activity into an overused marketing slogan has also blossomed into unrealistic expectations of exclusivity and differentiation. Many coffee producers sell the same coffee to more than one importer. In turn, the importer sells these special
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coffees with a transparent supply chain to many roasters and roaster-retailers who then claim exclusivity and differentiation. Specialty coffee has had a tumultuous upbringing over the last few generations. Our sourcing practices have changed as well as how we produce, prepare and present our products. The requirements of specialty coffee professionals have evolved as the marketplace changed, and the demands from consumers are now more complex and detailed than in previous generations. Sourcing, sustainability, and merchandising will capture the first sale, but only quality will keep your customers returning time after time. The future of the specialty coffee industry is in the cup. What I learned in Vermont restaurants and cafés is apropos for the specialty coffee industry. The way we approach sourcing is important, but without true exclusivity, there is no point of differentiation. Sustainability programs are critical to success, but when everyone has such a program it becomes an expected requirement and also ceases to serve as a point of differentiation. Service standards, branding and image are becoming a more sophisticated part of popular culture; however the promise of specialty coffee is destroyed when coffee’s flavor does not meet the expectations created by marketing. The future of coffee is……….. QUALITY; defined by flavor in the cup.
Spencer Turer is vice president of Coffee Analysts in Burlington, Vermont. He can be reached at spencer@coffeeanalysts.com
The End of the Rockstar Barista by Erin Meister, Sales Associate, Cafe Imports, LLC
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t’s going to make me sound like an old-timer, but when I started behind the espresso bar in 2000, the only baristas’ names I knew were the other college kids I worked with. We didn’t even know the names of the people who worked at the shop’s other location in town, and we for sure didn’t think there was a future in the work we were doing. As I plopped spoonfuls of peanut butter into the bottom of paper cups and attempted to “melt” them with the brown liquid somewhat resembling espresso that I was taught to make in my first 20 minutes on the job, it never occurred to me that one day I would know baristas I considered “celebrities,” or that meeting them in person would actually make me a little giddy. Within five or six years that completely changed, and the cult of coffee personality emerged— along with higher-quality coffees, better-looking and more efficient cafes, and more attention to detail behind the espresso machine—from the bursting cabbage patch that was the Third Wave. The rock-star barista was a brand-new concept, and, in many ways, an absolutely necessary one: Specialty-coffee believers were desperate to elevate their craft and convince consumers that really good coffee is not fast food, and different from the commoditized stuff dispensed by vending machines and poured into bottomless diner mugs everywhere. The barista was at the front lines of this conflict, explaining the differences between beans from Kenya and Colombia, or dark roast and light roast, or espresso macchiato and latte macchiato. In order to feel like we were accomplishing our goals in raising the tide and floating the boat of truly outstanding coffee, we needed to lift our baristas, too, putting them on pedestals in every and any way we could. The national and international competition circuit did much to this end, as did the development of trade publications aimed at showcasing and highlighting baristas. The physical and cultural architecture of our cafes changed in order to center the coffee experience around the barista, whose role became something like a coffee sommelier. We started to talk about the “theater” of coffee, and about hospitality; trends and stereotypes emerged, and we started to feel empowered, confident, and okay, maybe a little cocky.
In many, many ways, the rock-star barista as 36 a mascot of specialty coffee worked. In some
cases, it worked extraordinarily well: Coffeecompetition champions became smallish-time celebrities even outside the industry; baristas were featured in mainstream magazines and on TV; and sales have grown ever stronger in specialty markets, even in cafes that are so highly specialized and specific as to be absolutely foreign to my year-2000 peanut-butter-mochamaking self. Without the hipster-barista model, New York City’s Cafe Grumpy would not be on “Girls,” and Instagram would not be full of latte-art. Then, however, came the backlash—and it came hard. Movies, TV shows, websites, newspapers, Halloween costumes, action figures—suddenly everyone was having a go at the “hipster barista,” tearing us down from the notch we’d fought so hard to raise up. At this point, we’re all sick of the cheap shots—jokes about the barista dress code of thick glasses, beard, flannel, and a too-cool attitude—and the articles pitting one side of the counter against the other, as though customers and employees in coffee shops were engaged in some kind of tug-of-war over cappuccinos and chump change in the tip jar. Instead of a seething undercurrent of defensiveness, however, coffee professionals have proved themselves just that: professional. After four or five years of the seemingly nonstop criticism, commentary, and satire our rockstardom has inspired, the barista community at large has appeared to really change its focus. Rather than simply lifting individuals into the spotlight, we are now seeing a shift toward professional development and group empowerment. National events like the BGA’s traveling Barista Camps, local educational and sensorial opportunities like the MANE conference and the Caffeine Crawls, and myriad social and professional tools available online at the click of a button have transformed the barista community from an army of few to a force of many, getting bigger, stronger, better, and, dare I say it, more humble every day. Recent updates to the structure of the starmaking competitions seem to reinforce this shift: Changes in the SCAA’s approach to competition ostensibly open the field to a more diverse selection of competitors in their first-come, first-served nature; the latest international titleholders have mostly come from outside the usual spotlights, line baristas and cafe owners who are dedicated, passionate, and lack the “pretense” many have (often wrongfully) come to expect
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from coffee pros. Even the growing trend of abandoning tipping seems to contribute to the push toward rewarding and uplifting baristas across the board, rather than allowing a select few to walk away with the cash, leaving others holding the proverbial bag. Where is the role of the barista going? I see us moving toward a more collective mentality, truly focused on hospitality in that we are turning our professional focus back on the customer and— thankfully!—the coffee, rather than putting it on ourselves. The best new events to come out of the latter-day movements and momentum of the Third Wave are educational, professional, collaborative, creative, and inclusive, both in their intellectual and physical development. Barista Camp in Wisconsin? Regional competition in Kansas City, M.O.? My inner New Yorker is humbled, thrilled, and excited to challenge the notions that qualified, capable, and yes, even cool baristas exist outside of the biggest and brightest metropolitan areas. All of this is not to say that the baristas of the world aren’t still rock stars—we’re all just in a much, much bigger band.
Erin Meister
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How Technology Is Enhancing the Future of Coffee by Mike Doherty, Owner, Sunshine Coffee Roasters
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good cup of coffee has the power to brighten a customer’s day. There’s something magical about how the right blend of beans, the subtle scents of chestnut, chocolate, and caramel keep customers coming back for more. But it’s not just the coffee -customers also crave friendly, personalized service -- a nod or a smile from their local barista, a custom recommendation or a cheery morning conversation -- and it is these kinds of one-on-one interactions that inspired me to establish Sunshine Coffee Roasters over ten years ago. What is really exciting is that now, thanks to advancing technology, specifically social media and detailed, easily-accessible analytics, coffee is getting more personal than ever. With the help of hourly reports and POS technology, coffee shops now have the ability to highlight trends, drive in-store traffic, and introduce customers to new products based on their individual preferences. The tools baristas and business owners now have at their disposal are more valuable than ever before, making it possible to bolster business and forge stronger customer relationships to create meaningful, memorable experiences. Customer Relations Exemplary service starts from the top. At Sunshine Coffee Roasters, we take great pride in hiring our team and providing excellent benefits -- we consider them family. Several of our team members have grown alongside the company and even taken specialty classes to hone their skills. That care and concern filters down to our customers; we like to consider ourselves the “breakfast bartenders of western Sonoma County” and set a positive tone for the rest of their morning. Not only does our team recognize regulars and know their orders, but we work to expand their palate. Point-of-sale systems like ShopKeep can be used to quickly pull up a customer’s purchase
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extend the conversation around our products to a larger audience and engage with them after regular business hours. Through these channels, shops owners have the capability to poll customers, hear direct feedback, encourage user-generated content and reward fans with special coupons and discounts. Back-end admin tools supplement this experience, allowing shop owners to see which of their posts are performing best and adjust content accordingly.
history and suggest different brews based on their favorite flavors. Customers hugely value these personalized recommendations -- in fact, 93% would share personal data in exchange for customized offers. Essentially, consumer data is a barista’s best friend, allowing them to better understand customer preference to make tailored offers. Using Analytics to Boost Sales Data can also be used to manage employees and the cost of goods more effectively. Through ShopKeep’s hourly reporting functionality, we noticed a significant lull from 3 to 6pm and decided to introduce our “Organic Happy Hour” with dollar coffee specials within this timespan. Doing so not only improved afternoon sales, but also helped convert infrequent customers into regulars who stop by once, twice, sometimes even three times a day. ShopKeep also alerts baristas of our most popular drinks so we can shift weekly sales accordingly. Thanks to these insights, blends that have been slower to sell are given an extra boost and, often, carry over on a more permanent basis, successfully encouraging customers to try new products. Benefits of Social Media Social media provides coffee shops with unprecedented access to customers, permitting them to connect with regulars on “their time.” At Sunshine Coffee Roasters, we’ve seen the positive impact of these interactions firsthand through our Facebook, Twitter and Instagram accounts, where we regularly share recent news, timely offers and a behind-the-counter look at our company ethos and culture. In this way, social media has served as an invaluable tool in acquiring new customers, enabling us to
December 2015
Streamlining the Shopper Experience Shop owners should look to diversify offerings across the board, from product to method of payment. After adopting ShopKeep’s reusable gift card, we noticed a number of customers began buying pre-paid gift certificates for themselves. Often, guests will purchase a gift card on Monday and use it for the rest of the week so they don’t have to worry about carrying cash. Other shops are turning to NFC technology like Apple Pay which allow customers to make a purchase with just the touch of their finger. Shop owners should be mindful of customers’ preferences and partner with a technology provider that offers guests the flexibility to pay as they please. Above all, customers are not only looking for a quality product, but someone they like and trust to serve them their coffee. Because of the hard work of our employees and the customer relationships they establish, Sunshine Coffee Roasters has been fortunate to roast organic coffee for two Sonoma locations, as well as local retail, grocery and mom & pop shops. Since then, the resources we’ve learned to embrace have helped our brand flourish, enhancing the customer experience and enlightening us to make smarter, more strategic business decisions. Technology ensures the future of coffee will be bright -- we’re excited to see what comes next.
By Mike Doherty, owner of Sunshine Coffee Roasters
Smallholder Survival by Karl Wienhold, Specialty Coffee Trader, International Trade, Rural Development, Direct Origin Trading
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ust as squirrels learned to hide nuts and hibernate in the winter, birds learned where to migrate, and those weird fish learned to crawl on land for whatever reason they do that, so too must smallholder coffee growers evolve and adapt to changing circumstances in order to survive as a species. Furthermore, the supply chain in which they participate and the end users that want them to remain in existence must be cognizant of their situation. The world coffee markets are rapidly changing (plural because there are few similarities between a Cup of Excellence microlot and a 3-in-1 sachet of beige powder except that they result in something wet in a cup), as are the supply chain actors that meet the markets’ demands. Growth in coffee consumption, cultivation, and production reaching the far corners of the world, its increased segmentation and price variance, plus futures trading volumes, have kept coffee economics pretty volatile. There are commodity price swings, currency volatility, blights, and many other external factors that farmers cannot control. While the commodities traders that manage most of the movement have the ability to hedge uncertainty, farmers are mostly left out in the cold. The first step in this adaptation process is for growers to understand the markets in which they participate (not an easy feat in isolated rural areas) so that they can see their farms as businesses, rather than being treated paternalistically by governments or like a resource such as water or coal by intermediaries. Then, to carve out a lasting place in today’s market there are three important factors for smallholders: cup quality, productive sustainability, and commercial consistency allowed by direct relationships.
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Specialty-grade cup quality Though the fastest growing segment in coffee is instant due to the newfound taste for coffee in markets like China and Russia, the exploding production capacity of places like Vietnam is mostly Robusta and commodity-grade Arabica used in instant. Furthermore, a 2 hectare farm in Central or South America could never hope to compete with the production cost efficiency of the mega-farms that produce commodity product. Specialty coffee, however, is more labor-intensive, requiring more finesse; therefore, few economies of scale are attainable for the big guys and small farmers can be cost-competitive. Furthermore, for a small farm with good growing conditions and basic processing infrastructure, the difference between commodity and specialty grade can lie simply in careful monitoring and a little added elbow grease. That added effort could mean a big economic impact. If small farmers are just covering costs selling into the commoditygrade market, earning 50-75% premium over the C price in the specialty market (reasonably attainable with good growing conditions) could mean an enormous increase in farm income and improve the family´s situation significantly. Productive Sustainability Many farmers are seduced by the potential income of technified farm management, implying crowded planting of high-yielding varietals and cutting down the shade trees that were necessary for their old delicate heirloom varietals, thereby creating a monoculture. To spite farm income being limited to the lowered quality ceiling this kind of production mandates, a couple of years later the problems begin. The soil is empty of the nutrients that trees used to provide and the farmer must purchase more synthetic fertilizers whose prices in Colombia are often based on the US dollar. The increased temperature due to the lack of shade and the monoculture make it easy for the broca (borer beetles) to propagate, so the farmer purchases and sprays costly and dangerous insecticides. Income is soon back to previous levels and more vulnerable than before. (roya is another can of worms deserving of its own article) While it is difficult to think about the long term when the short term is so uncertain, the vulnerabilities created by agricultural intensification far outweigh the potential short term cash flow they stand to generate. Our group in Colombia has recently embarked on an effort to reforest coffee plots and have found that
December 2015
while shade trees are extremely beneficial for coffee ecosystems, they help the farmer’s bottom line in terms of cup quality, blight propagation, dependence on synthetic inputs, and can provide a source of food for farming families. Direct Relationships - Commercial Consistency Price volatility is at least as great a threat to smallholder survival as productive sustainability. While selling to specialty exporters increases farm income, it is in almost all cases by a factor of the current international commodity price, which can easily dip below production cost. However, specialty roasters on the other side of the world don’t buy green coffee based directly on a factor of the C-Price. Therefore, selling directly frees farmers from the price volatility of international commodity markets. It’s also important to mention consistency of sales. If a farmer sells to a specialty exporter for a good price one year there is not always a strong indication that they will get it again the following year if the exporter just needs to meet demand of x tons of y quality coffee. However, many specialty roasters want to know exactly by whom and from where their coffee is made, and are interested in directly sourcing unique, exclusive, single-farm microlots year in and year out and forming lasting, mutually beneficial relationships with growers.
Karl Wienhold Direct Origin Trading
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What it Takes to Deliver a Winning Cup by Howard Chapman, President, Office Beverage Div and NAMA Board Chair, Royal Cup Coffee
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he future of coffee in 2016- and beyond - is bright and brimming with opportunities for growth and innovation, especially as it relates to the coffee service channel. As the workplace of the future continues to be shaped by the needs of Generations X and Y, coffee service businesses have the chance to leverage those needs to truly enhance the quality and diversity of their products and services.
I witnessed the true appeal of these innovative products at an appreciation brew event that our Royal Cup team recently hosted for one of our customers, a technology company. This company, which has to attract and retain the best and the brightest, offers an attractive suite of employee benefits including on site massages, professional development opportunities and, you guessed it – high-end specialty coffee.
What was once a modest workplace perk has now grown into a highly-valued and sought after experience. Employees are looking for the “coffee shop” experience in their breakrooms and employers are happy to provide it because it keeps their staff engaged and onsite while providing that much-needed break throughout the day.
We served nitrogen-infused cold brew coffee and it was a huge hit with the employees. They went out of their way to voice their appreciation and it was evident that this upgraded experience made an impression on them – proving that we can “bring it” when it comes to delivering that coffee shop feel.
Helping define these opportunities further are the trends we are seeing in the coffee service sector, most notably in the specialty brew arena. The coffee industry at large has moved far beyond the days of hot and black. Don’t get me wrong, I love a traditional cup of joe. But for those who are looking for more variety, or consider themselves coffee connoisseurs, there are many more options available and it’s important for our channel to deliver those options to the workplace.
In addition to specialty flavors and brews, convenience is also a priority. Today’s (and very likely, tomorrow’s) workforce is fast-paced and they appreciate instant gratification where they can get it – making single serve coffee one of the most popular options in the office. We are also seeing a dramatic resurgence of bean-to-cup brewers. I think this is due in part to the technological ease of these brewers and also the lack of packaging waste, making them an environmentally friendly option.
Today we are seeing everything from unique flavors and roasts to cold brew to nitrogen-infused coffee. Cold brew has been gaining popularity due to its sweeter taste, and the infusion of nitrogen makes a cup of coffee come alive. These premium options, which are served in local coffee shops at higher price points, can really amplify office coffee service, helping create that “coffee shop” experience.
The environment and sustainability will continue to be driving forces in the creation of products and services in our channel. Responsible sustainability programs are becoming a requirement for operators and many manufacturers are making efforts to reduce their environmental footprints through innovative packaging and purchasing coffee beans that are Fair Trade and Rainforest Alliance certified.
At Royal Cup, we work closely with coffee farmers to ensure that we not only source high-quality coffee, but also work to improve the lives of the farmers through our partnerships. In addition, we have made significant progress with our emissions and have made a commitment to decrease waste to landfills in our headquarters and all 85 of our field warehouses. We want to ensure we continue to provide first-rate coffee products, while making a positive impact on our farming partners and our planet. A line from Royal Cup’s mission states, “With excitement and optimism, we work towards the future” – it’s difficult not to be excited about the future of our channel. We are living in the golden age of specialty coffee in the workplace and the opportunities are endless. It is important for us as an industry to gain a deeper understanding of what our consumers want and to employ creativity and innovation in pushing our products and services to be their absolute best, in order to drive growth for our businesses. In looking at today’s trends and the needs of tomorrow’s workforce, it is clear that variety, convenience and sustainability are key factors in delivering a winning cup of coffee for customers in 2016 and beyond.
Howard Chapman, NCE, CCS, President, Office Beverage Division, Royal Cup Coffee NAMA Board Chair
The Future of Coffee in 2016 by Tracy Allen, President, Brewed Behavior
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have the distinct honor to represent the Specialty Coffee Association of America as its president, and the joy -and responsibility- of that office is to help lead the American specialty coffee community into the future. Except, one thing that becomes immediately clear when looking at our membership is that it expands far beyond the borders of the United States of America. In 2015, nearly 40% of the attendees at the SCAA Event in Seattle were from overseas. Our member rolls include coffee professionals and companies from over 80 countries, only one of which is the United States. While America can be proud to be one of the birthplaces of the Specialty Coffee movement, it has now become a thriving international community of people dedicated to coffee quality in all its beauty and complexity.
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This moment has been coming for a while: even though Specialty Coffee is intrinsically international (after all, Alfred Peet, generally thought of as the father of Specialty Coffee was Dutch, but built his company in San Francisco), our community has become even more enthusiastically global in the past few years. Baristas perform their craft on Japanese brewing equipment, Italian espresso machines, American brewers, and German grinders. They effortlessly embrace Scandinavian roasting styles, Australian presentation, and the American influence of craft beer culture. Our roasting community is international too - this year, the Roasters Guild planned its first origin trip to
Ethiopia - the true birthplace of coffee. The trip included participants from Saudi Arabia, Portugal, Colombia, Malaysia, and Hong Kong. Our networks in coffee extend throughout the world. I can easily chat with my colleagues in Europe and Asia, and I do. So, when I think of the future of coffee in the coming year, it’s all about taking that all-important step towards building a truly international Specialty Coffee Movement. All the pieces are coming together: the SCAA’s education curriculum has synchronized with the SCAE’s courses, and our successful Symposium has metamorphosed into Re:co Symposium, a global network of events. Inspired by our successful collaborations, the SCAA board began exploring the potential of formally uniting with the Specialty Coffee Association of Europe to form a truly global Specialty Coffee organization. It’s really happening - we have in our sights the opportunity for a specialty coffee network that truly exists on the world stage. It couldn’t come at a better time. The challenges that face our industry are global, and it will take an international effort to grapple with them. Climate change and water scarcity affect the entire chain from producers in the tropics to consumers in the global north. New international trade agreements erase barriers to building markets overseas, but require a new set of skills for business leaders
to develop. We desperately need a way to build strong connections between coffee professionals everywhere, and our associations are critical network-building tools. We are being called to put our voices and our efforts together. As our branches spread, however, it’s critical that our roots grow deeper. Moving onto the international stage is impossible without the essential local networks and events that our community treasures. Though trans-oceanic communication is easier than ever, our industry is built on taste, and you can’t perceive flavor on the internet. In the coming year, as we become more international, we will simultaneously become more local - touching specialty coffee professionals in their cities, in their neighborhoods, and in their businesses. I feel lucky to be a part of the community at this very moment. It feels big and exciting, but also comfortable - it’s just that our family is growing into something bigger, and more capable, and more valuable for all coffee people.
Tracy Allen, President, Brewed Behavior
December 2015
Let Technology Quantify What Artisans Qualify by Marty Curtis, CEO, Just Quantify Coffee Academy and protocols we use, implementing new methods gleaned from research and quantifying what we as Artisans qualify with our senses and experience.
L
ast Year, I wrote an article titled, “Is Our Current System Sustainable.” I concluded the piece by asking “Can the Specialty Coffee system truly survive without the proper distribution of knowledge, wealth and sustainability? Now, I want to extend that conversation and address a key area, Knowledge. The knowledge that exists in the cup of coffee as we know it now and the knowledge still waiting to reveal itself. Join me as we strive to learn more about the black gold we call coffee. Companies and organizations in our industry are making ongoing efforts attempting to address concerns and shortcomings as we grapple with that big elephant in the room. The shortcomings that keep us from connecting the dots along the coffee chain; the concerns that remain hidden in our quest to understand what happens and what is possible as we produce and evaluate coffee from seed to cup. Shortcomings and concerns that keep us from speaking the common language that exists in the cup and keep us from reaching coffee’s quality frontier. Is there a silver bullet? I think not. However, there is an underutilized participant waiting in the trenches. Technology, or rather, the frontier that technology can help us identify and reach. Technology that helps address these concerns and shortcomings, by improving the standards
I have worked extensively in understanding how to achieve the most out of the roasting process. Technology has given us the ability to track roasts by capturing specific data points in the process; temperatures, time and rate of rise, to name a few. This all helps create a roast profile that can be reproduced with a degree of consistency. Sure, there are a lot of variables here, with different type of roasters, electric or fuel, etc. Although just a simplified example, it exposes a key takeaway here: technology offers us new ways of visualizing and validating a process; one that is an important step in the seed-to-cup journey. Mixing science with art is a subject that has and will continue to be debated within our industry. Science has its role as we strive to extract more knowledge from the coffee bean. I think the next big trend lies in our ability to reveal the mind’s eye of coffee; cupping. Cupping is the universal representative of a producer, cooperative, region, country, variety, processor, mill, exporter, importer, broker, roaster and barista. While there are several hats here to wear, there is not an appropriate distribution of importance that addresses each of these roles. Cupping’s focus needs to become more balanced and not so heavily weighted toward its traditional use as a market-facing, descriptive tool. It needs to be producer-facing, offering insights from data that help farmers improve their practices and financial lot. It needs to quantify everything in-between the producer and consumer. As the art of cupping meets the science of data evaluation, we have to
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capture that interaction, that data, each step of the way and let it reveal its cupping DNA. Not DNA in the traditional sense, but instead the consummate voice of coffee. Earlier this year we witnessed a prime example of science mixed with art, in the form of the Sensory Evaluation Project, one of many projects in a Multi-Year, World Coffee Research effort. Just look at the stated purpose: “To evaluate coffee quality in an accurate, repeatable, and statistically discriminatory sensory analysis.” While this only addresses certain attributes (Fragrance, Aroma and Flavor) in the cupping process, it does attempt to quantify a framework and reference point for sensory evaluation. It remains to be seen how this can and will be implemented in the cupping evaluation. Make no mistake here though, the science of data is in play. Cupping needs to connect the producer to the consumer, painting a meaningful picture that all participants can appreciate and benefit from. When it fulfills the appropriate role each step of the way, we let it reveal its cupping DNA. Utilizing all the participants available, will quantify our knowledge and help us blaze the quality frontier we strive to reach.
Marty G. Curtis
December 2015
Remodeling the Future By Tony Salas, Founder, Agribusiness Consulting and Management
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he Best of Times, the Worst of Times At one level, the global agribusiness sector appears to be in the midst of major changes—changes in product characteristics, distribution, consumption, crop production techniques, industry consolidation, and economies of scale along a more-tightly aligned value chain.
farmer yields, market prices, and profitability by integrating the smallholder farmer into a professionally managed, neighboring mid-sized farm growing the same crop. “Shared-X” stands for a shared experience. That is to say, the midsize farm management team proactively engages with the neighboring smallholder farmers, and shares best agronomic know-how and marketing practices.
At a different level – that of smallholder farmers worldwide – very little has changed. Notwithstanding efforts by many people of good will, smallholder farmers in remote regions of emerging economies still suffer from relatively low yields and profits. So many of them remain trapped in a subsistence reality, what I call “sustainable poverty.” By and large, the work of the subsidized public programs and NGOs has failed to create a sustainable model that enables prosperous businesses for these indigent farmers. And “fair trade” has not proven to be the answer either; in many cases, it’s become a stamp of poverty, not a path out of it.
Under the Shared-X model, the mid-size farm management team sells the specialty coffee produced by its networked smallholder farmers side-by-side its own. In combination with the improved product yields and quality enjoyed by the smallholder farmers, the smallholder farmer achieves a newfound level of prosperity.
Here’s the good news: consumers, including coffee drinkers, are more frequently demanding sustainable products. Across a range of products, consumers are increasingly relying on credence attributes (e.g. production method, health benefit, social trust, environmental benefit, etc.) and experience attributes (e.g. quality). In the last 5-10 years the food industry has “scientifically challenged” the consumers - premium buyers are looking for some “sustainability” proposition, without necessary understanding of the significance of what this multidimensional concept entails. This trend bodes well for smallholder farmers, if only entrepreneurs are able to develop innovative approaches that include poor farmers in the available prosperity. Cosmetic interventions have not achieved the objective, and in my view, never will. The foundation of the coffee value chain, still so closely entangled with problems of rural poverty, gender inequality and environmental degradation, desperately needs a profound transformation; one that espouses innovation, cooperation, transparency, and sustainability. A transformation that upholds the beauty and dignity of the small family farm network that has existed for millennia. A New and Innovative Model: 46 Shared-X There is hope in the form of a new model – the Shared-X model – which lifts smallholder
Needless to say, none of this is possible if the mid-size farm team does not have the requisite management skill, market access, commercial experience, as well as a combination of local and international technical expertise. Strengthening farmer associations while at the same time establishing a strong production/ commercialization collaboration between small and mid-sized specialty coffee farmers will accelerate the sector’s competitiveness and show progressive economic results all around. As we move forward, let’s all bear in mind the ancillary benefits the successful scaling of the Shared-X model will have in the form of social cohesion and democratic practices, as well as the inevitable positive multiplier effect in the larger community. Shared-X Competitive Edge The Shared-X model is distinctive in the following three ways: Alignment of Interests – What’s good for the mid-size farmer is good for the neighboring smallholder farmer. They’re growing the same crop in the same region. The mid-size farmer is motivated to optimize the performance of his own farm. If he’s willing to share his know-how with his neighbors, they in turn stand an excellent chance of incremental high quality yields that assure better prices. Further, by aggregating their supply, this collaborative approach achieves stronger economies of scale through proportionately smaller fix costs. Today, small farmers are exposed to the perverse incentives of suppliers of goods and service providers (e.g., microcredit businesses, input
December 2015
sellers, middleman), adversely affecting the very first link in the value chain. Proven Model – Shared-X has demonstrated successfully its model, on real mid-size and smallholder farms, over the past three years. During this period, the model has boosted smallholder farmers independent of pricing and environmental conditions, including rust outbreaks. Specifically, the Shared-X model has been proven in Peru, where small landholder specialty coffee farms joined in a co-op called COPACEYBA, established in the central upper rainforest of the Chanchamayo province. At present, co-op yields average above 35 bags/ha (3 times the national average), and cupping scores average 84 points in the SCAA rating scale. Moving the Needle – The Shared-X model emphasizes the specialty coffee profitability variables that have the largest impact on smallholder growers’ net revenues. 90% of the variation in cost of production of specialty coffee in a farm is explained by yields. To tackle yields special activities for soil management, fertilization/nutrition, pest and disease control, shade management, pruning, and good harvesting and postharvest practices need to be addressed. On the market side, two elements of the model are to secure fixed-price sales contracts to mitigate price volatility risk, and establish reliable product tracing capability to assure credence attributes. The Vision: Shared Prosperity The Shared-X model makes the coffee market, for the first time, relevant for impact investors. The Shared-X business model reliably produces high quality crops, in a fashion in which the smallholder farmers’ stories can be told to consumers, thus directly answering market demand for triple bottom line goods: financial, social and environmental. The Shared-X model provides smallholder farmers a chance to escape the vicious cycle of sustainable poverty by instituting a “shared value” ideal and affixing a prosperous face to the coffee inside the cup.
By Tony Salas Founder, Agribusiness Consulting and Management
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The Future of Coffee is Strong by Dan Ragan, National Sales Manager Pod Pack Int’l
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etrics used for measuring coffee consumption vary from study to study, but the consensus indicates an increase in dollars spent in the coffee industry. A cup of Joe could be a product brewed at home, in the office, a local gas station, or a gourmet coffee house. The industry uses marketing information including Arabica, top 2%, rich, bold, blonde, rainforest, shade grown, organic, plantation grown, local roast, sustainable, and others as differentiators of the brew. Consumers continue to desire various brews, and are savvier about their personal experience with a cup of Joe. The future of coffee is strong. National chain shops continue to seek the magic bullet to achieve growth. The consumer expects a high-quality product in a friendly environment to have the ultimate experience. Creating trendy drink names, and adding pastries or other meals help improve the experience, and boost sales. The coffee house experience may also include live music, art displays, and coffee tastings. Additionally, the major brand coffee shops indicate they are adding more stores in the future. Howard Schultz of Starbucks mentions the chain added more than 1500 stores in the annual letter to shareholders, and intends to nearly double sales in the next five years. Quick-Serve Restaurants (QSR), and convenience stores (C-store) also work to attract coffee drinkers realizing the need for quality coffee to increase sales. These channels may entice the consumers with a value concept coffee, but realize high-quality increases repeat sales, and impulse purchases. Some QSR, and C-store chains are now offering single-cup products for purchase, and use at home. Additionally, some chains brew coffee in a single-serve format to ensure freshness, consistency, variety, and quality in every cup. These innovations are being driven by consumers willing to pay for quality. Consumers are using many methods to brew coffee at home, and some have purchased small roasting units to achieve the best possible experience. The various brewing methods may include the French press, Aeropress, Chemex, automatic drip, stove top units, and single-cup products. Single-cup growth has a direct correlation to a decline in automatic drip use. Some methods may seem to be fringe, but others have a following because of the convenience. The relevance of the single-cup concept cannot be ignored as it continues to gain market share.
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The concept of a nickel cup of coffee in the 1970’s has been trumped by a $0.65 cent single-cup product in 2015, and consumers want more! The single-cup format reduces wasted coffee, allows a consumer to enjoy exactly what they want when they want it, is fast, and convenient. Although, recent surveys mention the consumer is looking for a higher quality coffee in their single-cup experience. Some formats use clever marketing to entice the consumer such as products named Donut Shop, or Jet Fuel, and others use industry standards for extraction. Regardless of the marketing method, coffee is a subjective product, and the consumer will select something they enjoy. Consistency may be the reason consumers choose various coffee outlets, or products. Consumers know what to expect when they select a Coca-Cola product, a double espresso made in a super-automatic machine, their favorite latte, or a particular adult beverage. Some would argue the consumers appreciate a craft roasted coffee with subtle differences from roast to roast, but sales data may show the consumer relying on a consistent brew. Single-cup brewing continues to grow, and product leaders have emerged from oncehumble beginnings. These products are not only convenient, but offer consistency. Maintaining the quality of the brew requires an understanding of the process used, and differs among methods. Quality may also be subjective, so some may believe certain products are better than others for no scientific reason. Experts may provide guidance for developing a quality product based on varying concepts such as product strain, elevation of the growing region, annual moisture, soil content, processing of the cherry, washing, roasting, grinding, dosing, and maintaining freshness after the roast. The variables within the variables also effect the product, so developing standards or baselines within the industry help create the ultimate experience. Many sources are available to increase a consumer’s knowledge base, and quality is playing a role in coffee industry growth. Local roasters are trending up, and some consumers are paying attention to product sourcing. Some roasters offer a farm-to-cup story, and provide information about farmers. The information may include sustainable farming processes, benefits to a farm or village including digging wells, building clinics, and
December 2015
schools, to mention a few. Some consumers require an understanding of the socio-economic benefits to the farmer, and are willing to pay a higher price to support the cause. Large or national brand roasters may also have sustainable programs, but the purchasing volumes may exceed the volume an independent farm can produce. The popularity of cold brew coffee continues to improve, making the industry more diverse. Consumers are enjoying coffee in many formats, and the industry continues to respond by producing new and different items. The cold brew products are offered on tap in many outlets, and are bottled for convenience or grocery chains. These products may or may not be pre-sweetened depending on the consumer requirement. As the industry provides new products the consumer base will respond, and help determine the market strategy. To conclude, the coffee house continues to have an aggressive growth strategy. Quick-serve, and convenience stores are responding with higher quality offerings. At-home brewing is moving quickly to a single-cup convenience format. Consistency and quality will help grow coffee revenue as consumers depend on particular items to meet their needs. Consumers will continue to have options using national branded products, local roasts, and an understanding of sustainable processes. Also, consumers are looking for the next great coffee experience. The future of coffee is strong!
Dan Ragan Pod Pack International
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The Evolving Future for Coffee Service by Ken Shea, Owner, Ken Shea Consulting
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or a half century, the Coffee Service Industry has been mostly defined as one based upon providing amenities at America’s workplace. And while many, perhaps most operators, have disregarded the industry’s defining lines and generated handsome profits where beverages are sold, not given away, this journalist’s glimpse into the future will focus upon Office Coffee Service. I pen this article from the perspective of an operator in growth mode. Hence the future focus rapidly moves to menu opportunities and prospective customers. I want to profitably sell more things to my customers and systematically add more profitable customers. At the Coffee, Tea and Water Show in D.C., I had the opportunity to visit with a number of the most progressive operators in the country. I thank them for their time and insight that was instrumental in developing this article. The Menu: Coffee Service naturally begins with brewed beverages. Brew-by-cup continues to dominate the coffee category but the growing downward pressure on selling prices, especially with “cups,” is stripping away those profits that for so long made these programs more lucrative than batch brew systems. More and more operators are looking at K cup compatible programs that offer significant reduction in cost of goods but absent so many of the big name brands. Can high quality, private label cups realize the same success that private label roasters had with fractional packs beginning in the 80’s? Mars Drinks, Pod programs, and other alternative brew-by-pack systems are doing well. Brewers are more intuitive and robust than ever. I hear that more equipment is on the way and will be unveiled at the NAMA One Show.
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There are more millennials occupying desks in today’s workplaces than any other age group. Millennials ask for, and expect to have, more amenities than other age groups.
I also include in the single cup category the hopper based systems. These brewers come with a much higher cost but allow for a lower product cost per cup. Many operators report receiving monthly rentals. Consumers love combination drinks and the bean-to-cup preparation which is hard to beat from a quality perspective. In spite of the CAPEX jolt, these systems will continue to be more prevalent. Keep an eye on high-end tea opportunities. Coffee Service tends to follow the Coffee Shop trends and high end tea is a rapidly growing category such as we are seeing with Starbucks’ Teavana. We will soon see more offerings with remedial type tisanes. (I anxiously await the one targeted for we, the follically challenged.) Think sustainably! More Than Brewed Beverages There are more millennials occupying desks in today’s workplaces than any other age group. Millennials ask for, and expect to have, more amenities than other age groups. This ticket building opportunity is much more expansive than the allied products offerings of days past. Some operators are seeing the demand as the opportunity to be proactive and have already created well-developed plans to market expanded menus with items including, but not limited to: Sweet and salty snacks; better-for-you products; juices; fresh fruit; yogurt; sandwiches; salads...and the list goes on.
December 2015
Growing numbers of offices are giving the products away in a mini micro market type of set up. Operators are reporting that some offices that do not provide freebies are receptive to carrying snack items for which they can charge the employees which, in turn subsidizes the next purchase. An Expanding Customer Base? In a previous article, I spoke of the opportunity that exists with small offices. The U.S. Bureau of Labor Statistics reports that firms numbering from 1 – 19 employees exceeds 3.5 million! As an operator, I could never justify serving any office so small. While some Internet Coffee Service companies and the Office Supply Companies enjoy some penetration, most of my constituents report that they do not participate in the small office opportunity. I continue to look for a menu combination of a low cost brewer asset coupled with a high quality beverage and a manageable snack offering to justify stopping a delivery vehicle once every four weeks. I would also include a point of use water system and appropriate monthly rental. Could a 10 person office generate a $125+ invoice at a high GP with minimal service? Could I find dozens of these small offices within the confines of existing routes and not tax the capabilities of my route personnel? And if not, does this potential opportunity give me the impetus to more fully develop my own on-line capabilities? Could an entrepreneur build a business around small offices? We all see how the micro market opportunity has revolutionized the Vending Industry. Is there a similar, new opportunity on the horizon for Coffee Service operators? Stay tuned!
by Ken Shea, Owner, Ken Shea Consulting
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Coffee with Content: Creating Trust Amongst Consumers by Roberto Vélez, CEO Colombian Coffee Growers Federation (FNC)
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he future of the coffee industry depends on our ability to meet the challenges confronting us today to ensure a long term supply of high-quality coffees, generating value and well-being for all members of the industry. To accomplish this objective, highquality coffee growers need to be profitable and at the same time confront price volatility, attract new generations of coffee growers to rural areas, face climate change, provide the information and content that the market demands and maintain the social balance required to make a positive impact on the families and communities in our growing regions, among other challenges.
A subtler problem, shared by the agricultural sector as a whole, is that of attracting new generations of coffee growers to the industry. With the average age of coffee growers in Colombia and other producing nations rising, the FNC is conscious that a number of strategies need to be developed. These include changes in the education model to prepare and encourage younger generations to continue farming traditions after finishing school, obtaining financing, and ensuring that when they become old they will have access to a retirement plan or pension. Such packages will be impossible to devise and deliver without strong institutions.
Can most of the 25 million coffee growers in the world face these challenges by themselves? Just take climate change as an example. Colombia, the world’s largest producer of the Mild Washed Arabica coffee, has been among the first countries to face nationwide difficulties due to the impact of climate change on coffee plantations. From my perspective, working institutions are needed to confront these and many other challenges. In fact, from our point of view, when it comes to ensuring the future of high-grown high quality coffees, the most organized countries, those with the best quality information and with solid institutions, have the best chance of overcoming the challenges ahead.
Next Wave: The Sustainability and Information Imperative Younger consumers are placing a greater emphasis on social and environmental responsibility linked to the origin of coffee. A growing body of research confirms that the bulk of future consumers, led by the millennial generation, is emphatically discerning in their purchasing decisions. To win their trust, the industry must be open about where and how our products are grown, the environmental footprint we leave behind, and the impact of our products on local communities. At the same time, the industry must acknowledge that we need to overcome problems that threaten to put pressure on our economic, social or environmental sustainability indicators. Transparency, and the ability to provide reliable data and information to show our commitment to sustainability, are going to be essential.
A Solid Institution In Colombia, we have a strong, solid institution in place, with a significant track record of meeting and overcoming challenges: The Colombian Coffee Growers Federation (FNC). Our conviction is that through collective action and cooperation with the different actors in the chain, we can generate wealth and value for coffee growing families. Acting on that, the FNC has created far-reaching programs that involve farmers, government, clients, international cooperation agencies, the financial industry and many other stakeholders.
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One prime example is the FNC’s ability to get Colombia back on its feet after the coffee leaf rust attacks that drastically reduced farm yields and farmer profitability a few years ago. Our objective was focused on coffee crop renovation with coffee leaf rust resistant varieties that are better adapted to climate change. Our plant renovation program has become a reference and case study on how institutions can achieve positive change to overcome climate variabilityinduced difficulties and coffee leaf rust epidemics.
That’s a lot to ask, perhaps, but there is an upside. According to Nielsen research, more than half (55%) of the respondents to a 2014 global corporate social responsibility survey say they are willing to pay extra for products from companies that are committed to positive social and environmental impact. For this group, personal values are more important than personal benefits, such as cost or convenience. We believe that in the future, those coffee growing origins that demonstrate a strong and coherent action plan to improve sustainability indicators will outperform those who do not. The link between doing good in the community, and doing well in the marketplace is clear. In 2014, 65% of total sales measured globally were generated by companies that communicated positive values for the environment as well as for social issues (Nielsen.)
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With our renewed focus on achieving a more profitable and less risky business environment for coffee growers, the FNC is preparing to continue developing strong collective action initiatives to overcome our common challenges. Our Denomination of Origin programs will concentrate not only on ensuring quality, but also on sustainability indicators. Our climate change adaptation programs will focus on ensuring coffee growing is a viable business in most Colombian coffee regions. Our market access initiatives will continue to provide growers with the ability to establish direct trade relationships with clients, big and small around the world. We believe institutions are also key to providing transparent and relevant information to satisfy consumers who are exceptionally conscious of the products they purchase. Colombia is already working on strategies to sell coffee “with content.” The FNC aims to provide the information consumers want, and that information will be rich and distinct depending on the coffee origin, the number of certifications, traceability and more. As we move into the future, we envision a more profitable grower producing a high quality product and generating a responsive approach to consumer demand for incorporating sustainability information into our origins. Colombia’s experience in facing the multiple challenges within the coffee industry in the past can serve as a reference for other coffee producing countries, and for the industry as a whole. We are not afraid of challenges. We will face them with determination, keeping the farmer at the center of our action.
Roberto Vélez, CEO - Colombian Coffee Growers Federation (FNC)
Nitro- The Evolution of Cold Brew Coffee by Randy Anderson, Marketing & Development Consultant, Procreos Consulting
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old brew coffee is hot but as the category grows, a newer and even hotter trend is poised to overtake it – nitro cold brew. Some call it “morning beer,” some say nothing and only utter sounds of delight and satisfaction. From Esquire magazine to the Today Show, nitro cold brew is enjoying a spotlight that regular cold brew has never known. Who can argue? It’s impossible not to be captivated by a drink that is exciting to watch, provides amazing social currency among all age groups, especially Millenials and elevates cold brew rather than replacing it. The Guinness lookalike offers a smooth, creamier and tastier experience than its flatter predecessor with nothing added except nitrogen, all the while being non-alcoholic and 100% coffee. Since it is likely that infusing coffee with nitro will be a powerful vehicle that ensures that cold brew maintains its steady growth (339% over the past five years according to Mintel,) it doesn’t seem to be an issue to discuss. But serving cold brew coffee that is nitrogenated comes with questions and challenges. Before we get to that, let’s take a closer look at nitro cold brew.
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The reason for nitro’s success goes beyond theatre. For the coffee purist, nitro elevates cold brew coffee in a way that nothing else can and takes it to another level. Nitrogen infused cold brew (nitro cold brew) provides a vehicle that transports aroma to the senses the way hot coffee does with heat and steam. Before you drink that next hot coffee beverage, you will first smell the coffee. Your nose will prepare your tastebuds with distinct aromas and nuances. What do you smell? Chocolate? Citrus? Blueberries? If you are like millions of coffee lovers, your senses are bathed in a full olfactory response of smell and taste. At Coffeefest Portland 2015, over 100 attendees were asked to smell a glass of still cold brew coffee. The overwhelming response? There
was no aroma and thus, nothing to prepare them for what they would be drinking. Then, they received the exact same cold brew that had been nitrogenated using a JoeTap. Without exception, the same group now said they could smell the coffee. The head or “cold crema” further elevated the experience providing even more flavor than the still cold brew. In fact, in taste tests conducted over the past year, nitro coffee is preferred by an overwhelming majority over still cold brew. Nitrogenating cold brew pushes the true essence of coffee forward to the senses, elevating cold brew coffee to a place alongside hot coffee as a full sensory experience. The cascading bubbles and frothy head belie nitro coffee’s real treasure. By infusing cold brew coffee with nitrogen, it is something to be savored, discussed, judged, and considered carefully just as true coffee lovers do with hot brewed coffee. When considering nitro cold brew as a menu offering, it comes down to three solutions. The first is a DIY approach which means charging a keg of cold brew with nitrogen, waiting a couple of days and giving the keg a few shakes every so often to ensure better and faster infusion. The downside to this method is that once you run out (hopefully not in the middle of a rush) you’ll need to wait another 24 to 48 hours for a fresh batch. The results can also be inconsistent. However, the cost is lower than the second method – purchasing RTD nitro cold brew kegs. RTD Nitro can be a safe bet. All that is needed is a tap system for dispensing. However, shipping and storing the product can be a challenge, not to mention the cost per drink. Finally, there is the JoeTap. JoeTap systems require an investment of just over 4K for entry level units. The JoeTap is unique in that it infuses nitrogen instantly and then dispenses it from a tap. The system is also unique in that it allows dispensing either still or nitro from the same keg. Additionally, highly concentrated cold brews with mix down ratios of 8:1 and even higher can be “brixed” down easily in a way similar to fountain drinks. This is no small advantage since these concentrates are easy to store BIB (bag in box) products and are generally shelf stable. This allows for a steady supply of nitro cold brew that often equates to a similar price point as on-premise brewing. While nitrogenation helps to define and exploit a full taste experience and adds theatre to a wonderful craft, there are questions and challenges that exist with cold brew and
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specifically with nitro cold brew. Should I brew my own or buy a concentrate? If I buy a concentrate, will it ship stable? What about decaf, is it important? How do I store it? How should I dispense it? How long will it store before taste is affected? How much should I charge per drink to realize a profit? How much more cold brew will I sell if I serve nitro? What are the hard costs of buying a system like a JoeTap and what is the ROI? The answers to these and many more questions are important, especially when considering how corporate coffee has pushed cold brew to the front. Answers will vary widely based on factors like number of locations, geography, customer profile, store size and capabilities. Yet, with all of these questions it seems that there are answers and solutions. Based on reports from those who have made the leap, nitro cold brew has not been a disappointment.
Randy Anderson, Procreos Consulting Randy is a marketing, branding and new product development consultant for coffee, tea and specialty food & beverage randy@procreos.com • 425-971-8743
The Future of Coffee in Korea by Kate Seung Eun Lee, Sr.Analyst, CJ Foodville In the near future, I think the Korean coffee industry might take care of two kinds of customers: Some people like drinking specialty coffee although it is expensive; others like drinking caffeine if the price is reasonable. Speaking of which, I am going to introduce briefly my favorite three coffee shops (Anthracite, Coffee Avenue, Fritz coffee) as a coffee lover so that you can imagine our specialty coffee market more vividly.
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believe the Korean coffee market is transforming closer to the real coffee world, in which we can experience various kinds of coffee from different origins and we are able to enjoy coffee in our own way. Only 10 years ago, 3 in 1 and black instant coffee were very popular in Korea. Quite a few people were not likely to be familiar with coffee names like “Americano,” “Café latte,” etc. Also, many coffee consumers were not interested in coffee terms, such as medium roasting. However, Korean coffee culture has spread rapidly, like an epidemic. Surprisingly, coffee is now a very common beverage. You can find coffee shops on every street corner. I think our coffee culture is mainly a mixture of the American style and the Japanese style. The European and Southeast-Asian styles are also slightly combined, too. The reason why I say that all coffee cultures exist in the Korean coffee culture is that I can experience different parts of coffee culture all at the same time. For example, I can drink iced Americano, which has lots of ice like the American and Japanese styles. I can also drink dark roasted coffee with condensed milk, like the south-east Asian style. Sometimes I can go to an antique salon and enjoy the coffee with a beautiful porcelain cup.
Moreover, we have a unique service culture in coffee shops due to our chop-chop, impatient character. Every franchise coffee store serves an automatic waiting bell for its customer. When you order the beverage, a cashier gives you a bell. You can wait for your beverage anywhere inside the café, and when yours is ready, the bell vibrates like a smart phone. The clerk checks your bell number and gives you your drink. So even in a crowded morning, we can wait for coffee very peacefully. In my opinion, this is a great waiting system. On the downside, however, 56 I feel it lacks the personal touch.
First, “Anthracite (http://www.anthracitecoffee. com/)”. I feel it has a loose artistic connection to literature, music and gardening. I visited the store around Hong-Ik University in Seoul. It was a shoe factory that was renovated, and the café space is decorated with some of remaining facilities from the shoe factory. I think the owner tried to keep as much of the industrial atmosphere of the building as possible. Anthracite sells both specialty single-origin coffee from Ethiopia, Colombia and other major coffee origins as well as blended coffee, such as one that they have named “mystery history.” The taste is very original and the concept, inspired by literature, is also very impressive. Second, “Coffee Avenue (http://www.coffeeavenue.com/)” has an interior that is quite different from the outside of the shop. The appearance is very simple, but their coffee is anything but. They sell a coffee drink named “Levelup” which has a tremendous flavor from Ethiopia. In addition, sourcing the green coffee beans directly from their origins such as Brazil, Colombia, Guatemala, and Costa Rica, etc. is one of their strengths, so you can enjoy drinking various great quality drip coffee any time, and buy their own roasted beans as well. In my case, the most unforgettable taste is the cappuccino with one cube of brown sugar. When I get stressed from my work, I go there and drink the cappuccino. It’s my soul drink and makes me feel so relieved.
well, because their breads are made in nostalgic old-school style. As I drink the coffee and eat the pastry in the coffee shop, it reminds me of my childhood when I used to eat sweet bread behind my mom’s back. On the other hand, some companies started business to draw the customers who are important to coffee price and quantity. ‘Paik coffee’ and ‘mmthcoffee’ are using the low price strategy to attract customers to them very effectively. They serve large portions of coffee at low prices (50% down from the average price.) In my opinion, their coffee is popular with the person who needs the caffeine during their working hours. The customers usually buy the large-sized coffee in the morning and drink all day. In conclusion, the path of developing our coffee market is very similar to our economic growth. Trends move so fast and we accept literally all kinds of things about coffee. The market will probably become much bigger and more interesting than it is now. I am honored to watch this important moment of our coffee history as a coffee person.
Last but not least, “Fritz coffee company (https:// www.facebook.com/fritzcoffeecompany/ timeline)” has fascinating interior design and coffee. The shop’s main color is dark brown, and colorful lanterns hang from the ceiling like stars. They make vintage style coffee that tastes like old Korean coffee (I mean delicious mom-made coffee putting the power of instant coffee). Meanwhile they make both cleaned single-origin coffee and blended coffee. I like their bakery as
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Kate Seung Eun Lee
Connect to the coffee producers who need your help by adopting a grant request received directly from coffee communities that need our help and support.
1-800-791-1181 marilyn@cafefemeninofoundation.org
You too can help make a difference in the lives of women and their families in coffee-producing communities throughout the world. Visit www.coffeecan.org to see grants available for funding or to view our annual grants booklet.
The Cafe Femenino Foundation is a registered 501(c)3 non-profit. Š Copyright 2015 Cafe Femenino Foundation, all rights reserved.
Working Together to Build a Thriving Sector by Melanie Rutten-Sülz, Executive Director, 4-C Association
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Coming together is a beginning, staying together is progress, and working together is success” stated Henry Ford, the founder of Ford Motor Company and the father of modern industrial production. At present, this message resonates very strongly within the coffee sector. It comes as no surprise that the urgency for collaboration is now so strong. Over the last decade, the coffee sector has been a pioneer in bringing sustainability forward, putting in motion extensive research and a large number of projects and discussions that have already brought very positive results. Nowadays the coffee sector knows very well what its sustainability challenges are, and the best tools and strategies to address them. The Know-How is there. What is now urgently needed is a shared vision and an agenda to bring together the resources, knowledge, expertise and commitment of individual companies, organizations and governments to build a thriving coffee community for generations to come. The urgency of this call was strongly felt at the recent Global Coffee Forum celebrated in Milan at the beginning of October. Under the motto “a virtuous cycle of pleasure, health and sustainability for coffee,” leaders of the sector shared their views on the key challenges and future of coffee around these three themes. The word “collaboration” was echoed in each and every presentation and conversation, and the need to align behind one common actionable agenda was voiced by key industry players, civil society, producers and government leaders.
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In this search for ever-increasing collaboration, the 4C Association, the major multi-stakeholder organization in the coffee sector, has been and continues to be a frontrunner. Its members first came together more than 10 years ago to define
the Common Code of the Coffee Community (“4C”) and build the 4C Association. Since then, they have progressed by staying together and joining forces on many different fronts. Among other achievements, they launched the 4C Code of Conduct in 2006, the baseline sustainably standard for the coffee sector, to reach out to coffee farmers worldwide, bringing them on their way towards sustainability and improving production practices at farm level. By the end of 2014, the Code was being used by more than 450,000 farmers and 1.4 million workers in 24 producing countries, producing 43 million bags (2,58 mil. tons) of 4C Compliant Coffee — nearly 29% of global coffee production. As per the demand side, the purchases of 4C Compliant Coffee by final buyers’ members of the 4C Association amounted to nearly 7% of global coffee consumption last year. These are indeed great progresses. But the members of the 4C Association are now ready to take an even more determined step towards final success. Their vision of success is one of a thriving sector, with sustainable production, increased farmer productivity and profitability and effective public-private collaboration to address the systemic issues at stake. To achieve this, the members recently approved a new strategy to make the 4C Association the convening multi-stakeholder platform to agree on a common agenda to address key challenges. Building on the widely used 4C Code of Conduct, a non-negotiable baseline standard will be offered. This reference standard will be open for sector-wide adoption, eventually becoming part of national strategies, with the ambition to reach out to 100% of coffee farmers worldwide. Together with its members, the 4C Association will also define a set of common indicators to measure progress and report about their improvements over time, beyond the baseline standard.
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The combination of these three elements, the multi-stakeholder platform, the baseline standard and the progress framework, is the ambitious Strategy of the 4C Association to lead the sustainable transformation of the coffee sector and contribute to a thriving sector for the generations to come. There has never been a greater momentum towards real collaboration for meaningful change. Now is the time to stop talking collaboration and actually start doing it. The actions we now collectively undertake, or fail to undertake, to address the many challenges that the sector faces, from adapting to climate change to increasing productivity or addressing gender inequality in the supply chain, will determine the capacity of coffee farmers to deliver their coffee beans to the world over the coming decades. Join the 4C Association today and contribute to the success story! To find out more about the 4C Association, please visit: www.4c-coffeeassociation.org.
Melanie Rutten-Sülz
Your Coffee is in Trouble La Roya, or Coffee Rust is a deadly fungus wreaking havoc on Central American coffee farms.
If Coffee Rust continues unchecked, the rippling effect will cause a catastrophic loss in incomes, jobs, and food security for coffee farmers.
The Coffee Rust outbreak has pushed already impoverished farming families to the edge of survival, and it’s getting worse.
Poverty and hunger increases, along with the price of your coffee.
25k Total Chajul Region Coffee Production in QQs (100lb Bags)
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15k
10k
5k
0
2011
2012
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Production is plummeting.
Since its outbreak, some farmers have lost up to 75% of their income due to Coffee Rust.
It’s a National Emergency. Guatemala, Honduras, and El Salvador have declared Coffee Rust a National Emergency.
YOU CAN HELP A safe, organic, sustainable solution. • Uses cost effective micro-organisms to eradicate coffee rust on plant leaves and in the soil. • Provides farmers with training in soil replenishment and plant maintenance. • Improves food production while eliminating coffee rust. • Empowers farmers to spread their newly learned skills to other farmers.
Find out about hosting your own fundraiser by contacting helpnow@thecoffeetrust.org. Support the La Roya Recovery Project, a roaster-to-roaster fundraising effort uniting specialty coffee roasters, retailers and customers throughout the country in the effort to stop the spread of coffee rust, recover coffee production and help coffee farmers feed their families.
www.TheCoffeeTrust.org
Expansion and Perfection in 2016 by Rocky Rhodes, Owner, International Coffee Consulting Group
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henever someone presents a ‘state of the industry’ observation, it is important to understand the viewpoint/perspective/prism from which the observation is being made. There is probably no one single person that has a whole industry outlook, so each person has some limitation to their ability to look into the future of coffee. In my case, I am focused on supply chain quality improvements and mostly focused on sensory evaluation as a way to increase communication. I work in producing countries and consuming countries. I work with growers and roasters. The majority of my work is done in Asian countries and the US with a spattering of work in other countries. Through that prism I have a tremendous feeling of excitement for the industry in 2016. As the specialty segment of the market continues to grow in Asia, everyone is seeing the benefit. The demand for the ‘uber-specialty’ 90+ coffees out there is going through the roof and yet this large growth is still a pinprick of the overall market. As the supply of this coffee starts running low, the farmers and mills are getting more aggressive in creating those lots. This is fueling expansion.
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I see expansion in all areas of the industry. Roaster manufacturers are selling more machines. That is always a strong sign for the industry. In fact it is one of the most important signs, as everything flows through the roaster at some point. In Asia there are scores of really small machines going into micro roaster shops. Most of these are new shops that are going to find some unique way to differentiate themselves. They are seeking the ‘best coffees’ out in the industry and driving demand for the top end of the green market. Importers to places like Korea are bringing in record amounts of COE coffees and other 90+ single origins. Prices
I see expansion in all areas of the industry. Roaster manufacturers are selling more machines. That is always a strong sign for the industry. In fact it is one of the most important signs, as everything flows through the roaster at some point. are being driven up and the extra expense is being paid by the consumer over the counter. A big unsung hero of this movement is the importer. This is the part of the industry absorbing the biggest amount of risk by acquiring micro-lots, consolidating containers and making them available on the spot market in small quantities. This allows the small roaster to participate in the 3rd wave without having to invest hundreds of thousands of dollars to build and maintain relationships with growers around the world. I have been asked by Asian clients if I think it is nearing a saturation point with the number of coffee shops now open in places like Seoul, South Korea. I just look at them and say, “I was born and raised in Seattle where we kept thinking that year after year after year. It turns out that every time you open a shop some number of commercial coffee drinkers move to specialty, increasing the size of the market. I am not sure I can really ever conceive of saturation.” If you are creative you will always be relevant in the market. And this brings us to the concept of perfecting the art and craft of coffee. I am so excited for the future every time I teach a roasting class, Q-Grader Class or anything else. It used to be that students were the ‘old guard’ of the industry and used training to stay relevant. Now I see young folks (new to the industry) eating up
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the information in class and applying it to their own ideas of perfection. I have seen significant innovations in cold brew, single-serve and menu parings. I am watching roasters perfect profiles for single origin coffees that make them true beauty in a cup. I see baristas make foam dance while delivering all of the subtle nuance of the coffee. But the thing that gives me the most hope for expansion and perfection, is communication. Every level of the supply chain is investing in the Q-Grader certification course focusing on how to communicate about quality levels of coffee and how to improve them. Roasters ask their suppliers for certain specific attributes they want. Importers make the same requests from their exporters, cooperatives and estate farmers. Since everyone is getting calibrated on quality, there is much more efficiency as well as equitable compensation. When the coffee supply chain is doing business based on quality and not just availability of coffee, I have great expectations for the future. Coffee starts to trade on merits, and is less and less tied to the C-market. Higher, more realistic prices for high quality coffee cause each member in the chain to contemplate how they can perfect their part of the craft. This only increases demand and forces an expansion in the market. 2016 is certainly poised for expansion and perfection.
photo: Trish Rothgeb
Rocky Rhodes started as a coffee lover, became a coffee roaster, evolved into a coffee educator and is currently serving time as a coffee addict. He loves telling other people his opinion so being a consultant suits him well. Rocky can be reached at rocky@ INTLcoffeeConsulting.com
Office Coffee in Transition – OCS Providers Need to Step Up Their Game by Luis “Pilo” Gonzalez, Chief Executive Officer, Parlevel Systems
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he days of the breakroom coffee pot and a big can of ground coffee from the grocery store are history – or they should be. The reasons are many, but a primary factor behind this trend is the increasing numbers and influence of Millennials in the workforce. Coffee is just one element of the changes that this transition is bringing forward as companies reshape their cultures and work environments to align with a very different worker mindset. As the baby boomer generation begins to retire, millennials will have more impact on the workplace. According to a Pew Research Center report, the number of Millennials eclipsed Gen-X workers in the U.S. in early 2015. They are expected to comprise 50 percent of the global workforce by 2020 (PWC, Millennials at work - Reshaping the workplace, 2011.) In forecasting where coffee in the office setting is going, taking a close look at Millennials is a worthwhile endeavor. While previous generations anticipated a very structured work environment—full of cubicles and timed breaks at the water cooler—this new generation of workers is seeking an open, inviting environment with unique company cultures. As many companies recruit the best and the brightest of this incoming generation, it is becoming apparent that they also have to reimagine their culture to be more attractive to applicants. One aspect that this generational transition has created is a large demand for gourmet coffee services in the workplace. For the Office Coffee Service (OCS) provider, understanding these cultural shifts is an important part of building and growing
their business. It is imperative to not only provide the product variety and selections that are important to the team, but to also carefully manage and maintain the coffee station to ensure that it offers the required level of service. Millennials tend to have high expectations of the office coffee station. They place great value in the perfect cup of coffee and are not hesitant to go elsewhere for the products and services they expect. If an OCS provider can deliver on these expectations, they can reap the rewards: millennials are less concerned about price – a promising development for the OCS provider. Millennials can have very strong opinions about and loyalty to different brews – and most are not shy about sharing their thoughts. For the OCS provider, this can be a veritable goldmine of information that can help cement the service contract. One tool that has proven to be effective for improving the office coffee experience is a feedback portal. This is a customer-facing application that gives users the opportunity to provide input to the provider and help create a more customizable and satisfying coffee experience. From the perspective of the OCS provider, the portal helps keep an eye on inventory levels and product mix by encouraging constructive customer communication.
profitable combination for the operators. In fact, recent industry metrics have shown that OCS revenues have increased some 5.5 percent over the last year. With interest from customers on the rise and revenues increasing, managing the business with efficiency is a primary concern for operators looking to get the most from the market. Many are investing in vending and office coffee management systems that help them run their OCS efficiently. As many OCS providers are also in the vending business, the integration of office coffee management into a comprehensive Vending Management System (VMS) makes good business sense. Tracking usage, managing inventory, and planning service routes are common elements to both business lines. Streamlining back office and warehouse operations, route planning, and inventory management can deliver a direct impact to the bottom line. And doing so with a comprehensive and easy-to-use system will help the operator keep their focus on the customers, not the technology. Millennials are changing the workplace, and along with it, the relationship between coffee and the office environment. OCS operators are looking at a growing market with significant profit potential in the coming years. There’s a certainly a lot of potential here. But, as with any rapidly expanding market, the key is to be highly responsive to a sophisticated customer base, and use to the right systems, such as a vending management solution, to make the OCS as efficient, nimble, and customer-centric as possible.
The office coffee station has become the employee’s own “mini café” that helps them re-energize and refocus. This space creates the community atmosphere that Millennials crave. Studies show that companies that implemented office coffee stations have increased productivity and department cohesion by up to 10 percent. (PWC, Millennials at work - Reshaping the workplace, 2011.) Satisfied customers, and a well-stocked office coffee station, should be a winning and
Luis “Pilo” Gonzalez
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