October 2016 | Vol. XXIX No. 10 www.coffeetalk.com
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SUSTA e and Sustainability - Part 1
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CONNECT. GROW. PROSPER!
Ethiopia – Coins and Canines in Harar 14 GETTING PROFITABLE Lesson 2: Can My Business be Saved?
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Calendar
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The View
Contents
6
Remember to Claim your Free Listing
8
Sustainable Organic Systems
Organic Coffee and Sustainability Part 1
Improving Your Business Through Analytics
10
Why I’m Bad at Fantasy Baseball and What It Means For Your Business
Roaster's Rock
12
What You Have in Common with Belo Horizonte Brazil
14
Ethiopia – Coins and Canines in Harar
16
Lesson 2: Can My Business be Saved?
18
Coffee, Tea and Water Show – Looking to the Future, Connecting With the Past
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Tales From Origin
Getting Profitable
Coffee Service Corner
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ATTENTION VENDORS!
Three Apps for Coffee Houses Specialty Beverage Market Options for Food Service
Millennials Continue to Drive Demand/Growth for Specialty Coffee Market
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Newsbites
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Advertiser Index
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4 October 2016
FRENCH PRESS WITH PRECISION
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The View
Kerri Goodman
I
t is far too easy to take for granted the people in our lives. Life gets busy, personal and professional demands overtake our days, and we find ourselves propelled through the days, turning into weeks, and months striking items off our to-do lists, dealing with the deluge of details in the day-to-day, almost lulled into a dreamlike state of the regular routine. This weekend at Coffee Fest Anaheim I was jolted back to awareness. If you have spent much time in the industry, you probably already understand. Coffee people are like family. There exists a sense of community that spans the continents connecting us together. Last month our industry lost one of its pioneers. Michael Rubin was a passionate proponent of quality, a caring individual, and dear friend. We started our business around the same time and his courage and caring during the early years of entrepreneurial challenge were inspiring. Michael created a successful business. But I think far more important, Michael created a successful life. He had a gift for finding the positive side, for appreciating the little things, and for giving back. Michael you will be missed.
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"I enjoy the personal growth that comes with learning from the ever-changing challenges we face in our business life. I am grateful for competition, a force by its nature designed to make us evolve, or we can become a couch potato. Competition spends $$$'s on our behalf when they advertise their business. They validate our category simply by actively existing. They can be scary and yet in the light of day may or may not be friendly but they are a friend. What is most important in life. Number one, my family, spending time with my Wife Elena, playing with my Daughter Juliet. There is nothing better. Playing competitive basketball is near the top of my list. It keeps me young at heart." Michael Rubin
For complete and updated show information visit our online calendar: http://magazine.coffeetalk.com/industry-calendar/
October 6-8
SCAE Roaster Camp 2016, Estonia Pärnu
October 26-28
NCA: The Coffee Summit, Miami, FL USA
October 8-11
International Baking Industry Exposition, Las Vegas, NV
November 1
CAC’s 2016 Annual Conference, Toronto, Ontario Canada
October 10-12
Tea and Coffee World Cup, Krakow, Poland
November 2-4
NAMA CTW, Nashville, TN
October 10-13
Barista Camp 2016, Estonia, Pärnu
November 2-4
International Coffee and Tea Festival, Dubai, UAE
October 13-16
Let's Talk Coffee 2016, Puerto Vallarta, Mexico
November 3-4
ASOEXPORT Coffee Summit 2016, Cartegena Colombia
October 20-22
India International Coffee & Tea Expo, Goregaon Mumbai
November 7-9
The Speciality Food Festival, Dubai, UAE
October 20-24
Xiamen Tea Fair, Xiamen China
November 10-13
Seoul International Café Show, Seaoul, South Korea
FSMA Training Seminar, Miami Florida
November 11-16
Tea, Coffee, and Wine Expo; Taipei, Taiwan
November 13-19
ASIC's 26th International Conference on Coffee Science, Kunming, China
October 25-26
October 2016
Sustainable Organic Systems Organic Coffee and Sustainability Part 1
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n the early 1940's there were a number of important scientists, farmers, and early environmentalists who were becoming concerned with the impact chemical agriculture was having on the state of our vital soils, family farmers, and rural communities; not to mention the environmental impact! In 1941-42, J.I. Rodale started Organic Gardening & Farming Publication, and the words ‘Organic’ and ‘Sustainable Systems’ were beginning to be used in conjunction with agriculture throughout the Western World. A serious movement began to take shape to counteract the conventional agricultural systems through Sustainable Organic Practices.
by Thomas B Harding Jr., President, Lehigh Valley Organic Growers, Inc.
As the 1980's progressed it became apparent to the organic leadership, including the value-added trade and supply chain, that we could not effectively grow the market using 30 or more organic production standards and independent certifiers; something needed to be done. To remedy this problem, the Organic Food Production Act of 1990 (OFPA) was passed by the US Congress as part of the Farm Bill. At the same time, the EU and other National Governments were moving in the same direction; including the UN-FAO Codex Guidelines. It took ten years to put meat on the bones of OFPA, whereas the USDA National Organic Program (NOP), evolved and was fully implemented in 2001.
Moving along, in 1972 the International Federation of Organic Agriculture Movements (IFOAM) was founded in France by several concerned leaders from Europe, Canada, and the USA. A serious set of Organic Production Standards evolved until they became the Global Organic Standards. There were also strong efforts being made in California, Vermont, Pennsylvania, and others areas. In the mid 70's a group of concerned farmers founded the Organic Crop Improvement Association (OCIA) and they aggressively developed Organic Production and Certification Standards, covering everything from seed to shelf. This group effort spread rapidly throughout North, Central, and South America and later to Japan and China.
That meant anyone using the word Organic in organic production from seed to shelf needed to enter the legal volunteer system layout in the NOP, prepare an Organic Farm and/ or Handler Plan, submit it to a USDA-NOP Accredited Certifier, be inspected and certified annually, and use only approved materials on the NOP Materials National List! From the implementation of the NOP in 2001, the US Organic Products Marketplace has grown exponentially to $50 billion, including farm gate sales, and worldwide to around $120 billion and growing on average plus of ten (+10 %) percent annually. Our most limiting factor now is the lack of Certified Organic Raw Materials and Ingredients, caused in part by the worldwide agriculture subsidies paid to conventional producers. These do not assist small family farmers anywhere in the world, and some aid money is not invested wisely!
Soon after, in the mid 80's, the Organic Foods Production Association of North America (OFPANA), now the Organic Trade Association (OTA), was founded and took on the task to educate producers and consumers on the benefits and values of organic production. Today it's the largest such organization in the world!
Never has Certified Sustainable Organic Production been more important. Consumers worldwide are clear through the voice of their buying dollars, Organic Product Integrity is essential if they are to continue to connect to our values-based organic products.
At this point, the Organic Products Marketplace was estimated to be only a few hundred million USD, including farm gate sales.
8 October 2016
cont. on page 21
WE WILL NEVER LET COFFEE DOWN Swiss Water® Process begins with pure water and ends with coffee so amazing you don’t miss the caffeine.
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Improving Your Business Through Analytics Why I’m Bad at Fantasy Baseball and What It Means For Your Business
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aseball is a game of numbers and I’m a numbers guy. Analytics is my passion and I believe wholeheartedly that numbers don’t lie. Baseball teams, fantasy and real life, are managed by analytics. An entire industry has sprung up around baseball analytics; they’ve written blogs, books, and made movies about it. Sabermetrics (the term coined from the Society for American Baseball Research—SABR) rule the baseball world. And they work. Why do teams shift their defense depending not only on the batter, but on the balls/strikes count? Why is bunting now fairly rare? Why is a specific pitcher brought in to face just one specific batter? You can find analytics on every player in virtually every game situation. Managers, coaches, and players make decisions based on analysis of opposing teams and players. They play the numbers. And the numbers usually are correct.
by Mark Calhoun and Jim Starcev, PerfectCube
Chris Young, the starting Royals pitcher, was one of the worst pitchers. An unbiased person would have picked Donaldson for that game. But not a true Royals fan. Chris Young had given up more homers this season than anyone in baseball, but I knew that he was due for a good game. He’d pitched well against the Blue Jays before (last season). I didn’t pick Donaldson. Donaldson hit two home runs in that game. I finished in last place. What does this mean for your business? To quote Mark Twain, “It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” You know your business well; better than anyone else. But you have natural biases that convince you certain things are true when they’re not. And that can lead to less-than-optimal decision making.
Fantasy baseball players know this and have all this information available. Successful fantasy players make decisions based solely on analytics. I’m a numbers guy and I should be awesome at fantasy baseball. But I’m not. And it’s not even close. I’m below average. Well below average. And the reason is because of my passion. Passion for the World Champion Kansas City Royals. We all have cognitive biases. Wikipedia defines cognitive bias as “a systematic pattern of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion”. I was born and raised, and still live, in Kansas City. The World Champion Kansas City Royals are my team and have been my whole life. But my passion for them messes me up in fantasy baseball. When faced with decisions about players, the analytics become secondary to my belief that I know something not reflected in the numbers. So I pick more Royals players than I should. It’s really bad in situations where I should pick a player opposing the Royals; I can’t bring myself to do it. In July the Royals played the Toronto Blue Jays in Toronto. Josh Donaldson, the third baseman for Toronto, was one of the hottest hitters in baseball and
Costs go up in retail—labor, coffee, food; they all get more expensive. You need to raise your prices but you’ve overheard a couple of customers comment that your prices seem high. The natural reaction is to assume that all your customers feel that way and you will lose significant business if you increase prices. That’s a cognitive bias frequently referred to as the “focusing effect” where too much emphasis is placed on a very small sample set. In a recent, informal survey we did of coffee shop owners most of them had not raised their prices in 3 years. The most common reason is that they were afraid of losing business. The reality is that you most likely will not lose business if you start charging more. The hidden secret is that you can afford to lose business when you increase prices. We’ve run the data on all the coffee shops on our analytics software and all of them will make more money by increasing prices even if they lose some customers. Based on the data, we recommend most retailers do small price increases annually. Staffing is the largest expense over which coffee shop owners (and most retailers in general) have direct, ongoing control. In order to run a healthy business, you need to staff as optimally as possible. But how do you know if you are staffed accurately for each hour of the day? If you aren’t using data, you’re probably managing according to your bias and are either understaffed or overstaffed at least part of the day. Do you see long lines on a Wednesday morning at 10:30 and either call in an additional employee or schedule an additional employee at that time in the future? Do you know whether Wednesdays at 10 have been busy regularly or is that an anomaly? Measuring the data will tell you if there’s a trend at that time and whether or not your sales/labor cost and sales/labor hours are outside of a healthy range. Then you can make intelligent adjustments to your employee schedules. Cognitive bias is a part of everyday life and we will never totally remove it. Nor should we. But when it comes to making business decisions we need to put the odds in our favor by managing according to the data.
10 October 2016
Roasters Rock
WHAT YOU HAVE IN COMMON WITH BELO HORIZONTE BRAZIL
Rocky Rhodes
You need to tell a story to improve sales
B
razil is an interesting origin. All most of us know about it is that IT’S BIG and PRODUCES A LOT OF COFFEE! But what is often missed about Brazil is the massive amounts of coffee they consume. They are roasting a lot of coffee locally and are getting premiums for quality just like we do.
green coffee from the farm to the exporter, as well as the coffee shop selling a hand drip to a consumer. If there is not value, it will not sell.
They can buy direct from the farms and request certain things be done to improve quality. But they have almost no ability to bring in coffee from around the world. With only one origin to work with, they have to discover different ways to stand out in the market.
QUALITY as we discussed above, is hard to explain. It also really comes down to personal preference on the part of the consumer. They may hate something you like, and vice versa.
In the U.S. everybody can get their hands on beautiful coffee if they call enough importers. The problem is to differentiate yourself from the others roasting the same coffee around you. This week the Brazil Specialty Coffee Association put on a coffee trade show called “Semana Internacional do Café” in Belo Horizonte, in Minas Gerais Brazil. CoffeeTalk was asked to send someone to be on a panel to discuss “How to explain coffee quality to the consumer”. Since this is a focus for CoffeeTalk every month, it seemed like great way to help the industry. The following is a summation of the presentation and the reaction to it. The room was packed with over 400 attendees, made up of the entire supply chain with producers outnumbering everyone else. Step one: Define the difficulty of defining ‘Specialty Coffee’. The term ‘Specialty’ has been so diluted as to have no real meaning for the industry, especially consumers. Think of the word ‘gourmet’ and define it. Same thing; it is different for everybody because it has not been applied in a consistent way. Some national brands have taken what is clearly a commercial coffee and slapped a Specialty label on it, which only confuses the customer even more. If we are to explain quality or specialty to our customers, we have to define it for ourselves. One way we have done this was to create a grading system like Q-Grading. This makes the identifying of specialty coffee more objective, and less subjective. It also makes it very specific. For Arabica: 1) Zero primary and up to 5 full secondary defects in a 350gram sample of green coffee 2) Zero quakers in a 100 gram sample of roasted coffee 3) No foreign odors and a moisture content of 10 – 12% 4) Cup score using SCAA cupping protocols of 80+
Value in coffee generally comes from two places: quality and emotion. Having both is the key to higher sales.
EMOTION means that you make the coffee ‘personal’ for the consumer. A story makes it personal and is generated a couple of ways: defining quality through story and enhancing emotion through story. Here is an example of taking a quality attribute and creating a story: QUALITY: Zero Defects STORY: Juan and Maria spent extra time and labor on this lot of coffee to hand pick out all the defects to make this coffee they are very proud of. [Please note that the story has to be true! You have to know who the farmers are and that they did this sorting. A lie does not create sustainable value.] Perhaps even more value can be added by creating an attachment to the farmers or growing area by telling THEIR story. EMOTION: Empathy STORY: Juan and Maria and their 3 kids are the 3rd and 4th generations to work the land to bring you this coffee. Two years ago they invested in better growing practices on the hopes of creating an even better coffee. Their risk and hard work paid off with this superior cup. Enjoy the results of their efforts. Other suggestions for creating emotion were given at the speech, and the audience really seemed to embrace the idea. In the questions following the event, dozens of producers asked for ideas on how they could tell their story. I encouraged them to send stories, pictures and artifacts from the farm to the importers selling their coffee. Roasters then could then get the story to tell it. This will more likely increase the volume and the price they are willing to pay for the coffee. It would also start to build a relationship with the roaster and the emotion is always higher when you have a personal relationship. In Belo Horizonte they want the same thing we do; to increase the value of their coffee. Perhaps if we work on storytelling together we can all get what we want.
Explaining that to a customer is not only boring, it isn’t very useful. In most people’s minds an 80 is a B-, not something ‘special’. Not to mention that the same grading system applies to Robusta. Does this mean we have ‘Specialty Robusta’? The definition needs to be simpler, so we asked Ted Lingle for a definition of Specialty Coffee. He said, “Great flavor, no defects”. Well, this is simpler but it also does not help us differentiate coffees to our consumers. Step 2: Redefine the REAL problem and solve that! What we are actually trying to do when we are talking to the customer about Specialty Coffee, or Coffee Quality in general, is get them to appreciate that the product has a higher VALUE than other products. So let’s redefine our problem in the following way: Get consumers to APPRECIATE the coffee enough to PAY MORE for it. This is a problem we can solve!
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Step 3: Find the VALUE in Specialty Coffee The ‘quality’ of coffee is personal to each consumer. Translating quality into VALUE for the customer will sell more coffee. This is true for those selling
Rocky Rhodes speaking about Quality to 400 attendees in Belo Horizonte. Rocky Rhodes is an 18 year coffee veteran, roaster, and Q-Grader Instructor, and his mission now is to transform the coffee supply chain and make sweeping differences in the lives of those that produce the green coffee. Rocky can be reached at rocky@ INTLcoffeeConsulting.com October 2016
Photo by Trish Rothgeb
Tales From Origin Ethiopia – Coins and Canines in Harar
by Dean Cycon, Founder and CEO, Dean's Beans Organic Coffee Co.
O
ld Harar is an ancient, walled city in the highlands of Harar, Ethiopia. Before we go up into the mountains to visit the farmers of Ilili Darartu Cooperative, I have to search the bazaars of Harar for old coins. After all, my house and office are full of treasures gleamed from the junk shops and markets of a dozen countries, testament to the cultures and histories of the coffeelands. The streets of Old Harar are an endless labyrinth of winding, narrow, cobblestone paths with high painted mud walls on each side. Looking like a lost tourist draws sympathetic passersby to my aid. I ask if anybody knows where Fatuma lives, as I have heard she has old coins for sale. A khaki-clad official-looking fellow steps forward and tells me the “easy way” to find Fatuma’s house. “At the end of this lane you will find a begging leper woman; go left. Stay left and left past the Muslim Market. She lives near there and many people will help you find her.” Twenty minutes later I am hopelessly lost, surrounded by eight-foot mud walls, not a leper in sight. Some children run after me, shouting and pointing. I want to get away from them, so I duck into the alley ahead. The children fade away. I look down and realize why the kids were trying to keep me from going this way. I have found the alley that serves as the public toilet for all of Harar and most of the visiting camels. One hand on my nose, the other held out for balance, I tiptoe through this minefield of merde until I emerge out the other side. Hey, the Muslim Market! Nobody knows where Fatuma lives, but I do get many offers from Muslim women to buy my gold earring. They have never seen a man with an earring, so I am the star attraction for the day. Finally, Fatuma emerges. She is very large and very dark. I follow her to her home, wishing I had dropped bread crumbs so I can find my way out. Her home doubles as an informal ethnographic museum of nomadic culture, with knives and shields covering the walls, the floors littered with milk gourds, basketry, and sleeping, fleabag puppies. The tray of coins she offers turns out to be the pocket change of every Italian and German traveler who has visited Harar in the last fifty years. No, this isn’t what I wanted. I manage to find someone in the ogling crowd that has gathered to explain that I want very old coins from the days of trade. Harar was once a major trading post from the African south and the Arab north, from Yemen to the east and Sudan to the west.
city to scavenge through the dark lanes. Curiously, the hyenas eat the local mutts but never bother the cats. The hyena feeding is supposed to be something of a tourist attraction, so I figure we will be jostling for a view among busloads of German and Italian tourists. Actually, the entire time we are in Harar, I don’t see another Westerner. Our taxi driver takes us to Yussef ’s house just after dark. He leaves his headlights on so that we can see the action. The tourist crowd I feared consists solely of Yussef ’s three young nephews. The Hyena Man, a dark, scrawny fifty-year-old, sits on the ground next to a bucket of butcher scraps. He taps the side of the bucket and calls names out into the night. Slowly, six hairy, hunchbacked shapes come prowling around the perimeter of the light. Dear God! These things are huge! I thought they would be the measly canines of Disney cartoons, or the size of the coyotes that skulk through New England backyards at night. But these creatures stand as tall and as broad as bull mastiffs. They become more comfortable with the light and inch toward Yussef ’s outstretched hand, a slab of meat and gristle hanging off a foot-long stick enticing them forward. They lunge for the stick, snatch the meat, and back off. Now and then two will compete for the grab, with the larger one growling or snapping the other away. Yussef shortens the stick until it is only a few inches long. Then he puts it in his mouth, and the hyena’s snapping jaws clamp the meat a kiss away from his lips. It is mesmerizing. I have read that the Hararis had a mystical relationship with the hyenas, and something wild is going on here. I find my feet shuffling toward Yussef. He beckons me forward and hands me a stick. I stab a hunk of meat from the bucket and hold it out. The biggest hyena inches forward, keeping her eyes on mine, not on the meat. It is a weird experience, but I am compelled to draw the meat in closer; closer to my face. My body freezes when the meat dangles two inches from my lips. There is a blur of teeth and fur before me as the hyena lunges in then retreats several feet to watch me as it tears the meat apart. I abruptly come out of my odd reverie, hand Yussef a bunch of birrh, and back off to the taxi. The driver slaps me on the back, laughs, and says I am “crazy like a Harari.”
Fatuma produces a small woven sack and empties the contents into a silver tea tray. Jackpot! Silver and bronze coins a half-inch in diameter full of strange Arabic and old Hebrew markings fill the tray. I choose six and spend the next half hour eyeball to eyeball with the toughest old bird I have ever met. She would do well as a New Jersey divorce lawyer. She gets most of my assets and I am left with a few coins. But I am delirious. What have these coins traded for? Guns and swords? Did they buy the freedom of a slave or transfer ownership of a camel? How far have they traveled and how many hands have touched them? What karma do I hold in my hands?
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On our last night in Harar we are going to see Yussef, the Hyena Man. Yussef lives in a small house outside the northern wall of Harar. Every night he feeds the wild hyenas that come down from the hills surrounding the
Dean in Ethiopia October 2016
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Getting Profitable Lesson 2: Can My Business be Saved?
I
f you have been struggling to generate a profit from your coffee business and you’re running out of money and hope, then one of the most difficult questions you must ask yourself is: “can my business be saved?” Should you continue to struggle to achieve profitability, try to sell your business, or just cut your losses by shutting your doors? The answers to these questions should be influenced by the length of time you have been open, the remaining untapped potential of your market, the trend of your monthly loss trajectory, and the amount operating capital you still have available and are willing to risk. First, understand that the vast majority of retail foodservice businesses (coffee being one) run in the “red” for the first 6 to 18 months before they ever generate a profit, and sadly, some will never become profitable. Hopefully you had a healthy amount of operating capital set aside when you opened to help offset these losses. The trend at which your monthly losses have been decreasing is important. If you have been open for business for a year or more, then this trend becomes even more telling. For example, below are graphs showing the loss trajectory for two businesses. The first shows a business where losses have decreased significantly and consistently over its first 18 months. From this trend, one could assume that this business still has a good chance of achieving profitability. The second graph paints a much more pessimistic picture. The fact that the monthly loss trajectory has almost flattened out and the business is still far from breaking even after two years, indicates that profitability might be difficult, if not impossible to achieve.
Fatal mistakes made prior to opening for business can potentially predestine an operation to fail. Picking an inferior location (one incapable of producing the needed daily transactions to produce a profit) is one of the most
by Ed Arvidson
common. Likewise, a location that’s not highly visible to passing consumers, or that is difficult to access, can also lead to business failure. Agreeing to an outrageous lease, developing an inadequate concept, or starting off grossly undercapitalized are other reasons why businesses struggle or fail. I consider these types of mistakes to be fatal because they usually can't be easily or affordably fixed. I only mention this because at some point, you must determine if your business is a “boat” with some small leaks, or a gaping hole that can’t be patched. However, even if you think you made one of these mistakes, you should at least try to “patch” your business as opposed to just letting it sink! If you run a tight ship and you’ve done everything possible to cut expenses and build sales, but you find your business in a situation similar to the second graph, then continuing to operate may only be postponing the inevitable. Should you determine that your business can’t be saved, or you have no desire to continue, then selling your business will be far more advantageous than just shutting your doors. While you probably won’t be able to recover all of your investment, at least you will be able to recover some of it. More importantly, if your lease is transferable, a buyer can release you from that ongoing liability. And, always remember, your business will be worth more to a potential buyer if it is still operating, even if it’s losing money. However, if you just shut your doors and move your equipment and furnishings to your garage, then your assets will only be worth pennies on the dollar… at best. Unless you are at the point where you can’t buy product, meet payroll, or pay taxes, it’s premature to think about closing your business. You certainly shouldn’t make that decision until you’ve applied all the actions that will be suggested in the articles over the next several months in this series. Remember, the reason most folks don’t make a profit in this business is due to a lack of control over expenses, and/or an inability to grow sales. Sometimes these are problems that can be readily fixed with the right actions and a determined mindset. Ed Arvidson is a 25-year veteran consultant to the Specialty Coffee industry, and President of E&C Consulting. Elements of this article are from his new book, “How to Get Profitable in the Coffee Business.” www.coffeebizhelp.com
16 October 2016
17
Coffee Service Corner
COFFEE, TEA AND WATER SHOW – LOOKING TO THE FUTURE, CONNECTING WITH THE PAST Ken Shea
O
n November 8, NAMA’s CTW Show will convene in Nashville, Tennessee at the Gaylord Opryland Convention Center. This year’s event promises to be yet another step forward from what was begun in Cherry Hill, NJ a number of years ago. It feels very satisfying knowing that this year’s event will continue to be forward-thinking, while at the same time recognizing past contributions from many whose work pre-dated NAMA’s Coffee Service involvement. (More on that topic further down in this article.) Keep in mind that it was only a decade and a half ago that NAMA acquired the assets of the National Coffee Service Association to become the official steward of our industry. I should add that our industry has been in good hands since that milestone event. Education Abounds – There will be an interesting and appropriate mix of business management, Coffee, Tea and Water, and Workplace Cafe tracks that will begin just after the opening session on Tuesday afternoon. And before the opening session, industry leader Mike Tompkins continues his run as our resident coffee guru in a paid session titled “Coffee 101, The Elements of Coffee”. Much attention will be given to the evolving workplace, Millennial impact and the changes that are already affecting our industry, creating expanding opportunities for progressive operators and suppliers. As Bob Dylan once penned, “The times they are a changin’”. This is our industry’s only national convention and the place-to-be to network, conduct business meetings in a common setting, and see all that is new. IBWA too! – Great water makes for great coffee, with the International Bottled Water Association continuing to co-exhibit with CTW in Nashville. The association is an environmentally-focused, health-conscious, international organization. Many operators already participate in Coffee Service and many more are recognizing the opportunities to expand their menu of offerings to include Coffee Service. IBWA operators serve large and small places of business. With more than 4 million places of business having 20 or fewer employees, could the small office segment be a new opportunity for route delivery? Many believe so. Coffee and Water, the perfect combination.
to nurture, and match-make new opportunities, all with a most pleasant disposition. I called Dean after learning of his award, and in typical Dean style, he resisted the accolades. “I’m honored but shocked.” As I reminisced with Dean over his many industry highlights, he mentioned several milestone events that have taken place during his tenure at NAMA. “In my first 30 days, I called a number of key people, operators and suppliers who were members of NCSA to introduce myself. My most memorable call was with Stuart Daw who treated me like a son and gave me a few words of wisdom about coffee in general.” “I’m also very proud that our Coffee Certification program has been completed by more than one thousand individuals.” He continued. “Recalling the first NAMA Coffee event in Cherry Hill, New Jersey and seeing it develop into today’s CTW is amazing. It is also very satisfying to see the growth of Tea and Water in our Channel.” “My experience at NAMA and involvement with Coffee Service is a life highlight due to meeting so many individuals who cared about our industry.” Dean, speaking on behalf of many, many people, the life highlight of meeting and knowing you is all ours. You have always gone above and beyond the call of duty and helped many people and many companies. Congratulations on this well- deserved honor! We will see you soon in Nashville!
Coffee Service Hall of Fame – Led by industry veteran David Henchel of Corporate Coffee Systems, the Coffee Service Committee has developed the inaugural class of inductees for the newly formed Coffee Service Hall of Fame. They will be honored with an acknowledgement at this year’s event. Most of our industry groundwork predated NAMA’s Coffee Service involvement. Recognizing those that served our industry prior to that time and through other associations, completes the link between past and present and puts us in position to perpetuate the legacies of selfless leaders for as long as our industry exists. And with the talent we see in the Emerging Leaders Network, that will be for many, many years. Dean Gilland – Coffee Legend Award Winner – I have had the distinct pleasure to have known Dean from the day he entered our industry. I recognized immediately that he was a first class gentlemen. I learned quickly thereafter that NAMA had signed on a natural born leader whose hallmark has proven to be one that so naturally goes above and beyond to help,
Ken is President of Ken Shea and Associates and also serves as V.P. of Coffee Service for G&J Marketing and Sales
18 October 2016
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Three Apps for Coffee Houses by Matthew, Katz, Marketing Associate, BlueCart
T
he giants of the coffee world are just that, giants. By some estimates, Starbucks alone controls about a third of the entire U.S. coffee market. And yet, entrepreneurs keep opening independent coffee shops, and consumers keep flocking to them. Millennials in particular will go well out of their way to sip flat whites in an indie espresso bar, often passing right by the big guys along the way. Still, the challenges for independent owners are daunting. While the top chains benefit from massive economies of scale, huge marketing budgets, and a corporate structure complete with HR departments and supply chain management gurus, the quaint little shop on the corner has to work out all the details on their own. But you know all that. Now what to do? Here are three tools to help independent coffee shops thrive in the land of giants. organized for the suppliers, which is especially useful for roasters and bakers who need to calculate daily batches and manage fulfillment for hundreds of different orders. Best news? BlueCart is free, and works on your phone or computer. Plus, they even have a separate app just for sales reps, so your rep is always on top of your order, no matter where they may be. To sign up, just go to bluecart.com and start using online ordering for all your suppliers in minutes.
CUPS CUPS was developed to help consumers and businesses alike by offering a reward to the customer, while giving the coffee shop a proven ROI. It is specifically and exclusively designed for indie shops. The app works like a pre-paid coffee plan, and is now up and running in New York, Philadelphia, and San Francisco. It allows customers to order from local coffee shops on their phone using monthly plans that vary by type of drink, and number of cups. True caffeine junkies can even choose “unlimited” options. Prices for customers range from $11-120. So now you’re probably asking what CUPS does for the owner of the coffee shop. The mobile app gives independent coffee shops a marketing strategy and a streamlined payment method. CUPS also offers a referral plan that encourages users to invite their friends with the promise of credits toward their cup of coffee. Their website is chock full of stats to help owners see the value. For example, this tidbit: 87% of users buy extra treats in addition to coffee when paying with CUPS. To become a CUPS coffee shop, you can go to cupsapp.com/coffee-shop and fill out a form at the bottom of the page, or just request a demo to learn more. BlueCart Chances are if you’re a coffee shop owner, saving six hours of work time each week is a dream. With BlueCart, that dream becomes reality in app form. The relationship between independent shops and their suppliers is special. Service and good communication are paramount, and respect is absolutely key. With this in mind, BlueCart was designed to make communication as straightforward and transparent as possible for both sides.
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BlueCart allows coffee shops to order all their supplies - we’re talking stirrers to dark roasts and everything in between - in one click, saving hours of time spent calling each different vendor. All those orders are then automatically
Perka The punch card. It’s a classic reward system that retailers have been using for decades. Buy 10 of something, get one free, and it’s all logged on a piece of paper that sits in your wallet. If anything is ripe for being digitized, it’s all those cards stacking up in our wallets and purses. Enter Perka, the digital punch card. No more losing those little slips of paper covered in star-shaped holes. The Perka validator appears when that customer is settling up, the clerk gives a digital punch, and voila: loyalty. Plus, instead of a one way street where customers know how often they’ve been to your place and hold on to the card on their own, coffee shop owners can now see how many times a person has visited over the entire lifetime of the app, as opposed to in 10 hole-punch incriments. Show your customers love with Perka and they will no doubt be back for more. You can get the Perka app in the android or Apple Store or visit their website at perka.com. So there you have it, three apps that can help any coffee shop stand toe-to-toe with the goliaths of the coffee industry.
October 2016
Sustainable Systems So, what constitutes Organic Product Integrity? Authenticity, Transparency, open communication, with full traceability to origin, and Brand and Product Trust, through verifiable certification. Today, we have Organic Standards and Legal Regulations in over 70 countries and Organic Certification is required from seed to shelf. There are several governments with Equivalency Arrangements which have made the trade of organic products open and legally enforceable. In the US, a labeling violation could cost $10,000.00 US for each violation. These regulations now enable organic raw material and ingredient buyers, suppliers, and consumers to connect in the marketplace to products that represent organic product integrity. Organic Product Are Too Expensive? Not really. Truthfully, when the conventional production system externalizes cost downstream for civil society to bear the risk and clean-up, and good organic farmers internalize these costs, organic products are the best values-based investments and purchases you can make. Some years ago I met the Indiana Jones of Organic Coffee, Karen Cebreros. Although I had completed organic coffee inspections in Guatemala and Mexico, then later Africa and Ethiopia, now I was off on quite a coffee trek: moving throughout Peru, Mexico, Central and South America, Indonesia, and East Timor, where coffee was so low priced the small farmers could not maintain a sustainable quality of life. The goal was simple. Through Certified Organic Coffee, we could lift up the small farmers and their rural communities to where everyone in the chain would benefit: the farmers, the trade, and the consumers; a goal not yet fully realized. In addition to getting organic farmers, beneficios, and export/import partners Certified Organic, we also enter the World of Organic Decaf Coffee, which brings new technical challenges to the organic coffee industry. Remember, in the legal certification system required by the NOP Organic Certification, we can only use materials that are approved on the NOP National Materials List, whereas all materials used in the organic system must meet specific criteria. The first organic-certified decaf system was Swiss Water® Decaffeinated Coffee Company, and after several tries, and much work with the certifier, OCIA International, the Swiss Water® Process was certified Organic. This system continues to serve the industry today. Coming along at this time was the use of Super Critical Extraction (SCE). Since no prohibited materials and/or solvents were used in this new process, it was certified organic. Other clean methods are evolving and perhaps certifiable. Please remember, as I close this part; choose only Certified Organic Products that adhere to a recognized set of legally enforceable regulatory standards and are certified by a USDA NOP Accredited Certifier. • Authenticity • Transparency • Trust But Certified More to come as we continue to build an organic coffee industry; an industry built on a set of principles and values that reward based on a commitment to excellence, a certified guarantee, a sustainable fair market price at the farm gate that assures farmers, farm families, rural communities and the next generation a real sustainable organic future. Only then will our goals be met.
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Specialty Beverage Market Options for Food Service Millennials Continue to Drive Demand/Growth for Specialty Coffee Market
I
t’s no secret that younger consumers are the main force behind the latest increases in daily consumption of espresso-based beverages - their numbers have nearly tripled since 2008, according to NCA’s 2016 NCA National Coffee Drinking Trends (NCDT). The study calls the increase a promising category shift, supported by younger consumer tastes, that outpaces flat overall consumption. Millennials are adopting specialty coffee consumption habits started in the 1970’s by Starbucks, creating an anywhere/anytime market demand, expanding beyond the commercial food service industry to include convenience stores, hotels, restaurant chains, office coffee, and even vendors such as auto dealerships. Providing a quality cup of coffee is a win-win for operators - the customer is happy and it’s a known industry fact that profit margins are high. So how did we get here? Following the specialty coffee phenomenon, technology advancements in the late 1980’s and early 1990’s resulted in exponential market growth, penetrating the entire commercial food service industry. During this period, all vendors were expected to provide specialty coffee (often from premium roaster) as a right of entry. This trend continued to drive adoption into other channels. The early 2000’s marked the synergy of technology advancements and consumer adoption to expand beyond the commercial foodservice industry. Companies such as Concordia Coffee Company introduced next generation, automated espresso machines, spurring new markets for coffee vendors and employee organizations. Similar to all first-generation models, the machines were a bit large and complex. During the last 16 years, Concordia and other leading industry equipment manufacturers have focused on making the machines more compact, convenient, and affordable. Michael Szyliowicz is founder and principal of SolaBev and a longtime industry influencer. He believes the current trend is not just about availability for consumers. The key is providing a quality cup of coffee coupled with ease of preparation and access for both consumers and vendors. Szyliowicz thinks the real winners could ultimately be the roasters who can leverage demand to tap into targets markets such as office environments, hotels and food service/QSR. “Traditionally it’s been hard for roasters to control quality once it leaves their hands- think of the old coffee pots at auto dealerships - the cups often had the roaster’s name on them. These machines represent a method for quality control within the context of convenience. Often times even a restaurant can’t make a great cup of coffee.” He expects to see a continuation of consolidation among specialty coffee roasters as more adopt machines to help protect market share. “Leaders understand how this can result in more sales to customers, whether bean or capsules.”
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by Jeff Denenholz, Director of PR, Jerome Bruhn and Associates
Ken Shea is Vice President of Office Coffee Services at G & J Marketing and Sales. He says the demand for specialty coffee is great news for the coffee service industry. Shea notes that for years, poor quality office coffee resulted in a lot fewer new coffee drinkers. The dawn of Starbucks and coffee shops has created a rapidly growing segment of new coffee drinkers. Fast forward to today, he believes that with a more educated consumer in the workplace, driven in large part by millennials, what has been a steady growth curve is now starting to accelerate. Shea warns of the potential consequences for offices that aren’t providing specialty brewed coffee. “Non-specialty coffee can result in lost production. Employees will leave and get a cup at their favorite coffee shop. Millennials in the workforce are demanding a variety of upscale beverages to choose from. Poor coffee can even affect employee turnover. Quality coffee can be analogous to a mini 401k to help keep morale and production high.” Shea also expects the current specialty coffee trends to continue over the next 2-5 years. Even with demand rising and the availability of user-friendly machines, many operators and decision makers still face several challenges to provide specialty coffee. Single-serve capsule machines range in price from $50 dollars to under $2,000 dollars. Higher-end commercial machines (equipment, shipping, installation) are more in the range of $10,000 to $20,000. These units typically incorporate freshly ground beans, real milk, and commercial components to deliver a true café quality experience. There are additional costs for service and maintenance. One of the biggest challenges can be what one industry executive refers to as the fear of the unknown. Many businesses receive customer requests for specialty coffee, prompting owners to examine adding items to their menu. Despite all of the potential upside, owners can be intimidated by startup costs and the amount of drinks needed to attain profits. At least one manufacturer believes the next industry innovation should be focused on helping to make specialty coffee machines more affordable. Concordia Coffee Company recently announced their Plan Zero program. It’s designed for customers to pay a fixed monthly payment to cover installation, maintenance and repairs. Vice President John LaNier says it was important for the company to continue to help grow the market through financial collaboration with customers. Concordia offers a line of beverage systems under the brand names Ascent, Integra and Xpress. Other leading manufacturers and equipment include Franke Coffee Systems A200 and Foam Master 850, and Schaerer USA’s Ambiente PS and Coffee Art Plus. According to the NCDT study, even older millennials are contributing to the continuing spike in specialty coffee. The 25-39 group are the most likely group to drink gourmet coffee beverages weekly, along with specific options including cappuccino, latte, café mocha, espresso, macchiato, flat white, and cold-brew coffee. October 2016
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Boxed Water is Better Say hello to BETTER. It’s our simple way of starting a conversation with you about making better choices. At Boxed Water, we believe in better. Better water, better packaging, better design and better communities. Boxed Water is a simple way to make a small change that creates a bigger impact and a better tomorrow. We’re a sustainable water company that is changing the way water is sold, shipped and consumed. We aim to provide consumers a better option when purchasing water, while still enjoying the convenience of grab-and-go. Each carton is recyclable, 100% BPA free, and made using paper from wellmanaged forests. We’re sensibly sourced and purposely purified near end consumption to reduce our transportation carbon footprint. And as a member of 1% for the Planet, at least one percent of our annual sales support reforestation through partnership with the National Forest Foundation (NFF). Plus we’re committing to plant one million trees by 2020. We’re excited to have you say hello to BETTER. www.boxedwaterisbetter.com
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for anyone considering adding food to their café and considering a culinary program. • Coffee Fest debuted “Cold Brew U,” now an allencompassing workshop for anyone looking to enter this ultracompetitive but modern landscape. For more details about Coffee Fest shows visit coffeefest.com or become a fan at facebook.com/ coffeefest. Let’s Talk Coffee Mexico Unites Supply Chain this October
The global coffee industry is preparing to come together for Let’s Talk Coffee Mexico, the annual gathering that unites the entire supply chain to discuss pressing issues, forge and strengthen relationships, and collaborate as an industry. Now in its 13th edition, Let’s Talk Coffee is the industry’s collaborative learning platform, with workshops, cuppings, and top speakers shedding light on cutting-edge topics. This year’s speakers will include Todd Carmichael of La Colombe, Helen Russell of Equator Coffees & Teas, and Tracy Ging of The Coffeewoman. It’s also a premier platform for business, offering an intimate setting where attendees can network and establish Coffee Fest Anaheim Opened September 30th lasting business relationships. The event takes place October Coffee Fest, 13-16 in Puerto Vallarta at the the trade-only CasaMagna Marriott, an allevent for the inclusive hotel where families are US Specialty Coffee Industry, announced a full welcome to stay and be part of package of classes and workshops the Let's Talk Coffee experience. for the 78th Coffee Fest. Classes, Register today at letstalkcoffee.org. workshops, and special events were provided for all levels of expertise, from emerging coffee Swiss Water retailers and roasters to seasoned Decaffeinated Coffee Company Event in Abbot industry veterans. Coffee Fest Anaheim featured 250 exhibition Kinney booths and more than 100 profit- On the heels building classes workshops and of a successful New York City special attractions. pop-up in the • Coffee Fest debuted fall of 2015, America’s Best Cold Brew competition, which allowed Swiss Water Decaffeinated Coffee Company attendees to be the judge. brings its amazing coffee without The champions were determined by all-attendee caffeine experience to the west coast. Swiss Water® will host votes and a select panel of industry pro’s blind judging. a 10-day pop-up coffee taste experience at 1421 Abbot Kinney • Coffee Fest debuted the in Venice, California, opening on “Food Integration Lab,” Friday, October 14 and running the preeminent seminar
through Sunday, October 23, from 10:00 am to 10:00 pm each day. Swiss Water® is a 100% chemical free process that gently removes caffeine (and nothing else) from specialty coffee for coffee roasters including Stumptown, Blue Bottle, Verve Coffee and Allegro Coffee (Whole Foods). The pop-up will serve hand-crafted brewing methods including pour over, Chemex and espresso, as well as more innovative methods like siphon, cold brew and Aeropress, among others. Because all the coffees are 99.9% caffeine free, guests can experience all the complimentary coffee they want without becoming overcaffeinated. Visit swisswater.com to learn more. Charlotte's New Uptown Neighborhood Coffeehouse Coco and the Director recently opened in Charlotte, NC bringing a new neighborhood coffeehouse, café, co-lab meeting space, and retail shop showcasing local Carolina products to Uptown. Aficionados have a wide range of coffee options to choose from: single origin pour overs, aeropress, small batch drip, cold brew, latte, cappuccino, flat white, and more. Forte Legato Coffee Company in Fort Mill, SC provides the Andante blend of beans from Brazil and Cameroon exclusively roasted for Coco and the Director, as well as single origin beans from Indonesia, Colombia, Cameroon, and Tanzania. Located on the bustling corner of Trade and Tryon streets, Coco and the Director serves as a community enclave with large windows and amphitheater-style seating overlooking Charlotte’s historic crossroads. Free Wi-Fi is available throughout. Coco and the Director (CocoandtheDirector.com, @ CocoandtheDirector) is located at 100 West Trade Street in the Charlotte Marriott City Center. Open daily 6am to 10pm. Ferris Coffee & Nut Announces Grand Opening of New Downtown Grand Rapids Location Ferris Coffee & Nut Company, a leading Michigan coffee roaster, October 2016
announced that it opened its new coffee shop in downtown Grand Rapids located in the Trust Building at 40 Pearl Street on Thursday, September 22 from 7 a.m. – 7 p.m. The new shop will feature specialty coffees and baked goods offered from Ferris Coffee’s flagship location on Winter Avenue in Grand Rapids. In addition, the location will eventually serve a variety of small plates including charcuterie, appetizers, and other bar snacks. Ferris Coffee also plans to offer craft beer and wine to customers from the downtown shop.
Triestespresso Expands Expo Areas for The 2016 Edition TriestEspresso expo, the most important B2B espresso coffee biennial fair, organized by Aries - Chamber of Commerce of Trieste in collaboration with the Associazione Caffè Trieste, will take place in Trieste, Italy, from October 20th to the 22nd 2016. The enlargement of the exhibition area allows the expo to feature new companies, which will be able to take part to 8th TriestEspresso for the first time. More than 200 companies from the entire coffee production chain will showcase their products at the trade show (see exhibitors list, triestespresso.it/padiglioni. html). Among the side events that will take place in the ancient halls there will be: the finals of Espresso Italiano Champion, workshop by Università del caffè illycaffè, the new Barista Bonanza program organized by SCAE, tastings organized by FIPE, conferences, training, and numerous workshops dedicated to coffee professionals. For more information and tickets www.triestespresso.it #triestespresso #triestecapitaledelcaffe
Ukiah-Based Black Oak Coffee Wins 2 Gold Medals at The Golden Bean! Black Oak Coffee Roasters won two Gold Medals for its single-origin coffees at the 2016 Compak Golden Bean North America. Gedeb Lot 002, an Ethiopian coffee, won gold in the single origin pourover category. Banko, another Ethiopian coffee, took the gold in the single origin espresso category. The Golden Bean Competition, the largest coffee roasting competition in the world, received over 700 entries from roasters across North America. The pour-over drip (a single brewed cup of coffee) category received over 200 entries. Each coffee was evaluated in a blind setting by a panel of industry professionals and only one gold medal was awarded in each category. Both of (…making Black Oak’s winners hailed from a small area of Southern Ethiopia, from cooperatives near the town of Gedeb. Each lot is certified Organic. Visit blackoakcoffee. com to see our products.
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Advertisers Index Company..................................................................Phone...........................Web..............................................................................................................Page Add a Scoop Supplements.......................................... (415) 382-6535..............addascoop.com............................................................................................................... 25 Boxed Water Is Better................................................... (616) 710-1560...............boxedwaterisbetter.com................................................................................................. 11 Brewista.............................................................................. (307) 222-6086.............mybrewista.com.............................................................................................................. 23 Buhler Inc........................................................................... (905) 754-8389............buhlergroup.com............................................................................................................. 25 Cablevey Conveyors....................................................... (641) 673-8451...............cablevey.com.................................................................................................................... 23 Coffee Fest Trade Show............................................... (800) 232-0083............coffeefest.com................................................................................................................. 23 Coffee Holding Company............................................ (800) 458-2233............coffeeholding.com...........................................................................................................19 Curtis.................................................................................... (800) 421-6150..............wilburcurtis.com.............................................................................................................. 27 Datio POS........................................................................... (408) 643-0990...........datiopos.com.................................................................................................................... 23 Don Pablo Coffee Roasting Company.................... (305) 249-5628.............cafedonpablo.com.......................................................................................................... 25 E&C Consulting, Inc........................................................ (541) 408-8626.............coffeebizhelp.com..........................................................................................................24 Follett Corporation......................................................... (800) 523-9361.............follettice.com.................................................................................................................... 25 Fres-co System USA, Inc.............................................. (215) 799-8032..............fresco.com........................................................................................................................... 3 Grey Fox Pottery............................................................. (612) 767-7407...............greyfoxpottery.com........................................................................................................ 25 International Coffee Consulting Group................... (818) 347-1378................intlcoffeeconsulting.com.............................................................................................. 25 Java Jacket........................................................................ (800) 208-4128.............javajacket.com................................................................................................................... 17 JoeTap................................................................................. (855) 456-3827.............joetap.com.......................................................................................................................... 21 KitchenAid Craft Coffee............................................... (800) 541-6390.............kitchenaid.com/countertop-appliances/coffee-products/............................... 5 LMI Packaging Solutions.............................................. (262) 925-8145..............lmipackaging.com............................................................................................................19 Mother Parkers Tea & Coffee Inc............................... (800) 387-9398............realcup.com........................................................................................................... 15, 17, 26 Plitek.................................................................................... (847) 827-6680.............plitek.com........................................................................................................................... 13 Primera Technology, Inc............................................... (800) 797-2772.............primeralabel.com............................................................................................................ 25 Red Bull North America................................................ (310) 393-4647..............redbullusa.com................................................................................................................. 23 Service Ideas, Inc............................................................ (800) 328-4493............serviceideas.com............................................................................................................. 25 Shore Measuring Systems............................................ (800) 837-0863............moisturetesters.com...................................................................................................... 25 SIGEP................................................................................... +39 0541 744632..........sigep.it....................................................................................................................................2 State Farm Insurance..................................................... See web............................st8.fm/bizinsurance.com.................................................................................................7 Swiss Water Decaffeinated Coffee Company...... (800) 668-9981.............swisswater.com.................................................................................................................. 9 Texpak Inc | Scolari Engineering............................... (856) 988-5533.............scolarieng.com................................................................................................................. 28 The Coffee Trust.............................................................. (505) 670-9783.............thecoffeetrust.org........................................................................................................... 25 Tightpac America Inc.................................................... (888) 428-4448............tightvac.com..................................................................................................................... 23 Vessel Drinkware............................................................. (855) 833-7735..............vesseldrinkware.com....................................................................................................... 15
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