December 2016 | Vol. XXIX No. 12 www.coffeetalk.com
NT THIS MO
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T F O E STAT
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sue
Special Is
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PROSPERING IN THE EVER CHANGING REALITY OF THE COFFEE WORLD
An insider's view on what is happening in the specialty coffee industry, directly from its own members.
2017 ISS
UE
Welcome
C
offeeTalk Media is honored to bring you our 2017 State of the Industry in which some of the most influential thought leaders in the coffee, vending, and foodservice related industries each address the issues of identifying and addressing “Prospering in the Ever-Changing Reality of the Coffee World.”
• Kat Fiske, Senior Associate for Technical Communications, Lutheran World Relief • Justin Marquis, CEO Tightpac Global • David Gross, President, Add a Scoop supplements • Damon Piatek, President and CEO of Welke Customs Brokers USA • Dan Ragan, National Sales Manager, Pod Pack International • Ken Shea, President, Ken Shea and Associates and V. P. of Coffee Service for G&J Marketing and Sales • Heather Perry, Barista Champion & SCAA Director, Klatch Coffee • Maria Rosa Elena Romero de Castro, Entrepreneur and Coffee Producer & Maria Botto, President, IWCA El Salvador • Ed Arvidson is President of E&C Consulting • Rachel Tuhro, Communications Director PBFY • Molly Laverty, Farmer Brothers • William “Bill” Murray, NCA President & CEO • Randy Anderson, Director of Marketing, JoeTap
Though the topics discussed are wide-ranging, certain themes emerged: Consumers are becoming savvier with higher expectations; survival depends upon our ability to innovate and adapt to the changing needs of our customers; and knowledge is power. Enormous thanks to our industry contributors: • Ben Weiner, Gold Mountain Coffee Growers, L.L.C. • David Griswold is the founder and CEO of Sustainable Harvest Coffee Importers • Paul Stewart, Global Coffee Director, TechnoServe • Michael Shaw, Tour Guide | Marketing Specialist, The Roasterie • Steve Mangigian, President and Managing Partner, Zingerman’s Coffee Company • Donald N. Schoenholt, President, Gillies Coffee Company
January 2016 www.CoffeeTalk.com Vol. XXIX No. 1
We hope you find the articles inspiring and useful! Cheers and wishing you all an incredibly successful 2017!
Kerri Goodman, publisher coffeetalkMAGAZINE
February 2016 www.CoffeeTalk.com Vol. XXIX No. 2
CONNECT. GROW. PROSPER!
March 2016 www.CoffeeTalk.com Vol. XXIX No. 3
CONNECT. GROW. PROSPER!
CONNECT. GROW. PROSPER!
See page 4 for instructions on how your company can be in the next Buyers Guide
page 14
This Month
This Month 8
The Physiology of Taste: The Science of Taste and What It Means to Coffee Cafe Profile: A Dream for Sale
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16
Pseudo Science: Caffeine Confusion
18
The Future of Coffee— Ten Challenges and Collaborative Solutions
Connecting the Dots— Single Served Coffee
8 26
The Power of Origin Trips— Learning in the Birthplace of Geisha Coffee
36
The Rural Value Chains Project— Better Quality Coffee, Better Quality Life
August 2016 www.CoffeeTalk.com Vol. XXIX No. 8
Vol. XXVIII No. 7
Women and Micro Finance
page 8
CONNECT. GROW. PROSPER!
Tools for Roasting
See Exhibitor Highlights page 22
El Salvador Solutions to Crushing Poverty
page 10
This Month
page 8
This Month
This Month
10
Producer Profile — Santa Elena, Costa Rica
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Tales From Origin— Peru - How to Make Friends and Influence People
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Tales From Origin— Colombia – A Message from the Heart of the World
Big Business & Corporate Social Responsibility— Five Reasons the Coffee Industry Needs CSR Programs
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Water: An Unfiltered Conversation
8
What's in Your Water?
MAKING A DIFFERENCE
THIS MO
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SEE EXHIBITOR HIGHLIGHTS
ROASTER'S ROCK
Preparing for the
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IO N S
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Improving
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TALES FROM ORIGIN 14 GETTING PROFITABLE
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SEE EXHIBITOR
WHAT WE TAKE FOR GRANTED 10
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Systems
HIGHLIGHTS
Mexico – The Death Train Runs on Coffee
Can My Business be Saved?
GETTING PROFITABLE
GETTING PROFITABLE
Understanding Profitability
THREE APPS FOR COFFEE HOUSES
Lesson 3: Calculating a “Cost of Goods”
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ble Organic
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TALES FROM ORIGIN
Lesson 2:
Controlled Fermentations— An Overlooked Opportunity for Flavor Development
GANIC ABLE OR
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SUSTAIN
Part 2 - Build
NIC BLE OR-GA Part 1 SUSTAINA inability e and Susta
Organic Coffe
Ethiopia – Coins and Canines in Harar
TALES FROM ORIGIN
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s
ugh Analytic
Tales From Origin— Overcoming Gender Violence in Rwanda
www.coffeetalk.com
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Guatemala A Visit With a Saint
GY & BU SI
ness Thro
Your Busi
Producer Profile: Terra Bella Villa Sarchi | Costa Rica
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November 2016 | Vol. XXIX No. 11
www.coffeetalk.com
www.coffeetalk.com
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October 2016 | Vol. XXIX No. 10
September 2016 | Vol. XXIX No. 9
How to Ope
See SCAA Exhibitor Listings page 40
page 32
CONNECT. GROW. PROSPER!
See Exhibitor Highlights page 22
See NAMA Exhibitor Listings page 40
This Month
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June 2016 www.CoffeeTalk.com Vol. XXIX No. 6
The Role of Packaging
The Challenge of Women in Coffee
NCA Attendees Don't forget your free gift mug!
Connecting the Dots— Life In Motion Roaster's Rock— The New SCAA Flavor Wheel: The Evolution of an Idea
CONNECT. GROW. PROSPER!
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Learn the Local Language! Or, An “A” for Effort in Papua New Guinea See Exhibitor Highlights page 9
10
May 2016 www.CoffeeTalk.com Vol. XXIX No. 5
CONNECT. GROW. PROSPER!
Origin Adventures—
Frozen Assets Fire Up Profits page 8
April 2016 www.CoffeeTalk.com Vol. XXIX No. 4
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Contents
10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 41 42 43 45
Sponsor Index Five Steps to Direct Trade Success Based on Quality Ben Weiner, Gold Mountain Coffee Growers, L.L.C.
Looking to an Inclusive Economy to Guide our Future David Griswold is the founder and CEO of Sustainable Harvest Coffee Importers
Prosperity Starts on the Farm Paul Stewart, Global Coffee Director, TechnoServe
Coffee Today, According to Us – Fusions, Bookish Baristas and Coffee Everywhere Michael Shaw, Tour Guide | Marketing Specialist, The Roasterie
A Vision of Success Steve Mangigian, President and Managing Partner, Zingerman’s Coffee Company
Do What You Can With What You Have Donald N. Schoenholt, President, Gillies Coffee Company
Moving the Needle Toward Farmer Prosperity Kat Fiske, Senior Associate for Technical Communications, Lutheran World Relief
Perspective Key to Success Justin Marquis, CEO Tightpac Global
Promote the Wellness of your Products David Gross, President, Add a Scoop supplements
Importing: Understanding the Rules to Keep Your Company Growing Damon Piatek, President and CEO of Welke Customs Brokers USA
Prosperity in Coffee Dan Ragan, National Sales Manager, Pod Pack International
Coffee Service Corner Ken Shea, President, Ken Shea and Associates and V. P. of Coffee Service for G&J Marketing and Sales
The Forgotten Sales Team Heather Perry, Barista Champion & SCAA Director, Klatch Coffee
Prosperando en el Cambiante Mundo Del Café Maria Rosa Elena Romero de Castro, Entrepreneur and Coffee Producer & Maria Botto, President, IWCA El Salvador
Viable Coffee Business Concepts for the 21st Century Ed Arvidson is 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
Three Ways to Prosper in a Competitive Coffee Industry Rachel Tuhro, Communications Director PBFY
Prospering in the Ever Changing Reality of the Coffee World Molly Laverty, Farmer Brothers
A Year of Challenges William “Bill” Murray, NCA President & CEO
Tap into Profits Randy Anderson, Cold Brew Coffee Consultant
Contents
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CoffeeTalk does not assume the responsibility for validity of claims made for advertised products and services. We reserve the right to reject any advertising. Although we support copyrights and trademarks, we generally do not include copyright and trademark symbols in our news stories and columns. CoffeeTalk considers its sources reliable and verifies as much data as possible. However, reporting inaccuracies can occur, consequently readers using this information do so at their own risk. Postmaster: Send address changes to HNCT, LLC, 25525 77th Ave SW, Vashon, WA 98070 Subscription: The cost of a subscription in the U.S. is $47.50 per year; in Canada, the cost is $72.00. Free to qualified industry professionals. Non-qualified requests may be rejected. Publisher reserves the right to limit the number of free subscriptions. For subscription inquiries, please call 206.686.7378 x1 or subscribe online at www.CoffeeTalk.com. Copyright © 2016, HNCT, LLC, All Rights Reserved
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10 December 2016
Five Steps to Direct Trade Success Based on Quality by Ben Weiner, Gold Mountain Coffee Growers, L.L.C. markets that place value on quality, their main incentive will be volume, not high-cupping coffee. Third-wave roasters wishing to obtain highcupping coffees nowadays need to seek out direct-trade relationships. Increasingly-educated customers and “foodies” in the globalized world (think of the local movement in “Portlandia”) expect roasters to know their coffee farmers and the processes used to produce their coffee. They expect traceability, not a certifier’s generic stamp. News articles are shedding considerable light on gaping flaws in certified coffee supply chains, and roasters can do much better. Photo credit: Gold Mountain Coffee Growers (@goldmtncoffee)
Coffee Roaster Eric Mason sources coffees in Nicaragua with Gold Mountain Coffee Growers.
R
oasters in the third-wave of coffee need a direct-trade supply chain that values quality and traceability. Below are five key steps they should take to ensure both. Unfortunately, the C Market and certifications of coffee farms create incentives for volume, but not quality. Why should a coffee farmer who gets paid $1.15/lb most years ($2.00/lb once every blue moon) pick with perfect ripeness, ferment well, wash coffee well, and pick out imperfections on raised beds when her pay barely lets her family eat? Certification systems may have “premiums” tied to volume, but they are often consumed by administrative fees and export fees. Unless farmers are connected directly to specialty
Roasters seeking to establish effective directtrade relationships based on quality should at a minimum follow these five steps: 1) Be there: Travel to origin and cup coffees, then return as the coffee is being packed for export. To avoid coffee switching, take samples yourself from the actual export bags. Roast and cup them. Mark the bags destined for your roastery and watch as they are sealed. Send your favorite barista or cupper if you can’t make it. 2) Engage: Make sure the coffee you purchase is traceable to a specific coffee farm. Visit the farmers. If your export and import partner won’t allow you to visit the farm or if they make excuses, the lack of transparency should dissuade you from that business relationship. 3) Reward directly: When your coffee reaches 87 points or more, give the farmers a quality premium directly (in
their hands) and make clear that it is because of the quality they achieved. If you are working with multiple farmers, give the highest-cupping coffees the highest quality reward. 4) See for yourself: When you visit a farm, notice its environmental impact. Did the owners chop down forest to plant coffee? Does the farm protect forest? Are there shade trees? A certification isn’t enough. Verifying environmental protection is more meaningful. 5) Get all the info: If you must rely on importers and can’t get to origin yet, ask them tough questions about the farmers and coffee, as well as coffee processing. Does your importer know the family members of producers? Can they tell you the latest goals and challenges of the farm? When did they last visit? Can they call or visit the farmer within a week or two to ask a few questions for you? Can you visit whenever you’d like? If any of these answers is no, you should look for a more direct connection with origin. Ben Weiner is the founder/CEO/ chief farmer of Gold Mountain Coffee Growers, LLC. He will be giving a talk at the SCAA show in Seattle (April 2017) on how to achieve quality through direct trade relationships. You can learn more about coffee processing and get sample roasting tips at www.goldmountaincoffeegrowers.com and see what they’re up to at origin at @goldmtncoffee (Instagram, Twitter, Facebook).
Photo credit: Gold Mountain Coffee Growers (@goldmtncoffee)
Farmers in directtrade relationships based on quality have incentives to produce meticulouslyprocessed coffee. Here coffee is being washed on Finca Idealista in Nicaragua.
Photo credit: Gold Mountain Coffee Growers (@goldmtncoffee)
On Finca Idealista in Nicaragua the farm utilizes volcanic filters to clean water after it is used to wash coffee. This prevents environmental contamination. The farm also bought a rainforest just to protect it and was awarded the 2016 excellence award for sustainability by the Specialty Coffee Association of Europe.
12
Photo credit: Gold Mountain Coffee Growers (@goldmtncoffee)
Roaster Karl Fisher of Alabaster Coffee in Williamsport, Pennsylvania visits partner producers of Gold Mountain Coffee Growers in Nicaragua. Here Karl stands with Sebastiana Diaz Ortiz on her farm. He traveled through a river, past men with large guns, and over mountains to get there.
December 2016
Looking to an Inclusive Economy to Guide our Future by David Griswold, Founder and CEO of Sustainable Harvest Coffee Importers
W
ildly shifting coffee prices, influenced by everything from politicsrelated currency devaluation to unpredictable rainfall. Climate-change-spawned dismal forecasts raising questions about farmers’ ability to grow coffee in the long-term. Prolonged poverty at origin leading farmers’ children to abandon coffee and seek other career options. Sometimes just participating in the specialty coffee supply chain can be a daunting prospect, with one seemingly insurmountable challenge after another. It becomes even more harrowing when you consider the divisiveness of our political climate, violent global uprisings, and the myriad questions facing our future. Sure, the coffee industry is facing an unpredictable future, but so is much of the planet. So what can we as members of the coffee industry and the global business economy do to survive in this landscape? At Sustainable Harvest, we are focusing more than ever on an inclusive economy that includes all stakeholders, functions in a beneficial manner toward all of them, and seeks to develop opportunities for all involved. This has been a much talked-about concept recently in the B Corporation community, of which Sustainable Harvest is a part. B Corporations are companies that strive for business as a force for good—rather than emphasizing the bottom line and seeking profits above all else, B Corporations meet high standards of social and environmental performance, accountability, and transparency. Not surprisingly, these like-minded corporations treasure the idea of an inclusive economy that leaves no one behind and aims to nurture the economic growth of everybody.
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While Sustainable Harvest became a B Corp in 2008, these ideals of inclusiveness have been in our DNA since the company’s launch in 1997. Sustainable Harvest’s Relationship Coffee Model promotes transparent business relationships between coffee producers and coffee roasters that are mutually beneficial and nurture the growth and success of both parties. It’s an inclusive model that believes in the power of relationships and the idea that business connections are stronger when people know who they’re working with. This spirit is at the heart of Sustainable Harvest’s annual Let’s Talk Coffee gathering, which takes place in a different coffee-producing country each fall. The most recent event—in Puerto Vallarta, Mexico, in October 2016—united 250 people from throughout the coffee supply chain. Over three days, the assembled attendees took in a program in which top global speakers shared their insights on pressing industry issues including market volatility and climate change; enjoyed multiple networking opportunities during which they forged and strengthened business relationships; and attended cuppings and trainings to strengthen the entire coffee supply chain. A funny thing happens at Let’s Talk Coffee: When everyone in the coffee industry—from producers, roasters, and baristas to NGOs and financiers—is in the same room, a sense of magic is created by the enthusiastic spirit and collaborative nature of these passionate coffee people. Walking into a room at Let’s Talk Coffee reveals a collection of people working their hardest to achieve the greater good for the collective benefit of the entire coffee supply chain.
Helen Russell, Albert Scalla, Fatima Ismael at Let’s Talk Coffee
December 2016
One of the ways Let’s Talk Coffee distinguishes itself from other events is by focusing on coffee producers and women. At Let’s Talk Coffee Mexico, 62% of the program sessions featured women, many of whom were producers. Focusing on these groups demonstrates the inclusiveness that is so important to Sustainable Harvest as a company and the future of the coffee industry. With producers facing perhaps the most daunting challenges of any stakeholders in the coffee industry, it’s vital to include them and give them the support they need. It hit home with us at Sustainable Harvest when, just a week after Let’s Talk Coffee, some of our staff attended the B Corp Champions Retreat in Philadelphia and witnessed many presentations centered around the value of an inclusive economy. We had just demonstrated these values in Mexico, and here was a community of likeminded entities reinforcing our belief in their importance. What’s more, it gave us hope that this mindset may be widespread enough to give this movement the boost it needs to resonate with the greater business community and start to take greater shape as a tenet of many companies. In times that are seemingly more perilous than ever, it resonates strongly with us to take care of one another and strive for mutual success. For any roasters or other organizations who are similarly looking to spur the growth of an inclusive economy, please contact me directly and we can explore collaborations. We have launched many projects at origin that produce exquisite coffees while strengthening the organizations behind them, and I believe in the power of this partnership model. In coffee and beyond, we must move forward while placing the utmost importance in inclusivity, working collaboratively, and striving to succeed together. David Griswold is the founder and CEO of Sustainable Harvest Coffee Importers in Portland, Ore. He can be reached at david@ sustainableharvest.com.
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Prosperity Starts on the Farm by Paul Stewart, Global Coffee Director, TechnoServe
But raising the incomes of farmers is just as important, as it allows them to put money away, weather the rough years, and continue farming coffee. Without this cushion, thousands or millions of farmers around the world will be forced to abandon coffee for low-value crops or migrate to cities.
A
s I write this, the harvest is underway at the Duromina cooperative in western Ethiopia. If the past five years are any guide, the coffee being picked and processed there will be sold in bags and cups by some of the most acclaimed coffee roasters in the world. But a decade ago, the situation was dramatically different: farmers in the region were selling low-quality coffee to local traders at rock-bottom prices. The change at Duromina is emblematic of a shift that is remaking the coffee world. According to the National Coffee Association, consumption of specialty coffee in the United States has risen three-fold in the past fifteen years. Consumers’ growing appetite for high-quality coffee, and their readiness to pay a premium for it, can bring new revenue to retailers, roasters and exporters and transform the livelihoods of coffee farmers. But those gains are not guaranteed—seizing this opportunity requires cooperation and investment in farming communities around the world. Investments for Higher Yields To meet growing demand, we must help farmers—especially those working small plots of land—to improve their yields. In East Africa, for example, average yields observed on farms are just one-fifth those of well-tended demonstration plots. While farm yields are somewhat higher in other regions of the world, there is still much room for improvement. In some cases, higher yields will come from improved sales channels for fertilizers and high-quality seedlings, and from better access 16 to the credit needed to purchase them. But
productivity can also be improved dramatically if farmers adopt climate-smart agricultural practices, many of which require no inputs at all. In working with farmers across Africa and Latin America, we have found that hands-on training in small groups on a demonstration plot can lead to dramatic behavior change. During a recently completed project in Rwanda, for example, the percentage of coffee farmers using at least half of the recommended agricultural techniques rose from 40 percent to 89 percent. Investments in Improved Quality Similarly, investments must be made to improve the quality of coffee produced. Often, this means launching new local processing facilities. That is exactly what unlocked the quality at Duromina cooperative. The local coffee cherries grown there always had great potential, but poorly executed natural processing yielded green coffee that was defective. With improved access to finance and the technical advice to successfully build and operate a wet mill, the farmers of Duromina had the tools they needed to attract premier buyers. In Latin America, central wet mills may become an attractive alternative to farm-level processing facilities, improving quality control and giving farmers back the many hours they would spend on processing. But outside capital and capacity building is required to turn these visions into reality. Investments in Resilience Supporting farmers makes sense for the coffee sector even in the best of times. But the specter of climate change brings with it even greater urgency to act. Improved adoption of climatesmart agronomy practices and better access to inputs will help to minimize the impacts.
December 2016
How to Bring about Change How will we make these changes happen? In many cases, that process has begun. In East Africa, we have seen exporters build wet mills to ensure access to a high-quality product. At TechnoServe, we work with many of the world’s leading coffee companies to deliver agronomy training to smallholders and improve farmers’ access to good processing facilities. These companies understand that not only do these efforts help farmers, but that it is in their own long-term interest to invest in expanding the world’s supply of high-quality coffee. Working together, we’ve reached hundreds of thousands of farmers in recent years. But there is still an enormous amount of work to be done and millions of farmers to be reached. To scale up what has been accomplished, we need more strong partnerships. We need the private sector and public sector to leverage their strengths and financial commitments. We need to share what works in the laboratory and in the training session. It is only through this kind of collaboration that we will reach our twin goals: that the supply of high-quality coffee increases, and that every farmer growing it has a path out of poverty. Because the best way to prosper in this ever-changing coffee world is to ensure that farmers prosper, too.
Paul Stewart, Global Coffee Director, TechnoServe
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Coffee Today, According to Us – Fusions, Bookish Baristas and Coffee Everywhere by Michael Shaw, Tour Guide | Marketing Specialist, The Roasterie Another trend we’ve seen over the past few years are changes in the attitudes of our staff. For the most part, it’s the same types of demographics you’d expect to find working at a café. 20-somethings, some college-age workers, and a few graduates disenfranchised with their discipline of choice. What’s truly changed is the overall attitude towards working in a café. Our baristas, managers, tour guides—they like what they do. For some it may be a stepping stone on the road to further careers, but they still genuinely enjoy layering lattes and chatting with regulars.
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ake a brief look at the so-called ‘Waves’ of the coffee industry. At the core of these chapters in coffee consumerism, central trends can be noticed. In the first wave, it was important to spread coffee to the four corners of the Earth. Advertising was also extremely potent. In the second wave, coffee took a more central role in the cultural landscape of America. Cafes became a meeting place for students, dates, and colleagues alike. The third and most recent wave focused almost entirely on the brew itself. While we’re not convinced that we’ve breached the fourth wave, the trends we see in the industry today are influenced by third wave coffee, the hectic schedule of the average customer, and a desire for authenticity and information. The first trend we’ve noticed is a demand for fusions of business categories. A small, dive coffee bar can drum up a healthy profit in the right circumstances of location and a dedicated following. Yet, in our experience, offering more than just a superb cup of coffee goes a long way. Becoming a coffee shop as well as a bar, or bakery, or meeting place keeps customers coming back. To paint with a wide brush, everyone is busier than ever before. With the modern, hectic schedule it’s oftentimes not feasible for someone to visit 5 different stores for 5 different errands. Hence, the rise of enormous, all-purpose one stop shops that even have a small café inside the grocery store. Consolidating the bakery, butcher, farmer’s market, and café is the reality we live in. If someone is travelling on foot in densely populated areas, they can still afford specialization and more than a few stops. The Midwest, on the other hand, is so spread out that most people will not take the time to drive to 18 multiple locations several times a week for their
groceries. Particularly when you count parents with small kids, even getting everyone in or out of the car can mean an extra 10 minutes and another hassle. While it’s important to offer a variety of services and goods in a fusion-type category, it’s perhaps even more important to maintain a strong sense of self in that messy Venn-diagram. The benefits of a strong brand identity have been wellknown for a while, but particularly in the coffee industry, being suave or trendy is only half the battle. Anyone can make a coffee shop that looks nice, but to have everything you believe about coffee oozing through the walls will make all the difference in the world. One of Danny O’Neill’s pillars of identity for The Roasterie is education. An educated customer is a more discerning customer, and our belief is that a more discerning customer will notice the difference in our coffee (and pay for it) at the store. Moreover, The Roasterie offers factory tours of the roasting facility, we’ve started to perform coffee brewing demonstrations or, ‘coffee colleges,’ in local grocery stores, and we also host public tastings for people who want to try a variety of coffees at one time. Though we do our utmost to maintain the integrity of flavor and quality of our products, we spend almost as much effort educating the public and making our ravenous passion known. Our identity is couched in education and amazing coffee experiences; the services we provide and the attractions that bring people in the front doors further that identity implicitly. Again, these principles are covered in ‘branding 101,’ but the takeaway is that you can’t just make great coffee. You have to make great coffee while simultaneously expressing a belief, perspective, or attitude towards the brew.
December 2016
Obviously every employer hopes their staff will have a cheery and helpful attitude, but in our case we’ve been both lucky and purposeful in creating an environment of coffee nerds. We get compliments all the time on how engaging and knowledgeable our staff is. Particularly because our tours bring in all sorts of tourists and other guests, we’re seen as a hub for information. And that isn’t possible without employees that are eager to learn and willing to share their newfound information. So, as a trend, we’re finding employees who are curious to love our product and who enjoy the day-in-day-out pace of working behind the bar. Perhaps the last thing we’ve noticed is that coffee is permeating everywhere. In the past, libraries were exclusively anti-beverage. Recently, though, many libraries are forsaking this stance for small cafes built inside the building. We’ve even recently heard of higher-end men’s clothing stores that are interested in serving micro lots and pourovers to browsing customers. Even when camping there are a myriad of new products that are engineered for the more outdoorsy segments of consumers. From mountaintops to the library stacks, the current coffee zeitgeist demands: “I can have my coffee anywhere.”
Michael Shaw, Tour Guide | Marketing Specialist, The Roasterie
A Vision of Success by Steve Mangigian, President and Managing Partner, Zingerman’s Coffee Company
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ast year I wrote about the fourth wave of coffee and what that might look like. I shared that this next wave would likely be rooted in delivering an outstanding customer experience, which included amazing coffee, meticulous preparation, and guests walking away feeling included rather than feeling isolated from the experience.
because they have so many things going on at once or a multitude of ideas banging through their brains. As such, we become quickly overwhelmed and unable to process it all. We get spread way too thin. If you happen to be one of those people, I would encourage you to slow down, take a deep breath, delegate some of your responsibilities or simply learn how to say NO!
This year, as I considered the idea of “Prospering in the Ever-Changing Reality of the Coffee World” I treated the question like a mini-internal brainstorming session and the first phrases that came to the surface were:
Today it seems like there is this never-ending attempt to consolidate and homogenize. Franchise chains are perfect examples of this (not that there is anything wrong with this model). Under this model I would posit that in today’s world, the key to succeed is to avoid the trap of “Me too”. Meaning that nobody wants to be or do the same thing(s) as the person/ business down the street. How many times have you driven through a planned community or new subdivision and asked yourself “Are any of these homes different?”
“Focus on core competencies” “Be relevant” “Have a value proposition” “Know your market” “Deliver unparalleled service and quality to your customers” “Have a vision of success” I won’t be writing about everything mentioned above. You might also be thinking to yourselves, “I know all this stuff already” or “Those are the obvious responses”. My aim is to offer a slightly different perspective. In my organization, everything we do starts with a vision of success. We start with the question “What does success look like in a given point in time?” We write it in the present and in a narrative form. Visions are the “north star” and don’t change. We submit that they should be inspiring but strategically sound. It is a collaborative process and should include all the stakeholders in the business. When complete, it becomes a roadmap of sorts. For us, success does not really occur unless it is rooted with a vision. In my company we have written a vision that takes us into the year 2020.
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I would suggest that offering high levels of service along with perhaps hard-to-find products can help to further differentiate yourself. Further, focusing on core competencies (read above) and being the content expert in your field can also help. As they say: “knowledge is power”. Being the person in the area that knows the most means that you can leverage that knowledge and assist others in their quest for differentiation. One of the examples I like to use in our business is that we can source really
great coffee and roast it beautifully, but unless those coffees are brewed or prepared properly then what’s the point? In our café we offer to our guests the ability to have every one of the coffees we source and roast to be brewed up to 8 different ways at any time. We call it the big brew board and it is designed to welcome people into our space and expose them to the different methods of prep out there along with all the various coffees we source. Many of you out there may be doing exactly what we are doing, and as such may be dismissing the idea that this can be a point of differentiation. However, the knowledge we glean from daily interactions with the guest helps us gain even more expertise and allows us to leverage all that we do at a wholesale level with our customers on that side of the business. This, I would argue, is the primary value proposition we offer (in addition to many others). Lastly, the idea of being relevant is one that is often overlooked (although obvious to many of us). In a recent keynote address that I delivered to a large group, I shared that reinvention must reveal the results of relevance. A nice play on words. But what does it mean? It means that if you want to re-invent yourself, you need to be relevant. You need to offer something that no one, or very few other people, can offer. It is an iterative process. Just when you think you have “arrived”, it is time to re-devote yourself to further learning. Often, committing yourself to ongoing learning and focusing on core competencies will keep you one (or more) step(s) ahead of everyone else. Opportunities abound for independent café owners. Roasters have opportunities to capture market share being left as a result of acquisition and consolidation. What we do with these opportunities is what differentiates us and helps us stand out.
The idea of focusing on core competencies is generally accepted as an obvious solution for any business owner asked the aforementioned question. However, the space between AGREEING and DOING is huge. From my vantage point, I have seen many cafes and business owners find themselves in crisis management
Truthfully, there are many ways to prosper in today’s ever-changing coffee world. What I have shared above has worked pretty well for us. Maybe it can help you too!
December 2016
Do What You Can With What You Have by Donald N. Schoenholt, President, Gillies Coffee Company
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he independent small coffee business is ever at risk. There are winds of change eternally blowing, influencing our ability to make a living. Like it or not, in the global age, we must teach ourselves to understand these forces, some of nature, and some of man, that are shaping coffee’s economic future, and our individual economic lives. In the last three crop years more Arabica coffee was grown in the world than was roasted. This was in part due to suppression of demand caused by a weakened global economy which hurt the nascent consumer coffee markets in developing lands. The warehoused inventories of older crop coffee have been depleted by a recovering world economy. The reduction in Robusta exports from Vietnam and Indonesia, and the US market needing more coffee than was being grown, created a recipe for rising green coffee prices, and so we have watched, fascinated, as the New York “C” Contract market on the ICE Exchange has moved up throughout the year (with a couple of steps back just to give us a false sense of relief) from about $1.20 in January to a high just shy of $1.80 on November 8th. Specialty folk understand the “C” is just an indication of Arabica values. It does not include premiums added to the bean values by purchasing smaller than 250 sack lots, buying better grades and specialty items. In the Age of Reagan, Robusta numbers were unimportant to most specialty roasters. The coffee world has changed, and we must all learn to understand their importance now. There are two reasons for this. First, when Robustas are unavailable, roasters who use them must find Arabica
substitutes. This
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shortens the supply of lower grade Arabicas pushing everyone up the pyramid to buy better grades. And with this tension the price moves upward as sellers can extract an ever-higher price for their better grades. Second, more Robusta coffee of the better grades are finding their way into formerly all Arabica specialties, particularly in espresso blends. The American specialty community, was first introduced to high-end espresso blends with Robusta beans by David Schomer, of Café Vivaci, in Espresso Coffee Professional Techniques (1995), and has largely accepted his premise that there is a role for better grade neutral cupping Robusta in American espresso. The general cycle of Robusta price increases pushing roasters into Arabica purchases creating upward price pressure on Arabicas is not a new story. We have seen it in the not too distant past. Of course, these things never repeat quite as they occurred last time, but it’s a close enough pattern that if we are very quiet we can hear Yogi’s ghost whispering, “It’s deja vu all over again.” The good news is that communication has come a long way from the days of waiting for a cable from Brazil or London to tell us what’s happening in the world. No one can slip in a frost that isn’t there, as satellite images and on-site mobile phone cameras can help us learn if reports are valid. Still, there is anxiety as we wait to hear confirmed crop reports and nervously watch the “C” Contract in New York, knowing that what happens there affects many of the specialty origins and grades that we buy. There is a particular anxiety in knowing that for a long time now the “C” has been controlled less by supply and demand as by the moves of moneymen, referred to in the trade as “Specs and Funds”, with no particular interest in coffee other than its use as a financial instrument to move decimal points on a screen. It is a cold business compared to the passion of buying and roasting real coffee produce, which the traders refer to as “Actuals.” The coming consolidation of specialty coffee trade groups will draw succor and support
December 2016
further away from independent operators, while at the same time providing more educational opportunities, and materials to help individual workers in coffee to grow. The Guild system pioneered by American specialty coffee may prove to have been the most important contribution made by independent roasters in the last quarter century. The Guild platforms raise workers that, in the 20th Century, had been reduced to semi-skilled laborers and technicians, to a level of respected craftspeople. As the world around us swirls, and we feel uncertain of the future of our coffee livelihood in the global economy, it is helpful to be grounded in a philosophical approach to managing the future. I suggest the idea of a favorite philosopher of mine, Theodore Roosevelt, who wrote in his autobiography, “Do what you can, with what you have, where you are.” Aspire to prosper by focusing on your personal economy; seeking to expand your possibilities with the resources at hand. The Internet is a low cost tool that is a fountainhead of information in your pocket and on your desk. Embrace it. Finding ways to use it to advantage can make positive change in your understanding of both your business, and of the wider coffee universe. Embrace your available office technology to raise the quality of information generated within your businesses. As an example, in recent years learning some rudimentary ways to use Excel has helped me in the areas of buying, cost accounting, and pricing. Expand the time spent on staff development, for the people we work with are by many measures our business’s most valuable asset. By focusing inward, using the tools at hand, our good sense, and our energy, while being cognizant of the world beyond our roasterie, café, farm, and office door, an independent coffee business, can prosper within the coffee village. The winds of change, as the Big Bad Wolf before them need not blow down our house.
Donald N. Schoenholt, President, Gillies Coffee Company
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Moving the Needle Toward Farmer Prosperity by Kat Fiske, Senior Associate for Technical Communications, Lutheran World Relief forces them to sell their beans at lower prices to middlemen, who have the means to transport their beans to buyers.
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he struggle of small-scale coffee farmers is not news to anyone in the industry. A quick Google search of the term “coffee farmers” yields pages of results with various iterations of the same message – coffee farmers are barely breaking even. We are familiar with the statistic that coffee farmers typically earn less than 10 percent per pound of the retail value for their coffee. And we understand that the added costs of agricultural inputs (like fertilizer), cooperative fees, and middlemen further cut into what measly profit farmers can pocket from the sale of their beans. We know all this, and yet, we are not translating that knowledge into widespread, meaningful change for the world’s coffee farmers, who continue living in poverty despite the industry’s growth. This is not to say important change is not happening. That same Google search would also bring up websites and articles discussing Fair Trade, direct trade and impact investing, all of which can increase farmers’ profit margins under the right circumstances. Coffee corporations also invest in social responsibility departments and foundations that aim at helping impoverished farmers, so there is an obvious drive in the industry to make a difference. But the fact of the matter is this: those efforts alone are just not enough to move the needle from farmer poverty toward farmer prosperity. Coffee farmers today – especially those farming on small plots of land – face a myriad of challenges, all of which must be addressed if they are to break out of their cycles of poverty: • Most coffee farmers do not earn enough to provide sufficient food for their families year round and have no savings, credit, insurance or alternate sources of income to compensate for when their coffee harvest is poor or the market price is low.
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• The altitude at which coffee is best grown typically requires farmers to live in remote areas with difficult, mountainous terrain, which limits their access to markets and
• Many coffee cooperatives suffer from weak management, allowing biases and traditional power dynamics to limit how much farmers benefit from their membership. • Coffee farmers are also contending with climate change, which is negatively affecting their production in a variety of ways. Increasing temperatures have fueled the dramatic spread of la roya, the shrinking of land area suitable for growing coffee, and the frequency of severe weather. • Lack of training on climate-smart and environmentally sustainable agriculture practices as well as a general lack of clean water reduces the quality and quantity of their coffee harvests and contributes to environmental degradation. In addition to all this, coffee farmers are also aging. On average, they are in their mid to late fifties, and their children are not planning to follow in their footsteps, instead looking to more profitable work in urban areas. This brings up a host of questions about the sustainability of the coffee industry itself. If coffee farming doesn’t become profitable, what incentive is there for youth to stay? And if the youth don’t stay, who will be growing coffee in 20 or 30 years? If farmers don’t have access to the proper equipment and knowledge of environmentally sound agriculture practices, where will farmers even grow coffee once the land has gone bad? In addition to the humanitarian imperative, addressing these problems now and ensuring that coffee farmers prosper today will increase the sustainability and quality of the world’s coffee supply for decades to come. To effectively tackle these complex challenges, we need to develop long-term, multi-faceted, dynamic, and context-appropriate socioeconomic and ecosystem approaches. We must widen the focus of programs designed to help farmers, and we must make them more holistic. We must weave together single-approach initiatives, like price guarantees, with activities aimed at improving the social, economic and environmental realities in which farmers live and work. To ensure effective program design and execution we must rigorously plan, implement,
December 2016
monitor, and evaluate these programs to make sure they are meeting objectives, and we must make adjustments when they are not. Perhaps it goes without saying that these types of programs are difficult to put together, pay for, and pull off. This is where public and private sector partnerships can be extremely beneficial. Working together, each can build on the efforts and strengths of the other to help farmers in a big way. Such complex programs require the coffee industry’s substantial resources, product expertise, and market connections to reach many farmers over multiple years with high quality, technical livelihood support. These programs also need the vital local knowledge, culturally sensitive relationships, and experience in sound development practice found in the humanitarian sector to ensure contextually appropriate activities are diligently implemented and monitored at the farmer level. Greater partnerships between the coffee industry and development organizations have the potential to bring the scale, depth, and analysis necessary to more fully address the complex challenges of farmers. Some such partnerships exist today to a limited degree, but there need to be more to make a lasting difference in the lives of coffee farmers, their families and communities. If we ever hope for our efforts to significantly move that needle, these private-public partnerships must become the new norm in the industry’s approach to ensuring the prosperity of its coffee farmers.
Kat Fiske, Senior Associate for Technical Communications, Lutheran World Relief
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Perspective Key to Success
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by Justin Marquis, CEO Tightpac Global
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write this article from my office in Amsterdam, the Netherlands. My company Tightpac America / Europe manufactures containers for many different industries, and our markets are worldwide. I started this company over 10 years ago, with sales of well over 10 million sold. I have a unique perspective, having started from rock-bottom to a global entity. I travel throughout the western world, and it has become very clear to me the direction most of us need to go in order to survive and thrive in what was referred to a few years ago as the “New World Order”. Meaning the Wall Street version of The Coffee Industry and indeed our world. The success of our Coffeevac line has come from Europe first, not the USA, which happens to be our home market. The reasons for this should inspire us all and bring hope for the future. Simply put - perspective is the key. Let’s start with coffee in Europe; there are literally 100’s of smaller coffee companies in every European country, so many in fact, one wonders how it is possible? The model of local quality combined with community business is sustainable. Our traditional USA version of business success often involves millions of dollars raised, new premises, new this, new that, new car. We see it every day when reading articles about dot coms or coffee companies being sold for millions like they were candy bars tempting us at the checkout counter. This is not a reality many of us will share, and to be honest it only happens to a very small percentage of business society - maybe 6%! Our bent media would have us believe millionaires are falling out of the sky. The blatant reality of Super Success…. I have worked almost every day this month; and I have to admit every month for the past 5 years has been similar. I have not met up with any friends (outside of business) or gone to a party in a long time. Employee management now requires 26 all (even small) companies to have a human
resources department working around the clock! 5 years ago the IRS sent letters, once or twice per year. Now every other week they try to extract money from 2012 to 2016! Much like a witch hunt for money, if you can’t prove you made the payments – they hang you! When you boil it all down - success on a large scale is no longer worth all the sacrifices. So next time your view of a company sale is that of a sell out – think again - perhaps they couldn’t take all the crap anymore! The American Dream still exists; it’s just been pimped out and distorted by our greedy system. Now is the time to take back and live the dream in a sustainable way. Never before has the opportunity to be smaller had so many advantages. You can now market
virtually free of charge with technology, the internet and POS systems now offer unlimited opportunities. There are so many different ways of marketing: from basic reviews on your website, social media, instagram, to having customer preferences from your POS. This gives the smaller, quality-driven coffee entity the advantage of looking big, marketing big, which means having potential customers all over the country. Big brands are now charging over $5.00 for a basic cappuccino, and cheating, often using the super automated espresso machines (and that’s not all)! In the end, the coffee-loving consumer will change loyalties. Smaller Coffee establishments will benefit from this transition, and with this change they will be able to purchase their coffee and other products at a marginally higher price than the conglomerates.
December 2016
™
The “good old days” are over; we cannot act like everything is just fine and dandy anymore. Our election is certainly proof of this, when money seems to be the only thing that matters! We need to put our money where our beliefs are. When this business model exists in large numbers and on an American scale, possibilities present themselves. The root problem is how to get the farmers a higher price? Higher prices paid directly to the farmers will help to halt the exodus of young people away from the luring city, and it will also make life on the farm feasible for generations to come. It all sounds so simple, the funny thing is – it damn well is. Most important: never underestimate the value of your beliefs – Turn negatives into positives and stay real.
Justin Marquis, CEO Tightpac Global
Promote the Wellness of your Products
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rospering in the Ever Changing Reality of the Coffee World involves an understanding that blended drink sales are based on taste and nutritional benefit. Recent Mintel studies show us that the key driver behind blended beverage purchases is taste. 72% of consumers claim taste/flavor as the main influencer when choosing a beverage.
by David Gross, President, Add a Scoop supplements beverage industry, but {cafés} should consider a stronger focus on communicating flavor, in addition to health-centric or function attributes, of cross-category products.” Elizabeth Sisel, Beverage Analyst at Mintel. People want coffee, yes, but more specifically they want energy above and beyond caffeine.
In second place - but be careful not to ignore it - is the health/nutritional attribute of the drink. You can reach that additional 21% of the market share, which is a tremendous number, simply by adding nutrition to your blended drinks.
All research aimed at finding out what’s important to the market base will lead, time and again, to catering to the health-minded consumer. To add nutrition to the taste is the key to prospering in the ever-changing reality of the coffee world.
The important thought to keep in mind when looking to expand your customer base, sales volume, and profit margin is, “Taste & Nutrition: Let’s combine these two.”
Additionally, energy drinks have been cashing in on this principle. The skyrocketing sales numbers are an indicator that consumers want drinks with a functional supplement.
Anyone wondering, “How do I sell more blended drinks?” will find the key is to provide taste and functional supplements. Blended beverages are the most popular vehicle for promoting to the health & wellness minded consumer The coffee/café concepts that are enthusiastic about combining healthfulness and great taste to their blended beverage distinguish themselves from the competition and are therefore the ones destined to prosper in the coffee world. The statistics cannot be ignored. It’s crucial to understand the importance of this building block as a foundation for prospering. The consequences for ignoring this trend could include watching your sales drop off, when instead they could be expanding. There is a considerable number of ‘added nutrition’ options from which to choose. You need to consider adding boosts that are formulated to provide improved digestion, boost immunity, energy, stamina: vitamins, herbs, probiotics, fiber, amino acids, etc. 67% of American consumers ‘sometimes or frequently’ purchase new/different beverages. Research tells us that people are on the hunt for alternative drink options. Across the marketplace, generally speaking, the progressive coffee shop is offering a wide variety of functional beverages (functional with supplements included).
28 “Sales trends suggest the better-for-you
movement is reshaping the non-alcoholic
December 2016
Be it Vitamin Water, 5 Hour Energy, or any of the countless other brands out there, consumers are selecting drinks with added boosts. No corn syrup. No artificial flavors or sweeteners. It’s evident in other café menu items as well. Consumers are selecting healthy baked goods, sandwiches and snacks. You can meet this need by adding nutritional supplements to your frappes and smoothies as well. Consumers, being on the go, are attracted to convenience. To be able to get their nutrition at the same time they’re getting their blended drink is a big plus, and the key to prospering in the ever-changing reality of the coffee world.
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Importing: Understanding the Rules to Keep Your Company Growing by Damon Piatek, President and CEO of Welke Customs Brokers USA
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s the business of coffee changes, so can the rules surrounding access to coffee. For coffee importers in the United States, there are two related but separate government entities that oversee what is being brought into the country: U.S. Customs and Border Protection (CBP) and the Food and Drug Administration (FDA). Both organizations have not only rules, but philosophies, that govern their interactions with importers.
– eliminating wait times and enabling “trusted trader” programs – is to target bad actors. The issue for many importers, though, is that with the intricate and often-changing rules and regulations involved in U.S. Customs, there is plenty of room for error. The cost of errors can be steep. “Customs compliance” has quickly become a priority for U.S. importers, but ruleabiding importers can’t deny the positive impact on trade the change in philosophy has had.
As a licensed U.S. Customs broker, and president of Welke Customs Brokers USA, it’s my job to know where things come from and how they got here, as rules and regulations for bringing things into the country are detailed, open for interpretation, and often changing. It’s so nothing gets in the way of getting your coffee into your customers’ hands.
Coffee, U.S. Customs and the FDA Since the FDA works closely with CBP to facilitate coffee imports into the United States, it is essential for coffee importers to understand the regulations, roles and intricacies of each department related to both homeland security and trade facilitation. Coffee, including coffee extracts and coffee preparations, is subject to inspection by the FDA when imported into the United States, and must meet the same standards as domestic goods, and must contain informative and truthful labelling in English.
U.S. Customs Trade Transformation On September 11, 2001, the world changed. Following the devastating attacks that took place that day, America’s relationship with the rest of the world changed, as well. Almost immediately, the focus for America’s international borders and ports of entry became national security, and in November, 2002, the Department of Homeland Security (DHS) was officially established. U.S. Customs, which had previously been a part of the Department of the Treasury, was moved to DHS and became U.S. Customs and Border Protection. Given the circumstances and the state of the world at the time, it’s difficult to debate this transition. However, the increased security had an instant impact on importing and exporting for the United States. Almost overnight, wait times at ports-of-entry into the U.S. increased dramatically, scrutiny of both freight and individuals became more meticulous, and international trade became infinitely more complicated. In summer of 2013, however, U.S. CBP announced a new initiative called “trade transformation.” Through this new program, DHS would refocus resources and energy on international trade. The announcement was met with appreciation by the import/export community, but it brought some procedural changes that had significant impact on importers.
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The theory behind trade transformation is that the best way to facilitate legitimate trade
Following the terrorist attacks of September, 2001, the U.S. Congress passed the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (“Bioterrorism Act”), which added requirements for prior notification of imported food shipments. Prior notification is a critical component of the import process, as covered products (including coffee) arriving to a port-of-entry without it may be refused admission and, if refused, must be held at the port, with possible additional penalties. Recently, a new initiative, the Foreign Supplier Verification Program (FSVP) of the FDA, went into effect (November 26, 2015 – compliance is required within 18 months), requiring importers to perform certain risk-based activities to verify that foods for humans and animals imported into the United States have been produced to meet applicable U.S. safety standards. Classifications and Country-of-Origin The U.S. Harmonized Tariff Schedule (USHTS) is an organized listing of goods and their duty rates used as the basis for classifying imported products and identifying the rates of duties to be charged. Determining the correct classification can be complicated, depending on the nature of the product being imported, and companies often come to us after they’ve been stung for an incorrect classification, even though the one they were using seemed perfectly logical.
December 2016
For example, coffee, as you know, comes in many forms. For U.S. Customs, there are separate classifications for roasted coffee beans, non-roasted coffee beans, coffee husks and skins, coffee substitutes, decaffeinated coffee, instant coffee, coffee extracts, coffee preparation, and coffee drinks. There is a lot to know, and the importer is the one ultimately responsible for accuracy. Importing companies should also be well aware of country-of-origin marking regulations. Every article of foreign origin entering the United States must be legibly marked with the English name of the country-of-origin except for rare exceptions. Certain coffee classifications – including roasted and instant coffee – are among the exceptions to country-of-origin labelling, simply because you can’t physically mark a coffee bean. However, in those cases the packaging must still bear country-of-origin marking. If imported items are found lacking proper country-of-origin marking, they must be exported, destroyed, or modified at the importer’s expense, under the supervision of U.S. Customs. Importing to Grow Your Business When you’re creating your business plan for growth in the coffee industry, there are obviously many factors you need to consider. It’s easy to get caught up in the more tangible things you need to do to attract customers and build brand loyalty. Having your import processes as professionally handled as selecting your coffee beans will help you grow in a sustainable way. When the import regulators are happy, your customers are happy.
Damon Piatek, President and CEO of Welke Customs Brokers USA
Prosperity in Coffee by Dan Ragan, National Sales Manager Pod Pack International Cold brew continues to grow because of the perceived benefits of the product. Whether the emphasis is lower acidity, caffeine content, certain flavor components, or trendy packaging, the consumers are wanting more. Espressobased drinks are also growing in popularity, and provide an experience to the consumer. The emerging products category will continue to grow if there is sufficient expertise and processes to create consistent high-quality products.
old brew coffee provides an example of the new prosperity in coffee. Innovation in coffee depends on the transformation of this commodity. The industry continues to innovate as new products emerge, or re-emerge. Additionally, consumers respond to various benefits, local sourcing, and sustainable products. Innovation, quality, and local sourcing will continue to create desirable items for prosperity in the coffee industry.
Continuing success in an industry depends on the knowledge and expertise of those providing the products. Coffee has become a hobby for many people, which requires the industry to increase the expertise of coffee professionals. Also, coffee labs are in some universities as part of the science curriculum, and are some of the most popular classes offered. Opportunities exist at industry trade shows to increase knowledge, however the industry needs a process for continuous improvement to help purveyors stay ahead of the consumers. Whether knowledge comes from a university setting or a special seminar, the improved awareness in the industry will create important industry trends for prosperity.
Consumers gravitate towards convenience items, and are willing to pay a higher price for innovative products. However, in the coffee industry consumers are becoming more savvy, and expect quality and sustainability in their brew. Industry standards provide consumers the necessary benchmark to justify paying higher prices for quality products. Standards in product sourcing, roasting, and brewing methods provide a point-of-difference for purveyors with the expectation of premium pricing to the consumer. Additionally, consumers accept sustainable products as a higher-price alternative particularly when a story is part of their brew.
Innovation will provide opportunities for growth in the coffee industry. Retailers are capitalizing on smart phone applications allowing consumers to order products ahead of time for convenience. Coffee equipment manufacturers are investigating - and in some cases using smart phones or tablets to control equipment processes through Bluetooth applications. This innovation allows consumers to set up equipment in advance and use a Bluetooth application to brew just before they are ready to consume the product. These are additional ways of adding value to the consumer for prosperity in the industry.
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Local sourcing continues to trend in the industry, although some consumers look for other differentiators. Whether the roasting process is air roasting, drum roasting, packed-bed roasting, or another process, this may become part of an artisan story. The process may have other artisan indicators such as flash roasting, blending before or after roasting, and single-origin or small plantation products. Creating a farm-to-cup story may enhance the value by using visuals of the farm, or people at the point of origin. Using these various processes or products adds value thereby increasing 32 prosperity in the industry.
Marketing may provide the best method to add value to the coffee category. However, the marketers must understand why products are trending to determine if consumers will pay more for various options. Creating targeted campaigns for lower acidity, dark roasts, hyper-caffeinated, and smooth taste are some opportunities to create value in the product. Some product claims require verification, while others may be subjective. Social media provides some insight to consumer desires, and data mining may offer information for targeted marketing. To conclude, consumers continue seeking high-quality convenience items. Standards in the industry provide benchmarks for evaluating various products. Creating differentiators including roasting techniques, point-of-origin, and artisan methodology strengthen local roasters. Expertise through knowledge fortifies the value of coffee. Innovation produces the consumer desire to try different products and methods in the industry. Equipment plays a significant role in the brewing experience, and brewer manufacturers improve the consumer experience through new offerings. Emerging products should be embraced to increase beverage channel penetration. Marketing is a significant tool for industry growth. Adding value will provide prosperity in coffee.
Coffee brewer equipment manufacturers continue to invest in new products to meet the consumer’s needs. The equipment must provide the utility of a high-quality brewer. Consumers continue to seek faster brewers to improve productivity, and fit into a busy lifestyle. The brewers are more stylish, and fit many interior design trends. Some manufacturers continue to add versatility to the brewer so the product is easy to make, has many options, and requires little clean-up. As new products emerge, or re-emerge the industry should embrace the opportunity.
December 2016
Dan Ragan Pod Pack International
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Coffee Service Corner by Ken Shea, President, Ken Shea and Associates and V. P. of Coffee Service for G&J Marketing and Sales
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N INTERVIEW WITH ASSOCIATED SERVICES’ TOM STEUBER Associated Services was formed in 1972 in Oakland, California by Diane and Hal Steuber. I had the pleasure of my first introduction to the Steuber family in 1985 when they were a customer. For more than 4 decades Associated has set the mark for Coffee Service excellence. Today, the business is led by son Tom Steuber who has made his own mark as he has expanded the company and family legacy. CoffeeTalk caught up with the Steuber family at the Nashville Coffee, Tea and Water show recently and had the opportunity to interview Tom. CT: Was joining the family business something that you envisioned at an early age? Steuber: I was a teenager washing coffee pots in the summer, I couldn’t imagine coming back to work at Associated Services. However, after a short stint in Corporate America, I thought I might want to give it another try. I’ve found working in a family business to be the most fulfilling job I could imagine. What really inspires me is seeing our whole team pull together to make our business successful. We have many people who have made a career of working at Associated Services, and I’m honored to work together with them.
recognize which employees are driving growth and to find ways to support their efforts. CT: You have been a consistent contributor to industry associations for many years. How would you assess the value and benefit of membership today? Steuber: I find being involved in industry associations to be extremely valuable. I enjoy networking with my peers at industry meetings like Coffee Tea & Water. We all face similar problems and when we get together, we can compare notes. At these meetings, I make connections with other operators that I can call when I need assistance. I really enjoy the educational seminars. I feel like I take home at least one tidbit that I can use from each one. I’m always inspired when I see other operators who I admire as industry leaders paying such close attention to the speakers. Of course, I love the trade show floor where you can learn so much about new products all in one spot. CT: Many of today’s progressive companies are subsidizing more and more amenities for their employees. Can a coffee service company that provides only brewed beverages and related items survive today? Steuber: Yes, an OCS company can survive by sticking with the traditional offerings, but in order to thrive and grow, you have to change with the times. When I look back on the most valuable changes we’ve made to our business,
most of them came from when our customers asked us to do something extra. When one customer asks for help solving a problem there are usually other businesses that need help solving that same problem. CT: Do you see any threats to the coffee service industry? What can we do to ward off such events? Steuber: The business climate continues to change and evolve. The coffee service industry is not immune to these changes. In order to thrive, our industry needs to adapt to the changing needs of our customers. I am concerned about Amazon.com as well as office supply providers like Staples and WB Mason. All of these companies sell to businesses and since they work on lower margins, they will be able to sell the same products at a lower price. In order to compete, we have to offer value to the customer. This could be a personal relationship or breakroom design expertise or equipment variety, but service will continue to be the key to thriving in a competitive world. CT: It was a pleasure to see you, Diane and Hal on stage for induction into the Coffee Service Hall of Fame in Nashville. Do you foresee a third generation of Steubers being next? Steuber: I really hope so! I have four kids, and it would be great if one or more decided to make a career at Associated Services!
CT: When you took over the company leadership role in 2007, did you have a clear vision for growth or did the plan evolve as you settled in?
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Steuber: When I took the reins, it hit me very hard that all of our employees were depending on me to provide steady leadership that would keep the company healthy and their jobs secure. I tried to stick with the basics of emphasizing good customer service. Over the years, I tried to be open to new opportunities and not to be afraid to try something new. We tried many things that were not successful, but we focused on the new ideas that seemed to work and that provided the best opportunity for future growth. Personally, I’ve tried to develop my ability to
Ken Shea, Greg Sidwell and Dan Kozlak of G&J Marketing had the pleasure of presenting an industry acknowledge to the Steubers during the festivities. During CTW, all three members of the Steuber family were inducted into the Coffee Service Hall of Fame!
December 2016
The Forgotten Sales Team by Heather Perry, Barista Champion & SCAA Director, Klatch Coffee
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ave you ever watched a show where they take a failing restaurant or bar, and someone comes in and has 48 hours to turn the whole thing around? They start by bringing in people to add a fresh coat of paint, and tear out the old carpet. The other part of the crew focuses on redesigning the menu, adding fresh ingredients and training the staff on how to execute it. And then time runs out and there are people lined up outside and the owners finally get to turn around and see the big reveal.
is not about creating a one liner that is used when someone walks through the door. You don’t want cookie-cutter. What you want is for people to be genuine and authentic. Now that everyone has settled in, it’s time to find out why they are here. Obviously, it is for some sort of product you have, but maybe they don’t know which one, or maybe they do and they need it fast. Part of great customer service is reading your customer and meeting their needs. If we are able to meet the needs of our customers, they will begin to trust us and return. If someone is staring at the menu don’t be afraid to make a suggestion of your favorite, or ask what flavor profile they typically like and make an appropriate recommendation based on that. Try to avoid just pointing out the most popular, that makes me feel like “I’m just part of the crowd” instead of someone you are trying to help. Have good descriptions for your products as well.
Gasps, tears and hugs as everyone loves the new space. People begin filling the place and talking about how great it looks and how good the food and drinks are. But before the fresh coat of paint can even fully dry, the place is once again empty and the owners are right back where they started. You see, what they forgot about in all of this, is you can have a great product in a beautiful space, but if you haven’t given your staff the resources to help drive your sales, then you will have no sales. Stop looking as the people on the front lines as order takers or cashiers; they are your sales team and they will determine weather you succeed or fail. For most retailers, when they hire someone for the front lines, the training program usually involves some sort of training for the POS, some amount of shadowing another employee, and then they are left on their own to ring people up and set the tone for customers’ experience. So what this means, is that for many retailers the first person your customer deals with, the person who your customer is handing over their hard-earned cash to, is the person who might have the least amount of training.
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If you want to increase sales, you must teach people how to sell, and in a retail environment setting a standard for customer service is a great way to do that. When people hear the word “customer service”, immediately minds go to someone being friendly; but customer service
People don’t buy based on ingredients, they buy based on feelings. We have a spiced holiday drink, and when people ask what it taste like, I say “Christmas in a cup.” The feelings evoked by that statement are exactly what people need to make that purchase. is so much more than that. Customer service is taking care of a customer. Not simply being friendly to them, but treating them like they are a friend. When a customer walks through the door their experience begins. From the cleanliness to the background conversation, they all help to play a role. The biggest part of this entrance is the greeting they get. This will set the tone. A simple “What can I get you” tells me this will be transactional, cold. I will give my money, get a product and be on my way. This is not customer service. “Good Morning,” followed by “How has your day been so far?” This is how I would start a conversation with a friend if they walked in, and this is how you start building a relationship with your customer. From a training perspective, this
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When they’ve decided upon their product, is there anything you suggest that would make it even better? I mean a cappuccino is great, but add a macaroon and I’m in heaven. When you sell a brewing device, making sure you also sell filters will make their first experience using the device much more enjoyable. The isn’t about just increasing your ticket average, this is about fully meeting the customers’ needs, some of which they may not have realized, but they will thank you for it later. All of the little steps listed above will contribute to a drive in sales, because they all contribute to creating a better experience for your customer. Don’t let your customers leave with just a good taste in their mouth, but more importantly a good feeling in their soul.
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Prosperando en el Cambiante Mundo Del Café Prospering in the Ever-Changing Reality of the Coffee World by Maria Rosa Elena Romero de Castro, Entrepreneur and Coffee Producer & Maria Botto, President, IWCA El Salvador
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indows in Life! Being born in a small country basically with agricultural families and with little natural resources, our people have learned to be creative, innovative, and industrious. Soon, my life became coffee; I started working at Coffee Cooperative in my native town Jucuapa, San Miguel, El Salvador Central America. A Cooperative I later managed, and also supported the producers with all administrative issues. Years passed and I saw myself as a woman coffee producer; I was able to have a loan at Banco de Fomento Agropecuario to buy my farm. Due to many changing trends in a yearly crop such as coffee, I have for many years now established a small bakery to have additional income for my family to live on.
processes for specialty markets, and add value to our product by roasting and grinding the coffee to be able to offer it to the end consumer. I work until the coffee value chain is completed. I even innovate in the use coffee by-products.
Now, I foresee the need to buy a 30 lb coffee roaster instead of outsourcing this process. My coffee with the brand “Café de Mi Tierra” (Coffee from my Land) is well accepted in my hometown market.
This enhances and completes the world of coffee. This is good, because the income is higher and the producer can reinvest the money to generate development and improvement in the quality of life for the families involved in the coffee farm.
My business is growing. Recently I employed two young women to promote and give coffee tastings to the customers at Juacuapa’s three malls.
In 2011, I was introduced to the IWCA Chapter for the II Biannual Coffee Convention held in our country. I was awarded one of the scholarships. Since then I have been involved with various activities from the chapter and it was in 2015 when the Earth’s Choice Coffee Woman micro-loan program started. I heard this wonderful news and I was at that specific moment making the decision to start packaging ground coffee in two different sizes to offer the local market. Soon, I received a loan to invest in the packaging material. In six months, I paid the first micro-loan and asked for my second micro-loan to buy additional green coffee to roast. Now I am two months away from paying my second loan. Simultaneously, I started a new product in my bakery, “Toscatas”, to have two products in my portfolio to offer in stores and to my customers.
Coffee is usually a good and noble crop, but a producer has to keep track of many variables; international coffee price trends and daily changes, the effects of climate change, coffee tree pests and diseases; soil erosion due to deteriorated soil conditions and the strong rainfall currents that wash away soil nutrients.
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This makes it imperative to implement different production techniques, soil nutrition modification, differentiated coffee
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I consider myself a winner in this world of coffee, as after eleven months, my sales have grown, I have many points of sales, I give work to other people and my family and I am able to increase my opportunities to invest in additional machinery for my business due to the micro loan project designed by Earth Choice Women Coffee and IWCA Chapter El Salvador. I invite more women to dare take the challenge to apply to this micro-loan program to invest in innovative small projects and create better conditions for their families and home towns. María Rosa Elena Romero de Castro Entrepreneur and Coffee Producer “Elenita Products” Brand Café de Mi Tierra I sell ground roasted coffee in 1 Lb and 16 oz sachets. Jucuapa, San Miguel El Salvador.
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Viable Coffee Business Concepts for the 21st Century by Ed Arvidson, President of E&C Consulting
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aving been a consultant to the Specialty Coffee Industry for the past 25 years, I’ve watched the coffee business develop and evolve. Coffee business concepts that were successful 25, 15, and perhaps even 10 years ago, may not be viable in today’s marketplace. If you are starting a coffee business or currently own one, and you’re struggling, then developing an expanded concept may help ensure your success. Let’s go back 25 years; if you started a coffee business back then, you might have been the first, or one of the first within your community. You were a novelty… on the “cutting edge.” Specialty coffee, and in specific espresso drinks, were all the rage, and you benefitted by having an enthusiastic, captive audience. Today, coffee businesses are neither new nor rare. Consumers have many options to choose from, and even if you do a consistently excellent job, numerous competitors have likely diluted your market share of potential customers. Numerous coffee businesses also means that many of the premium locations have already been taken. It’s getting harder to find “A” locations, those that can generate 400 or 500 transaction per day or more. With many of the available remaining “B & C” locations only being able to attract 100 to 250 customers per day, the typical coffee shop may not be able to generate enough income to cover expenses, let alone generate a profit. Understand that coffee business viability is more than just sourcing great beans, making tasty drinks, developing a cool store ambiance, and establishing a strong social media presence. In reality, viability is all about your ability to stay in business by generating enough income to pay all your bills, and yourself. For the average
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sit-down coffee house, daily sales of $1,500 to $2,000 will be necessary to cover all expenses, and leave a decent return for the owner (15% to 20%+). Remember, if you can’t make any money, you probably won’t be able to stay in the business very long! To succeed in today’s marketplace, many coffee business owners will need to develop innovative, expanded concepts that will attract additional customers or significantly increase the average purchase. These additional products or services should be chosen for their ability to generate significant additional income. Or, another option is combining your coffee concept with a second business to acquire additional customers and revenue. This shouldn’t be difficult to understand, if you consider how many “non-coffee” businesses have benefitted by added Specialty Coffee to their concepts. Whether it’s McDonalds, Barnes & Noble Books, or any number of super market chains, serving espresso beverages has expanded their traditional customer base and income. So, in a similar fashion, why not add another source of income to your coffee business? For example: If you already serve beer and wine, then adding an inventory of wines and micro brewed beers to be sold by the bottle will transform your business into a wine & micro brew store as well as a coffee bar. Or, how about taking on the production of gourmet thin-crust pizza? Espresso and pizza are both Italian products in origin, so they are a logical symbiotic pairing. And most pizza businesses generate significant sales and profitability. Whether it’s a coffee & donut shop, ice cream parlor, newsstand, bike rental shop, or travel bookstore, adding another significant feature to your coffee business can mean the difference between success and failure. When choosing an additional signature product or business, I suggest you pick something you already have a knowledge of and a passion for; something that won’t cost a fortune to add, and won’t require a substantial amount
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of time to manage. It’s also important to pick something that there is a need or demand for within your community. The goal is to select something that has the potential of adding significant extra income! Whatever you decide upon for an additional product category or business feature, it will need to be taken as seriously as your coffee. For example, if you select “wine” as your additional product, then it should be reflected in your business name or byline, and displayed on your business sign. Within your store, you should establish a separate wine bar in addition to your coffee bar. It should also have its own menu, an inventory of the appropriate glassware, a display of retail wines for sale by the bottle, a display for wine related merchandise, and an appetizer menu that’s complementary to wine. You’d also want to add some comfortable upholstered seating and coffee tables, to establish a loungetype area that’s conducive to enjoying a glass of wine with friends. In reality, your goal is to create two businesses under the same roof. Two businesses will generate more income than one, and customers from each business will be exposed to the other, thus stimulating the sales for both. Remember, if you can only generate a couple of hundred transactions per day, then you probably won’t survive selling beverages and pastries alone. Developing an expanded concept - offering a signature menu item or two, or adding another business to your coffee business, can be a viable solution to financial challenges.
Ed Arvidson is 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
Three Ways to Prosper in a Competitive Coffee Industry by Rachel Tuhro, Communications Director PBFY
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n such a highly competitive coffee market, it’s vital to continuously stay in front of your customer’s needs and attract new business as well. The coffee industry is not only competitive, it’s diverse. Your customers are going to be looking to constantly differ themselves from their competition by providing unique and new products. To stay on trend and in the competition, you will need to offer both exceptional products and a full-service company. To do so, focus on these three important aspects to continue to prosper for both your company and your customers: branding, product packaging, and providing a quality product. As a business owner, you are probably already aware that every company needs a strong brand, and in the coffee industry, brand recognition can be what keeps your current customer base and draws in new ones. A brand should offer not only an insight into what makes your company unique but also a visual representation of your company’s narrative. Essentially, if your company is all about being organic and fair trade, then having images that exemplify that will bring customers closer to selecting your bag of coffee. But brands aren’t always the easiest to make and market. Having custom prints on your bags is essential, and the ability to test out new brands and logos can shape the way you market your product. What are your customers most drawn in by? is it the picture of the coffee bean harvesters or rather an image of a pristine farm? Your brand should fit into the story that you have developed with your customers, should be easy to replicate, and should aim towards their interests. Are you selling to predominantly ‘hipster’ coffee shops? Then minimalistic and geometric shapes are your goal. It’s not just how the coffee bag looks, though. Put yourself in the customer’s shoes for a moment and think. “Other than the initial aesthetic what else am I checking for?” Most clients are looking at how your coffee bean is being packaged to both preserve the coffee and its ability to seal and be reused. Commercials are still on the market offering that elusive first sniff of fresh ground coffee, except now, customers expect
to open your bag and have that fresh smell and taste every time. Now they know which packages work and which ones end up with coffee grounds spilled all over the floor. When you are competing with over 30 brands on the shelf or selling to an individual coffee shop, this difference can be what scores you the customer. It’s not just the functionality of the bag, either. Are you looking for a more wholesome design, a classic brown bag that is both functional and recyclable? Are your customers more inclined
thing, and that is a consistently high-quality product. This is what keeps customers loyal. Regardless of what the variety you offer in your blends, whether it is the less expensive Robusta bean or a strand of Arabica coffee, you can provide a high-quality service from shelf to cup. Your quality begins with marketing. You are not offering high quality if you mislead your customers into thinking they are getting a rich cup of coffee, but instead it is an acidic Robusta coffee. These types of products should be marketed as high in caffeine with a strong espresso-like flavor. Regardless of the type of product, the way you market it leads to how your customer distinguishes its quality. Quality isn’t just in the bean, it’s in the bag you store it in, how well the company addresses customer needs, and the overall customer experience in the purchasing and use of your product. To stay competitive with the ever-changing coffee industry and your customer’s needs, you need to assess what is top priority to your brand, packaging, and product quality. These factors can have your bag of beans placed into shopping carts or selected for artisanal coffee shops time and time again. The common thread for all three of these factors is to look at your customer’s average needs and aesthetic preferences and determine how to meet those while staying true to your company’s overall narrative.
to that minimalistic look? Or does it fit better with your company to have sleek shiny bags with pop colors and a stark label? This style fits with coffee roasters that focus on the science and production of the bean. A few weeks ago, I was looking at all these different coffee options, trying to select one as well. There was one bag in particular that caught my attention. The company’s name and logo were all focused on the traditional cowboy coffee imagery. Coffee made for rugged individuals on the go, and the bag was a sturdy stand-up plastic that looked like it could go through a rodeo, unscathed. Even though I personally don’t identify with a rugged cowboy, the start to finish narration had me inspecting that bag to purchase ahead of all others. At the end of the day, you want your company to be known and remembered for at least one
Rachel Tuhro, Communications Director PBFY
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Prospering in the Ever Changing Reality of the Coffee World by Molly Laverty, Farmer Brothers
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armer Brothers has a rich history in the coffee industry. For over 100 years the Company has delivered quality coffee to our foodservice customers. Throughout the years, the coffee producing world has faced many challenges including: urbanization, instability in the coffee market, and the impact of climate change, to name a few. In recent years the supply of green coffee has been dramatically affected by higher temperatures, long droughts punctuated by intense rainfall, more resilient pests, and plant diseases - all of which are associated with climate change. To survive and grow in the coffee industry, Farmer Brothers believes we must adopt a collaborative and comprehensive view of sustainability that institutes measures to impact our customers, our company employees, our environment, and coffee growers at origin. An important part of Farmer Brothers sustainability efforts is our Direct Trade Verified Sustainable (DTVS) program. DTVS is an innovative approach to farmer collaboration and sustainability investment, which utilizes individual farm-based analysis and performance monitoring to ensure we are focusing on the issues of greatest need at individual locations. Our approach is not “one size fits all�. Rather, we tailor technical assistance to have a positive impact and meet the unique needs of each origin location. Through this program our green coffee and sustainability teams work directly with coffee growers at origin to offer technical assistance strategies that include environmental farming classes, learning strategies, and tools for better crop management and coffee quality. New strategies are developed for individual communities to specifically address new challenges as they arise. Coffee growers who participate in the DTVS program receive 42 better prices for their crops and premiums
they can then use to help make productive and sustainable investments in their farms. For instance, 100% of partnering growers in Jinotega Nicaragua have access to soil conservation techniques like shade tree management, hedgerows, check dams and buffer zones. These
DTVS relationships provide us with high-quality coffee beans now, and the assurance that coffee growers will be able to continue farming in the future. Beyond the DTVS program our Company maintains long-term relationships with other Direct Trade coffee growers and organizations like Rainforest Alliance and Fair Trade USA. Through these efforts we can help encourage fairness and accountability within the industry, support environmentally sustainable growing practices, and help farmers adapt to a new coffee-growing reality within our changing climate.
our Company is promoting sustainability across the entire organization. This includes reducing our waste to landfill, improving recycling efforts and training employees on effective work environment sustainability actions. In fact, during 2015 we continued to offset 100% of electricity used in our roasting plants by purchasing renewable energy credits (RECs) generated from wind energy. The coffee industry may be changing, and we expect to continue to experience climate and environmental challenges. This is now a fact of life for future generations. By working directly with coffee growers to help them implement sustainable farming practices, and including measurable sustainability actions within the production and supply chain, we can help farmers adapt to a changing climate, while at the same time promoting good practices both here at home and at coffee growing origin to mitigate the environmental impact of coffee on climate change. In this way, together we can help ensure a positive future for coffee growers and the coffee industry.
Logistically, Farmer Brothers is working to deliver our product using vehicles that are fuel-efficient and have a reduced carbon footprint. Additionally, through the use of videoconferencing and other collaborative tools, we are able to conduct face-to-face, interactive meetings without flying, to decrease work travel compared to previous fiscal years. At home in our roasting plants and main office,
December 2016
Molly Laverty, Farmer Brothers
A Year of Challenges by William “Bill” Murray NCA President & CEO Pesticides While there are no pathogens that can be carried on green coffee, FSMA regulations cover not only biological hazards, but also physical and chemical hazards. For coffee, physical hazards would be sticks, stones or other farm-based debris that are routinely eliminated. Chemical hazards include topical pesticide residues which are sloughed off during processing, and thus have not been high-profile for the industry, but FSMA will require a closer look at this aspect of sourcing coffee.
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t’s been a year of challenges for the U.S. coffee industry – challenges that, perhaps, have been a long time coming.
Over the past decade coffee has come to play a more prominent role in U.S. society than ever before. Coffee shop culture, new technologies, and evolving tastes and trends have increased the visibility of coffee – and now, or so it seems, the legal and regulatory worlds are racing to catch up, bringing a host of new demands and burdens for the world of coffee. And yet, even as companies scramble to comply with new requirements, this year’s Presidential Election introduces a new, potentially disruptive element, with campaign promises to change “business as usual” in Washington holding the potential for the appointment of new officials, the repeal of current laws, the passage of new ones, and delays or even postponements of the regulatory process. FSMA Final rules were issued this year to implement the Food Safety Modernization Act, or FSMA. This law completely redirects the nation’s food safety focus from fixing problems after they arise to preventing problems beforehand. After five years of what was slated to be a two-year rulemaking process, the U.S. Food and Drug Administration (FDA) recently postponed the first two sets of deadlines on two key FSMA provisions, which is making it even more challenging for companies to determine how they must comply. The Hazard Analysis & Risk-Based Preventive Controls provision of FSMA requires facilities to identify potential hazards in the foods they handle and implement preventive controls such
as a formal Food Safety Plan. Where the hazard is “controlled” by a subsequent commercial customer, a facility can simply disclose that the hazard is so controlled and get a written confirmation from the customer that it has practices in place to prevent the hazard. The disclosure requirement is already in effect. However, the need to get a written confirmation was pushed back from September 19, 2016 to September 18, 2018 for larger businesses and from September 18, 2017 to September 18, 2019 for smaller ones. Of course, in some cases “smaller” businesses may supply “larger businesses” and thus compliance is further complicated. Another key provision of FSMA pertains to the Foreign Supplier Verification Program (FSVP), which requires importers to verify that their foreign suppliers provide them with safe food. Again, if the hazards are to be controlled by the customer, similar rules require disclosure of the hazards and receipt of written assurances. The FDA recently announced an extension in the FSVP compliance date from May 30, 2017 to May 28, 2019.
Labor Conditions Labor conditions along the supply chain took on a much higher profile with the enactment of the Trade Facilitation and Trade Enforcement Act (TFTEA). This new law now enables individuals and organizations to file petitions claiming that goods were produced under forced labor conditions, potentially resulting in a Withhold Release Order (WRO) blocking shipments at the port. As NCA is counseling its members, there are steps that can, and should, be taken by suppliers to address the provisions of this law. Heat-formed Compounds Heat-formed compounds, created naturally in coffee and other food and beverage productions, continue to plague the industry with legal, scientific and reputational implications. Acrylamide, a compound created by every American who toasts their bread, continues to drive a major lawsuit against the industry in California. Another heat-formed compound, diacetyl, is now also on the industry radar. Initially this was an issue surrounding flavorings containing artificial diacetyl. This compound also occurs naturally in the processing of many foods, including the roasting and grinding of continued on p 44
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pure Arabica. Rather, another type of test for an oil distinct to Robusta might be the better choice. A lack of testing standards could lead to misidentification of coffee, with implications for brands, consumers and all members of the supply chain. GMO A new 2016 federal law sets out guidelines for disclosure of genetically engineered food (that is, containing Genetically Modified Organisms, or GMOs). While there is no GMO coffee currently known to be in the marketplace, certain coffee-based mixes and beverages may contain sweeteners and/or whiteners made with GMO technologies. The new federal GMO law establishes a requirement for the labeling of GMO foods that supersedes any contradictory state laws – such as Vermont’s very restrictive GMO labeling statue. Under the federal law, there are several options for disclosing GMO ingredients – with a digital, smartphone code; an on-package symbol; specified language approved by the U.S. Department of Agriculture (USDA); or, for small companies, a phone number or website URL. While the law is already in effect, there is no specific action companies need to take in the short term. The USDA must now draft regulations that will define compliance. The regulatory process also needs to address many remaining questions including whether products derived from GMO ingredients would need to be labeled. With these deep and diverse issues on the table, the ever-changing reality of the coffee world is more challenging than ever. It requires legal, scientific and business information to address the industry’s biggest concerns. Prospering in this new reality means becoming informed, seeking expert advice, deploying smart solutions, and working together as an industry because, as it is often said, “there is safety in numbers.”
unflavored coffee, and has attracted attention due to media coverage. The NCA has worked to educate the industry about this topic, and has also undertaken a major independent research initiative to dig more deeply into the science surrounding this compound. Labeling Two new FDA regulations have changed the rules for food nutrition labeling, with potential implications for coffee. One rule changes the standard serving size for beverages from six to 12 fluid ounces. Currently, the quantity of food or beverage components with nutritional significance must be disclosed on the Nutritional Fact Panel (NFP). The second new rule makes the disclosure of potassium mandatory rather than voluntary. Putting the two new rules together, coffee would
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amount of potassium in 12 ounces of coffee – the new “presumed amount” consumed (versus the former six-ounce measure) – exceeds the threshold below which an exemption is granted. At present, this is considered a discretionary matter, and coffee is thus not being required to carry a label, but the question of a potential labeling obligation remains open and uncertain. Coffee DNA Sometimes, advances in science introduce new complexities requiring attention. The Robusta genome has been decoded, but not that of Arabica. And, while we consider these two coffee species to be distinct, Arabica is actually a hybrid that traces its distant history in part to Robusta. Scientific tests that look for traces of Robusta DNA will undoubtedly find them in Arabica. Without a decoding of the Arabica genome, it’s not known how much Robusta DNA is within
December 2016
Bill Murray President & CEO National Coffee Association
Tap into Profits by Randy Anderson, Cold Brew Coffee Consultant
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t is clear that cold brew coffee is beyond trending. The question now is not whether or not to offer cold brew but how to profit from it. For those brewing in-store, there are a plethora of brewing and dispense methods available in print and online. In short, this is most of what you need to know in less than a hundred words.
sells. Whether you brew your own or buy a concentrate, your coffee needs to appeal to your customers. Flat or “still” cold brew sells moderately well. However, stores that sell both still and nitro are seeing explosive growth of nitro over still. Nitro on tap has led the way in making cold brew something more than just cold coffee – it is, without a doubt, the most talked about and profitable category and
Step 1. Purchase a brewing system from Toddy, Brewista, Filtron, etc. and follow the directions. Step 2. Experiment with different coffees, grinds, brew times and filtration. The Internet is chock full of helpful articles, guides and Youtube videos to help you. You will even find some secrets to making nitro cold brew. Step 3. Do some research and learn how to install/convert an under counter refrigerator to a kegerator or purchase a new kegerator for cold brew coffee dispense. It looks hard but it isn’t. Step 4 Do in-store marketing and sell your product. Let’s look at the product side first. Brewing your own in-store is enjoyable and is a great revenue stream. From a business perspective however, you may consider not brewing your own for a lot of reasons. In-store brewing can actually be more costly versus buying a concentrate. Brewing your own means labor costs and long brew time (12-20 hours), refrigerated storage of low ratio concentrate (1:1) and low yield costs (cost per drink being close to $1 per drink) are all considerations that many business owners miss. Many commercial cold brew concentrate makers offer concentrates that cost far less per ounce than what it costs to brew your own. Additionally, more cold brew can be stored since they have a higher concentration. A bottle or bag-in-box with an 8:1 concentration takes up a fraction of the space that in-store brewed cold brew does at 1:1. Some are even shelf stable and don’t require refrigeration until opened. Now it’s time to ensure that your cold brew
that to the minute plus drink prep time for most iced drinks. A busy traffic line can move pretty quickly when pouring nitro coffee on tap. A differentiating menu item like nitro cold brew creates marketability as well as profitability. Again, as long as you have a continuous stream of nitro cold brew, business is good. While some smaller shops have been experimenting with forced nitrogenating, this method is laborious and limiting. The cold brew itself takes a full day to brew and then the cold brew is placed in a keg at high pressure for up to 3 days to nitrogenate. There are issues with dispense with force nitrogenation – heavy nitro in the beginning and progressively lower nitro pours without constant adjustment to the system. There are some systems that allow for instant nitro infusion. This solves the problem of waiting for a keg to infuse with nitrogen as well as worry free operation. These systems require a keg of ready to drink cold brew as well as tanks of nitrogen. One new technology is the JoeTap CT (the CT is short for countertop) and is the evolution of the original JoeTap. This countertop model allows bag-in-box (BIB) concentrates to be used with mixing ratios up to 16:1. The concentrate is mixed with water immediately before the point of dispense. The JoeTap CT comes with on board nitrogen generation alleviating the need for nitrogen tanks. Easy BIB changes means a small footprint and no downtime for the operator. It is as simple as using a post-mix BIB soda system – change the BIB, pour more cold brew coffee drinks.
defines this “white space”. More and more customers (especially millennials) are looking for premiumized cold coffee beverages. In coffee retail, as well as convenience stores and QSR (quick service restaurants) nitro does it better than any other method of serving cold brew... as long as you don’t run out. So why is nitro so important to consider? It sells. Nitrogenating cold brew adds texture without compromising flavor. In fact, nitro adds an element of creaminess and perceived sweetness without adding any ingredients except gas. Additionally, nitro has virtually no added prep time as compared to many iced drinks like frappes, iced lattes and smoothies. For business owners, the real profit comes from speed of service. Nitro coffee is delivered on tap and takes approximately 10-12 seconds to pour. Compare
Randy Anderson Cold Brew Coffee Consultant Randy@coldbrewconsulting.com
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