3 reasons why the specialty coffee industry is shooting itself in the foot

Specialty coffee has been around for decades, but it still hasn’t captured the admiration of the mass market. The data for how many people drinking specialty coffee is unreliable. All of the surveys define “specialty” differently and most of the survey participants don’t understand the definitions they’re hearing. In a survey titled, the “2014 Harris Poll EquiTrend rankings” which measures brand equity, connection and buzz, four brands dominated; Dunkin Donuts, Green Mountain Coffee, Foglers, and Seattle’s Best. I commend these brands for providing America’s caffeine fix for all these years but they’re far from what I would consider a quality cup of coffee. With specialty coffee trailing far behind these traditional brands, it’s safe to say that demand is growing, but it’s not enough. With specialty coffee representing a small piece of the pie, innovative coffee farmers are constrained. They enjoy the higher price that specialty coffee offers but with demand bottlenecked they miss out on the volume that they desperately need. In this article we’re going to be looking at 3 reasons why we’re shooting ourselves in the foot as specialty coffee companies. (1) we’re treating coffee like its wine, (2) we’re pricing ourselves out and (3) we’re not giving farms the volume that they need.

There’s a dream in specialty coffee that one day, the world will treat coffee like wine. It’ll be expensive, nuanced, and everyone will be speaking the language. It’s not going to happen. Coffee has many similarities to wine but at the end of the day, people see coffee as a tool, not a luxury item. Of course, there are communities that will argue whether washed or honey process will give you a cleaner cup, but these communities are small, and I don’t see them as characteristic of the mass market. Specialty coffee has done a great job thus far of catering to these communities but in the process, we’ve lost the script. The intent shouldn’t be to increase the intensity of our specialty coffee conversations but to grow them. Besides, it’s much easier to convert a specialty coffee drinker into a student of coffee than it is to convert a Folgers drinker into a coffee student. Once people start drinking specialty coffee, they’ll be curious to try more and ask questions. If you want to create a baseball fan, you don’t crush them with baseball factoids and statistics. You invite them out to the ball game and let them taste it for themselves.

We need to come to terms on pricing. The mass market isn’t going to pay $30 for a 12oz bag, it’s just not going to happen. If you want to nerd out on a beautiful micro lot of Geisha beans, great, there’s a market for that, but it’s not big. Whether we like it or not, the mass market has a ceiling for coffee prices and that’s okay. Coffee is more price elastic than most of us would like to believe but that just means we’ll need to sell more for the math to work. Which means selling to bigger markets. And lucky us, the coffee market is ginormous. It’s out there but we’re not catering to it because we’re pricing ourselves out of it. Specialty coffee companies are selling a better product than traditional coffee and can command a higher price for it, but let’s not forget the customer we’re selling to.

I recently listened in on a webinar featuring a conversation between Rob Hoos and an equally impressive coffee farm exporter. As you can imagine, the topic quickly went to the effects COVID-19 is having on the roasting and farming community. The roasting community, for the most part, is having difficulty moving coffee, especially in the cafes. People aren’t coming in like they used to for their early AM cup of joe, which is understandable given our circumstances. With the lack of demand, orders to farms have been dwindling, and as the exporter argued, the farms can’t not move crop. These farms employ dozens to hundreds of people that are dependent on exporting their crop. Without a roaster or distributor to sell to, they’ll have to trash their inventory. A devasting situation, as many of them are already on a thin line to make ends meet. Traditional coffee demands an unsustainable low price from farmers but provides plenty of volume. Specialty coffee on the other hand does a tremendous job doing the exact opposite. It provides a fair (or more than fair) price for a much lower volume. COVID-19 created enough of a stress test to show that volume matters, a lot. There’s a ton of skilled labor invested into operating a coffee farm and farmers should be paid a generous wage for this labor. The fact that coffee is the second most popular beverage in the world should not be lost on their income statements. Why is this important? Because there’s a world that we can create that increases the demand for specialty coffee, which in turn will get coffee farmers the volume AND price that they need to sustain their farms. When we fail to increase demand for specialty coffee, we’re not only failing to grow our own business, but we’re failing to sustain the farms that we’re claiming to empower.

In the end, we need to meet consumers where they are. We need to connect them with information and grow the specialty coffee market. Disrupting traditional coffee should be our goal, not treating coffee like it’s this art form that most would fail to understand. Crossing the chasm from Early Adopters to Early Majority (to borrow from Geoffrey Moore) can only happen when we decide to let go and empower others with better coffee. Through our success in growing this demand, coffee farmers around the world can enjoy a higher volume of specialty coffee orders at a higher price for their services. Sure, some farms will need to innovate and improve their processes but that’s what it’s all about, pushing quality upwards so that we can all reap the benefits of innovation. Specialty coffee is better than traditional coffee, let’s spread the word.

 

To better coffee, 

Alex Garrett