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A Coffee Analyst predicts the future of the specialty coffee industry.


BY JASON NASH Lattes with whip, the smell of coffee and freshly baking scones, friendly baristas, free WIFI...what a great way to start the day! Coffee shops have become so much a part of our daily routine that baristas often become great friends. They know us like family...or do they? When is the last time they offered you a customer satisfaction survey? It’s called Market Research and coffee shops need to get onboard before it’s too late. Disruptive technologies are getting ready to open a can of whoop-ass on the specialty coffee industry. Specialty coffee shops are becoming a little less specialty and a lot more unnecessary as each innovation hits the market. Single serve coffee makers, at-home espresso machines,

and at-home coffee bars make it easier than ever to craft your own beverage. Coffee consumers are way too intelligent to tolerate a 300% markup, mediocre customer service, and improperly made lattes. There’s a storm brewing and you heard it here first. The coffee industry is bloated and the numbers back me up. So, the housing bubble in the United States was formed between 1997 and 2006. During that same time period, Starbucks was popping up stores left and right. I discovered a 99.62% correlation between the growth of housing prices (Standard & Poor’s Case–Shiller Real Home Price Index) and growth in number of Starbucks stores worldwide. While economists struggle to define a market bubble, I would dare say that a nearly 100% correlation of a bubble...equals another bubble! If strong correlations to two recent bubbles isn’t enough evidence for you, there’s more. The number of transactions at Starbucks (same store sales) has dwindled to a mere 1% growth in 2016.

Food & Beverage Magazine |January 2017

This is what happens when you try to please your shareholders and forget about your customers. The specialty coffee industry must make some changes before this coffee bubble bursts. And if Americans want change, then that is what they will get...just ask Donald Trump and Hillary Clinton! The specialty coffee industry has been evolving ever since 1900. Think about it, there has been a lot of advancement since Maxwell House was “Good to the last drop” and TV commercials were singing “The best part of waking up is Folgers in your cup!” These brands embody what is now called the First Wave of coffee. Our grandparents were drinking instant coffee and the Mr. Coffee brand coffeemaker was invented. Then, the first Starbucks opened in Seattle in 1971 and the Second Wave of coffee began. The latte became popular and coffeehouses began to pop up on almost every corner. Finally, around 2002, experts began defining the Third Wave of coffee.

Food & Beverage Magazine January 2017  

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