The Coffee Guys

04_173589 ch01.qxp 3/24/08 1:51 PM Page 1 THE COFFEE GUYS PETER GIULIANO, COFFEE BUYER AND MINORITY OWNER OF Counter Culture Coffee, based in Durham, North Carolina, describes himself and the other Third Wave coffee guys driving the fast-growing specialty coffee industry as “a bunch of freakin’ nut- case obsessives who have trouble hacking it in the real world. “When I was studying music in college I had to figure out what was the most authentic expression of northern Mexican accordion music,” he explains. “I spent years of my life figuring this out. Then I applied my attention to cocktails. In my house I had a thousand dollars invested in obscure kinds of alcohol. My friends would come over and I would make them a martini the way they were made in 1934.” TakeCOPYRIGHTED Geoff Watts of Intelligentsia MATERIAL Coffee in Chicago or Duane Sorenson of Stumptown Coffee in Portland, Oregon. “You think these guys are normal?” Peter will ask, raising his eyebrows. Peter has a point. The top tier of the specialty world is full of people who obsess about the details. These are individuals 1 04_173589 ch01.qxp 3/21/08 10:06 AM Page 2 2 GOD IN A CUP who will drive themselves past the point of reason to get it right, who will spend five years figuring out the perfect protocol for controlling the temperature gauge of their espresso machine. Guys who compare great coffee to great wine and are able to detect hundreds of flavors and aromas in a coffee from a small farm in Guatemala as great wine masters discern countless sub- tleties in an aged Burgundy. Tasting—cupping is the term used in the coffee industry— ten or twenty coffees is never enough for guys like this. As Geoff Watts of Intelligentsia, a leading specialty coffee roaster/retailer, talking about his education in the industry, explains, “I wanted to cup two hundred coffees. I wanted to cup two thousand coffees. I wanted to know everything you could know about the nuances of flavor and aroma and then I wanted to know more.” Geoff and the other specialty guys would tell you that their devotion has been generously repaid. Considering his career and that of other industry leaders, Peter comments, “The beautiful thing about specialty coffee is that it rewards that obsessiveness. It uses all our talents. It fosters the development of lost kids like me.” Most Third Wave coffee guys you talk to will try to con- vince you that they invented specialty coffee, but they are wrong. As the organized high-end sector of the larger coffee industry, specialty coffee has been around since the early 1960s, and it has been evolving ever since. Coffee itself has a long history in the United States. Ever since a band of enraged patriots tossed ninety thousand pounds of expensive tea into the Boston Harbor in 1773, coffee, after booze, has been the beverage of choice for Americans. Early Americans drank coffee in convivial coffeehouses, and either roasted coffee beans at home or bought them from merchants and grocers, who sold freshly roasted coffee that their 04_173589 ch01.qxp 3/21/08 10:06 AM Page 3 THE COFFEE GUYS 3 customers carried home in paper sacks. This coffee came from high-quality Arabica beans—the Arabica species originated in Ethiopia and was cultivated commercially in Yemen, from where it spread throughout the Islamic world in the fifteenth and sixteenth centuries. In the seventeenth century, coffee was smuggled into Europe. Shortly thereafter, European adventurers transported coffee to the New World. Throughout the nineteenth century, most American home- makers purchased freshly roasted coffee. Grocers often roasted their own, and most towns and cities of any size were home to one or more coffee roasteries. In the first half of the twentieth century, however, coffee, like other foodstuffs, fell victim to the industrialization of the food supply. Consolidation. Technological innovations. Standardization. They all led to one outcome: heav- ily advertised national brands of coffee sold in supermarkets in vacuum-sealed cans. And after World War II came the lowest blow of them all: water-soluble instant coffee. By the time instant became the next new thing, American consumers were so acclimatized to bad coffee that they failed to notice the introduction of lower-quality beans from the far less expensive species called Robusta that price- conscious mass marketers had begun adding to their blends. In his history of the coffee industry, Uncommon Grounds, economic historian Mark Pendergrast summed up decades of “progress” in the American coffee industry with this comment from an unnamed attendee at the 1959 National Coffee Association Convention: “There is hardly anything,” said this fed- up coffee guy, “that some man cannot make a little worse and sell a little cheaper.” Just as casseroles made with canned string beans and ersatz cream of mushroom soup led to Julia Child and the foodie revolt in the 1960s, so did the ubiquity of Nescafé and other caf- feinated insults lead to the birth of the specialty coffee industry. 04_173589 ch01.qxp 3/21/08 10:06 AM Page 4 4 GOD IN A CUP The First Wave Coffee guys aren’t always the greatest historians, and there are many debates about what and who compose the First, Second, and Third Waves of the specialty coffee industry—all the young coffee dudes seem to believe without question, though, that they, the Third Wave, are the stars of the movie. Coffee consultant Trish Skeie, who popularized the wave idea, described the First Wave as the people before and after World War II “who made bad coffee commonplace…who created low quality instant solubles…who blended away the nuance [in coffee]…and forced prices to an all time low.” The Second Wave Trish has written that the Second Wave began in the late 1960s and extended into the mid-1990s. Among the Second Wave were a number of coffee-centric northern European immigrants who set- tled in California after World War II. These transplants carried with them old-world knowledge of coffee roasting, tasting, and sourcing. Among this group was Alfred Peet of Peet’s Coffee, who opened his first store in San Francisco in 1966, and Erna Knutsen, founder and president of Knutsen Coffee Ltd., based in northern California. It was Knutsen who coined the phrase “specialty coffee” to describe beans from specific “appella- tions.” Like appellation wines, Erna said, specialty coffees are grown in distinct geographic microclimates and they possess unique flavor profiles. Second Wave entrepreneurs such as Peet and Knutsen as well as Don Schoenholt of Gillies Coffee in New York; Ted Lingle of Lingle Brothers Coffee in Long Beach, California; Kevin Knox of Starbucks; and George Howell of Boston’s Coffee Connection created the specialty coffee business in the United States. They 04_173589 ch01.qxp 3/21/08 10:06 AM Page 5 THE COFFEE GUYS 5 introduced American coffee drinkers to high-quality coffees with discernible differences in taste from around the world. In 1982, a group of Second Wave guys founded the Specialty Coffee Association of America (SCAA). On their watch, specialty became the fastest-growing sector of the U.S. coffee industry, with sales in 2007 of more than $12 billion. Starbucks emerged in this period, the brainchild of Second Wave guys. The first Starbucks store opened in Seattle in 1971, sell- ing high-quality coffee, dark roasted by Alfred Peet. Soon the com- pany had half a dozen stores and was roasting its own. The chain grew slowly until 1987, when it was bought by Howard Schultz. In 2006, with 12,500 stores worldwide and total sales of $7.8 billion, Starbucks reported its fifteenth consecutive year of 5 percent or more comparable-store sales growth. By 2007, however, over-rapid growth (including hundreds of new stores) had taken its toll—by year’s end Starbucks’ stock price had fallen sharply, and the com- pany was closing stores and rethinking its business strategy. The Third Wave Trish believes the Third Wave emerged in the mid-1990s as a reac- tion to the Starbuck-driven industrialization of gourmet coffee. The Third Wave guys deplore the automation of café culture. Many of them are rebels who dress more like skateboarders than business executives, but you miss the point if you think they are laid back. They are fierce competitors who have built their busi- nesses on their ability to outperform other cafés, especially Starbucks. Virtually all of the young coffee guys in the retail business own shops in neighborhoods where Starbucks operates. To stay in business, they have had to sell better coffee and make better drinks than Starbucks. Third Wavers are members of what has been called the first global generation. The workplace they entered was one that 04_173589 ch01.qxp 3/24/08 1:51 PM Page 6 6 GOD IN A CUP had been transformed by technology and inexpensive overseas travel. Young guys in the Third Wave travel more and travel dif- ferently than their elders. They are comfortable toting back- packs, wearing sandals, and sleeping in hammocks. They don’t mind journeying six hours in trucks with worn-out shocks. The knowledge these young entrepreneurs gain “at ori- gin” shapes their approach as coffee buyers and business people. To develop the potential of specialty coffee business in the United States, the Third Wave insists you have to focus on the produc- tion end, and you have to see the relationship between the pro- ducer and the consumer ends of the coffee chain.

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