Analysis: Coffee roasters stick with less costly robusta
NEW YORK | Mon Jun 11, 2012 4:13am EDT
(Reuters) – Coffee roasters quietly pulled off a financial feat last year that went unnoticed by most customers: Adding a higher proportion of cheaper, lower-grade robusta to their grounds as the price of top-notch arabica beans surged. more…
If this isn’t just another reason to buy from specialty roasters, I don’t know what is. I sometimes get the impression that the United States just doesn’t care about quality or ethics, just as long as we are comfortable in our own little bubbles. It’s sad and pathetic.
From another perspective, it has made it easier for people to continue their “quality of life” during a turbulent time in the economy of coffee when compared to the economic health of the United States and the world.
Don’t get me wrong: there is a market for every coffee, and yes, that includes the robusta grown in lower altitudes. That having been said, the increased demand of cheaper robusta to combat a record high market price for coffee futures has perpetuated an increase in the amount of robusta being grown, insulting us, the consuming public, further.
People have not said anything, which must somehow mean that they can’t tell the difference. I reject that notion outright. Most people wouldn’t complain publicly or to the brands directly. Most people, I believe, would simply acknowledge that it “isn’t as good as it used to be”, but still buy it anyway because they were, and still are, either too cheap, too lazy, or too broke to buy the real deal.
Here’s the part that I found really interesting.. a company is paid money to steam admittedly inferior coffee to “improve” it. In other words, the coffee’s taste is diminished and broken down on purpose before it is roasted and sold. This is a classic example of consciously choosing the “lesser” evil. Why bother?
Ethically sourced specialty coffee is ~$0.50 per serving (assuming you drink a 10oz cup).. and this is expensive? Give me a break. What can we do to help the general unwashed masses wake up and smell the inspiring aroma of affordable, sustainable, and fantastically delicious coffee from specialty roasters?
For many people, the idea is pretty straightforward in regards to restaurants and food.
1. If the food is fantastic, but the place is a dump (i.e. – renouned barbecue joints), people will come back in droves.
2. If the food is forgetable and the service was good, it tells you something about the place.
3. If the food is wonderful, the service is great, but the ambience is lacking, you will notice, but you will still return.
4. If the ambience is fantastic, the service is great, but the food is mediocre, the odds are good that you will not return because while it scored highly on the peripherals, it missed it where it counts.
Why is this different than in part 2, where the business will still survive? Expectations.
In scenario 4, it seems that the ambience and service were building up to a glorious climax of fantastic cuisine. The food did not deliver, and thus, the entire experience is anti-climatic. They will not have bad things to say, necessarily, but the odds of their returning are very slim.
This is very easily understood by most people. You don’t get innovative high end cuisine from Applebee’s , but you also don’t expect it when going in, even if your neighborhood location has great service.
Translated to specialty coffee retailing, one can use the same logic. If a fortune is spent on the ambience, and the service is knock-your-socks-off-great, one should expect the coffee to be on level as well. More often than not, the coffee fails to deliver the satisfaction of a culinary climax to the experience, yet many of these places ride the wave of niche market branding. The niche of Specialty Coffee.
Many have gotten away with it for a long time in part, I believe, because the mediocrity found at well-known ubiquitous chains became the standard for the average consumer. Serve the same with a better cultural feel, and it’s low-hanging fruit: gauranteed success.
So why are we seeing some of these places going out of business these days?
The economy is partially to blame. This is a factual truth. The big chains are feeling the effects as is evidenced by their menu changes and shifts in marketing strategy. People are still willing to spend money, but now they are paying more attention to the value of what their money is getting them. In short, they are more concerned with the quality of the products they are buying. (key word: products)
While the service may have stepped up a notch, and while prices may have been reduced, some retailers may find their sales still dropping. Take the new French “fooding” approach. Give them more for their money. Great coffee can be easily approachable for the average joe (no pun intended).
This doesn’t have to mean spending more money(although it could). I am often amazed at how many retailers don’t actually take the time to learn about coffee before opening a company that specializes in making and serving it. Many have been convinced that selling culture is the way to run a coffee house, but what good is that for people who drop in on their way to work in the morning? All those people want is a great cup of coffee done well, and done in a timely manner. This means that what is important for a profitable coffee retailer is, above all, the quality of their products.
Yes, atmosphere is important, but in a hierarchy of factors, I would argue that it takes a back seat to product quality. After all, you’re not selling atmosphere. Atmosphere is intended to draw people in to buy products. It is secondary.
In a time when it is important to really focus, why not take a look at your shop’s coffee and training program. Is it enough? Have you shopped your competition? What can you learn from each other? It may be time to reevaluate things, and to start focusing on the heart and soul of your business. Your products.
I received an email from Hayley who is looking for work as a barista in San Antonio.
Her cantact info is listed below, as well as her resume in .pdf format.
680 E Basse Rd #338
San Antonio, TX 78209
This has been added to the List of People in the Jobs section.
As the recession continues to loom overhead, and even progress further down, it has probably become obvious to many that the sale of higher priced ticket items are on the decline as more people try to economize by sticking with the less-expensive brewed options.
While this may seem on the surface to be a negative hit to retailers, it does not have to be so.
When recessions hit, the smart investors start buying up stock, taking over other companies, and the likes as have been seen recently, as well as what happened in the Great Depression of the 30′s. SOMEONE stands to profit from it. The trick is learning how to work it to your advantage as well.
In the world of coffee retail, many many people have worked their tails off trying to educate their customers, trying to get them to try new coffees, trying to push the COFFEE, rather than the ‘recipe’. Consider the retail phenomenon we’re seeing as a golden ticket of opportunity. If you show your customers that your shop is trustworthy, and is looking out for their best interests, you can survive, and even thrive.
Roasting companies are doing pretty well in these times. That’s been the word from the roasters I have asked about it, and I’m assuming that goes for most others as well, assuming they are doing a decent job with their coffees.
How can a retailer profit from this? Sell more whole-bean coffees, offer different brew methods, hold free classes for consumers, and offer affordable brew-at-home equipment in your stores.
Brewing up batches of coffee is awfully convenient, but when the rush slows in the late morning and into the afternoon, how much of it gets thrown out? If the answer is “none”, is it because it’s not being refreshed with fresh brews, or is it because it’s being sold? If the answer sounds something like the first of those two, then it’s time to change something.
If you have been reading Texas Coffee People for awhile, you may remember our piece about Bottomless Coffee, and why it may not be such a great idea afterall. If you have read that piece, then what you’ve just read may sound like a repeat of information. It is.
I am reminded of one famous roaster/retailer’s Black Week, in which no milk-based beverages were served. The customer response? POSITIVE. Here’s a question: Are we selling coffee, or are we selling “concoctions”? If you are spending what seems like a lot of cash for your wholesale coffee, then the odds are good that you are trying to sell coffee. (and that’s as it should be in any “Coffee retailer”)
If you are confident that the coffee you are serving is of excellent quality, I feel safe in assuming that you have more than just a couple of coffees on hand. Every coffee has its own unique flavor profile, and every roaster has their own unique expression of that flavor profile. The phrase “taste the world” has been used over and over again to refer to the array of specialty coffee origins, but the fact of the matter is that it’s still true. Except that most people are now more aware of the fact that there is substantially more to it than “what country it comes from”.
Customers will return to a company they feel they can trust as the experts in their field. You and your staff should be those experts. Anyone who has ever gone through any amount of Starbucks training has probably been told that the customers expect the barista to be their go-to advisor for all things coffee (in regards to consumption, anyway). The independents don’t have the Starbucks image to fall back on, and it seems that’s a very good thing.
Hold customer education events:
Give a class on cupping, on brewing at home, on proper coffee storage, on the differences between origins, on anything and everything that you think your customer base might find interesting. If you are effective, they will come back to you for advice (and coffee).
Embrace “cup at a time” brew methods:
Sample coffees to customers before they decide on a whole bean to buy. Does this cost extra? Sure.. but less than throwing out half of an airpot in the afternoon, and it’s good customer service. Include proper instructions for brewing, and carry a Bodum C-Mill, at the very least, so your customers can afford to grind fresh, even if they can’t afford a proper burr grinder. And while you’re at it, you might consider retailing French Presses as well as Melitta Pourovers and Chemex brewers. Learn how to use them well, and teach your customers. Check with your roaster to see if they offer any of these. It’s better than the extra profit would go to a link in your chain, rather than merely to the parent company alone. If you’d like to carry an electric grinder, I hear from several sources that Baratza is very easy to deal with for retailers to become distributors(not to mention, their products aren’t bad either).
Sell whole bean coffee:
It’s cheaper for the customer, and it’s easy marketing for you. Just because people are not eating out as much doesn’t mean they’re not getting together. Wouldn’t you like the coffee being served to come from your store, with the answer to “ooo, where did you get this coffee?” be your company name? The ecoomy is going to rebound eventually, and just like buying up stocks on the market while they’re cheap in hopes that they will yield a return, this is the time to buy stock in your customers in the prospect of future sales. If you are like me, you get excited about new coffees, new flavors, and new brew technique discoveries or revelations. Share this! Wear your passion for coffee on your sleeve, ans share it with your customers. (read: do not force it down their throats, but make it known and available for them to tap into)
Market events around the coffee:
Just like Tim Wendelboe held a Black Week, you too can hold a special event that focuses on a specific coffee, a specific region, or a specific brew method. Keep it tight and focused. Don’t wear out your arsenal of information on just one event. Spread it out. Spread the word. This can breathe new life into your business, and spark new inerest in your customers. Hold education classes, seminars, anything and everything to do with the coffee.
Do NOT try giveaway promotions:
Many people may be tempted to try to boost traffic by offering deals. Like “buy 9, get the 10th free”, or the like. This devalues the coffee, but more salient to retailers, it doesn’t do a thing for sales! If it hasn’t become obvious by now, the key is to earn the business of your customers. Not with freebies, but by honest customer service and education. It’s simple. If you invest in them, they will invest in you. Win-Win. Both parties are happy, and no-one is taking the hit. The best marketing tool you have is Word Of Mouth. This is how that investment in your customers pays off.
Invest in your business:
I have seen more than a handful of retailers eventually fail because they were not willing to give their business the extra financial push it needed in order to break through the line between “afloat” and profitable. It’s scary, but so is entrepreneurship on the whole. They don’t call them “risk takers” for no reason, but in a situation like this, it shouldn’t be too difficult to calculate the risk. If you have a hard time stepping outside of the box when it comes to your own business, consider hiring a consultant to analyze the situation for you. One of the surest ways to kill a business is to underfund it. If new equipment is what you need in order to compete, then by golly, you should bite the bullet and take the debt to do what you need to do in order to stay afloat. (a word of caution: tx-coffee.com, nor the author, can be held responsible for a lack of research or common sense or the results of taking advice from this, or any other article on the part of the reader) As much as I hate the notion that “tools are to blame”, the fact of the matter is that in a business like this, you simply cannot perform without the right tools. Whether what is needed is training, equipment(scroll down), more staff, or any combination thereof.. any educator will tell you that the smartest investment is an investment in yourself. Well, I’d venture to say that the smartest investment your business can make is an investment in itself.
Know When to Cut Your losses:
Some businesses are too far gone to continue, and while a failure plan should have been built into the Business Plan, this is not always the case. This is the time to go back through the books, and start documenting if you have not done so already. As much as we don’t want to see any business fail, the fact of the matter is that some do, and it’s better to guide it down before the fuel tank is all the way empty than to keep fighting until the engines die and it crashes. This is about the financial benefactor of the business, and their financial health, and not so much about the business itself. Without financial backing, no retailer could get off the ground in the first place.
Hold on Tight:
Watch the market, but don’t listen to the pundits. Their opinions are.. well.. opinions. The newspaper doesn’t know which way the economy will swing any more than you do.. becuase they are written by other people. Sure, there are “experts”, and many “experts” have been wrong. Use your own sound judgement. It’s the American way. (at least, it used to be) It may be a bumpy ride, but hold on if you can! We here at TX-Coffee.com hope this has given at least some insite or inspiration for ingenuity in surviving the economic recession as a retailer. We’ve got more articles on the way. Thanks for reading.