God in a Cup

“When Geoff Watts, the buyer for Intelligentsia, tasted Hacienda La Esmeralda Special at the Panama coffee competition, the coffee was so aromatic he said he felt as if streams of light were pouring out of it. But the remark that got the coffee world’s attention came from Don Holly, quality control manager for Green Mountain Coffee in Vermont. When Dontasted Esmeralda Special for the first time, he said the coffee was so transporting that when he tasted it, he ‘saw the face of God in the cup.’

“From the first moment the judges leaned over the small white porcelain ‘cupping’ bowls and sniffed, Esmeralda Special demanded their attention. The coffee hit them over their heads with a crazy perfume bath of floral and citrus. Within this heady brew, they detected fragrances no one had ever smelled in Panamanian coffee: ginger, blackberry, ripe mango, citrus blossom, and exotic bergamot. Many commented that Esmeralda Special was bursting with the kind of good acidity–coffee buyers call it brightness–that is rare in Latin America, but common in the best coffees from East Africa.

“Esmeralda Special quickly became one the biggest things to happen in the specialty coffee world. Soon high-end retail customers were spending crazy amounts of money for this rare little bean.”
–From “God in a Cup”

Michaele Weissman is a journalist and author who writes about food, families, business, and American culture. Her work appears frequently in publications such as the New York Times , the Washington Post , and the Wall Street Journal . Her coffee blog can be found at michaeleweissmanwrites.com/godinacupofcoffee. She lives in Chevy Chase, Maryland, with her husband.

God in a Cup

The Obsessive Quest for the Perfect CoffeeBy Michaele Weissman

John Wiley & Sons

Copyright © 2008 Michaele Weissman
All right reserved.
ISBN: 978-0-470-17358-9

Chapter One

THE COFFEE GUYS

PETER GIULIANO, COFFEE BUYER AND MINORITY OWNER OF Counter Culture Coffee, based in Durham, North Carolina, describes himself and the other Third Wave coffee guys driving the fast-growing specialty coffee industry as “a bunch of freakin’ nutcase obsessives who have trouble hacking it in the real world.

“When I was studying music in college I had to figure out what was the most authentic expression of northern Mexican accordion music,” he explains. “I spent years of my life figuring this out. Then I applied my attention to cocktails. In my house I had a thousand dollars invested in obscure kinds of alcohol. My friends would come over and I would make them a martini the way they were made in 1934.”

Take Geoff Watts of Intelligentsia Coffee in Chicago or Duane Sorenson of Stumptown Coffee in Portland, Oregon. “You think these guys are normal?” Peter will ask, raising his eyebrows.

Peter has a point. The top tier of the specialty world is full of people who obsess about the details. These are individuals who will drive themselves past the point of reason to get it right, who will spend five years figuring out the perfect protocol for controlling the temperature gauge of their espresso machine. Guys who compare great coffee to great wine and are able to detect hundreds of flavors and aromas in a coffee from a small farm in Guatemala as great wine masters discern countless subtleties in an aged Burgundy.

Tasting-cupping is the term used in the coffee industry-ten or twenty coffees is never enough for guys like this. As Geoff Watts of Intelligentsia, a leading specialty coffee roaster/retailer, talking about his education in the industry, explains, “I wanted to cup two hundred coffees. I wanted to cup two thousand coffees. I wanted to know everything you could know about the nuances of flavor and aroma and then I wanted to know more.”

Geoff and the other specialty guys would tell you that their devotion has been generously repaid. Considering his career and that of other industry leaders, Peter comments, “The beautiful thing about specialty coffee is that it rewards that obsessiveness. It uses all our talents. It fosters the development of lost kids like me.”

Most Third Wave coffee guys you talk to will try to convince you that they invented specialty coffee, but they are wrong. As the organized high-end sector of the larger coffee industry, specialty coffee has been around since the early 1960s, and it has been evolving ever since.

Coffee itself has a long history in the United States. Ever since a band of enraged patriots tossed ninety thousand pounds of expensive tea into the Boston Harbor in 1773, coffee, after booze, has been the beverage of choice for Americans.

Early Americans drank coffee in convivial coffeehouses, and either roasted coffee beans at home or bought them from merchants and grocers, who sold freshly roasted coffee that their customers carried home in paper sacks. This coffee came from high-quality Arabica beans-the Arabica species originated in Ethiopia and was cultivated commercially in Yemen, from where it spread throughout the Islamic world in the fifteenth and sixteenth centuries. In the seventeenth century, coffee was smuggled into Europe. Shortly thereafter, European adventurers transported coffee to the New World.

Throughout the nineteenth century, most American homemakers purchased freshly roasted coffee. Grocers often roasted their own, and most towns and cities of any size were home to one or more coffee roasteries. In the first half of the twentieth century, however, coffee, like other foodstuffs, fell victim to the industrialization of the food supply. Consolidation. Technological innovations. Standardization. They all led to one outcome: heavily advertised national brands of coffee sold in supermarkets in vacuum-sealed cans. And after World War II came the lowest blow of them all: water-soluble instant coffee. By the time instant became the next new thing, American consumers were so acclimatized to bad coffee that they failed to notice the introduction of lower-quality beans from the far less expensive species called Robusta that price-conscious mass marketers had begun adding to their blends.

In his history of the coffee industry, Uncommon Grounds, economic historian Mark Pendergrast summed up decades of “progress” in the American coffee industry with this comment from an unnamed attendee at the 1959 National Coffee Association Convention: “There is hardly anything,” said this fed-up coffee guy, “that some man cannot make a little worse and sell a little cheaper.”

Just as casseroles made with canned string beans and ersatz cream of mushroom soup led to Julia Child and the foodie revolt in the 1960s, so did the ubiquity of Nescaf and other caffeinated insults lead to the birth of the specialty coffee industry.

The First Wave

Coffee guys aren’t always the greatest historians, and there are many debates about what and who compose the First, Second, and Third Waves of the specialty coffee industry-all the young coffee dudes seem to believe without question, though, that they, the Third Wave, are the stars of the movie.

Coffee consultant Trish Skeie, who popularized the wave idea, described the First Wave as the people before and after World War II “who made bad coffee commonplace … who created low quality instant solubles … who blended away the nuance [in coffee] … and forced prices to an all time low.”

The Second Wave

Trish has written that the Second Wave began in the late 1960s and extended into the mid-1990s. Among the Second Wave were a number of coffee-centric northern European immigrants who settled in California after World War II. These transplants carried with them old-world knowledge of coffee roasting, tasting, and sourcing.

Among this group was Alfred Peet of Peet’s Coffee, who opened his first store in San Francisco in 1966, and Erna Knutsen, founder and president of Knutsen Coffee Ltd., based in northern California. It was Knutsen who coined the phrase “specialty coffee” to describe beans from specific “appellations.” Like appellation wines, Erna said, specialty coffees are grown in distinct geographic microclimates and they possess unique flavor profiles.

Second Wave entrepreneurs such as Peet and Knutsen as well as Don Schoenholt of Gillies Coffee in New York; Ted Lingle of Lingle Brothers Coffee in Long Beach, California; Kevin Knox of Starbucks; and George Howell of Boston’s Coffee Connection created the specialty coffee business in the United States. They introduced American coffee drinkers to high-quality coffees with discernible differences in taste from around the world. In 1982, a group of Second Wave guys founded the Specialty Coffee Association of America (SCAA). On their watch, specialty became the fastest-growing sector of the U.S. coffee industry, with sales in 2007 of more than $12 billion.

Starbucks emerged in this period, the brainchild of Second Wave guys. The first Starbucks store opened in Seattle in 1971, selling high-quality coffee, dark roasted by Alfred Peet. Soon the company had half a dozen stores and was roasting its own. The chain grew slowly until 1987, when it was bought by Howard Schultz. In 2006, with 12,500 stores worldwide and total sales of $7.8 billion, Starbucks reported its fifteenth consecutive year of 5 percent or more comparable-store sales growth. By 2007, however, over-rapid growth (including hundreds of new stores) had taken its toll-by year’s end Starbucks’ stock price had fallen sharply, and the company was closing stores and rethinking its business strategy.

The Third Wave

Trish believes the Third Wave emerged in the mid-1990s as a reaction to the Starbuck-driven industrialization of gourmet coffee. The Third Wave guys deplore the automation of caf culture. Many of them are rebels who dress more like skateboarders than business executives, but you miss the point if you think they are laid back. They are fierce competitors who have built their businesses on their ability to outperform other cafs, especially Starbucks. Virtually all of the young coffee guys in the retail business own shops in neighborhoods where Starbucks operates. To stay in business, they have had to sell better coffee and make better drinks than Starbucks.

Third Wavers are members of what has been called the first global generation. The workplace they entered was one that had been transformed by technology and inexpensive overseas travel. Young guys in the Third Wave travel more and travel differently than their elders. They are comfortable toting backpacks, wearing sandals, and sleeping in hammocks. They don’t mind journeying six hours in trucks with worn-out shocks.

The knowledge these young entrepreneurs gain “at origin” shapes their approach as coffee buyers and business people. To develop the potential of specialty coffee business in the United States, the Third Wave insists you have to focus on the production end, and you have to see the relationship between the producer and the consumer ends of the coffee chain. They are not the first coffee guys to realize farmers matter-far from it. But they are the first to travel constantly and communicate readily with farmers in remote locales. You have to go where coffee is grown, and you have to help farmers improve their product to meet specialty standards, say Third Wave coffee guys. And that is what they do.

* * *

The Third Wave guys entered the coffee industry toward the end of the 1990s, at a time of extreme financial crisis for coffee farmers.

Around the world some twenty to twenty-five million farmers, mostly smallholders with just a few acres of land or less, support themselves and their families growing coffee. In the past thirty years, these farmers have lived through a series of economic catastrophes, losing hundreds of millions of dollars. According to the World Bank, prices for coffee have averaged a 3 percent decline in real terms each year since the 1970s. Farmers who could once afford to send their children to school can now barely afford to feed themselves and their families. Many of the worst off face outright starvation.

A number of different events converged to cause these repeated upheavals. The coffee market, like other commodities markets, goes through boom and bust cycles. The boom-bust continuum in coffee is exacerbated by the many years coffee trees take to mature: Coffee prices go up. Coffee farmers plant more trees. By the time these trees mature, coffee prices are dropping, so a down market is flooded with excess product and prices don’t just slip-they collapse.

Throughout much of the twentieth century, producing and consuming countries worked together to short-circuit the boom-bust boomerang. Under the terms of the International Coffee Agreement (ICA), coffee prices and coffee production were subject to a series of internationally agreed-upon quotas, price caps, and interventions. The ICA fell apart in the 1980s as world coffee prices were rising dramatically-Brazilian coffee farmers at the time were getting $1.40 or $1.50 a pound for their coffee, and many coffee farmers worldwide were certain the good times were here to stay. They were wrong. By the early 1990s, with the ICA no longer in place, prices fell to below $1 a pound.

Then in the late 1990s and early 2000s, Brazil and Vietnam flooded the international market with a glut of low-quality coffee, causing another monumental crash. High-quality coffee dropped to fifty cents a pound, far below what it cost farmers to produce. Coffee drinkers in consuming countries quickly became acclimated to lower prices.

It is hard to imagine a bleaker outlook than that facing millions of coffee farmers and their families. In parts of Africa and Asia, these farmers are among the world’s poorest people. Conditions in some parts of Latin America are only marginally better.

Millions of smallholders around the world have been forced out of coffee entirely. In Central America tens of thousands of small farmers have replaced their coffee trees with flowers for the American and European market. In Kenya, where some of the world’s most prized coffee is grown, coffee farmers are ripping out their coffee trees and replacing them with tea.

When farmers can no longer grow coffee, a way of life that has sustained families for generations is lost, setting off a cascade of miserable consequences, including accelerated urbanization in producing countries. Coffee lovers lose out too, for it is these smallholders, rather than the owners of large farms or plantations, who grow many of the world’s best coffees.

For coffee farmers, the rapid growth of the specialty market presents one of the few hopeful prospects in this disheartening picture. Farmers who sell their coffee as specialty earn more for their crops. When farmers successfully access the specialty market, the extra money they are paid for growing higher-quality coffee can save them from drowning in a sea of debt. For growers in countries like Nicaragua, Guatemala, and Rwanda, the specialty label has delivered concrete, quantifiable dividends.

To sell their coffee as specialty, coffee growers need to meet very explicit criteria. Trained tasters following established rules make the determination. To be recognized as specialty, a coffee must be rated at least an 80 on a scale of 100, indicating that it possesses pleasing characteristics and no major defects.

In the past twenty years, demand for specialty coffee in North America, Europe, and parts of Asia has grown dramatically. In the United States, approximately 30 percent of the coffee consumed now falls under the specialty rubric. According to the Specialty Coffee Association of America (SCAA), in 2006 specialty coffee was sold in 15,500 cafs, 3,600 coffee kiosks, and 2,900 coffee carts, and by 1,900 roaster/retailers. Retailers include Starbucks, Peet’s Coffee, Caribou Coffee, Green Mountain Coffee, Allegro Coffee (owned by Whole Foods), and many smaller companies. (In fact, Starbucks’ U.S. business accounted for more than half of the $12 billion annual sales.)

The specialty coffee companies that I write about in this book are those at the top of the specialty coffee quality pyramid. These companies take pride in selling coffee that professional tasters and consumers recognize as better than Starbucks. With annual sales of less than $1 billion, the highest-quality specialty companies represent around 8 percent of the overall specialty coffee market in the United States. Their influence outweighs the numbers.

Dunkin’ Donuts and other doughnut shops are not included in SCAA sales figures. McDonald’s isn’t included either, but both of these companies are clearly noticing what specialty purveyors are doing. In early 2008, McDonald’s announced that it was taking on Starbucks by installing espresso machines in some of its stores and launching a line of specialty coffee drinks, with expectations of $1 billion in annual sales.

The small high-end companies are the trendsetters in the coffee industry. Insiders in the specialty industry get the joke. They know the most exacting specialty companies are run by a ragtag bunch of rule-benders. Still, there’s no denying that the young dudes running elite roasting companies have seen what their elders missed: that specialty coffee has much more to offer in terms of culinary and economic value. The leaders of the Third Wave believe the sky is the limit-in their view there is no telling how huge specialty coffee can grow. Harnessing specialty coffee’s expanding value for the benefit of all the stakeholders in the coffee business, especially farmers, is the mission of these young movers and shakers.

Independent coffee consultant Anne Ottaway, who played a central role in helping transform Rwanda into a respected specialty coffee producer, describes the guys who run the top specialty companies followed in this book-Peter Giuliano, Geoff Watts, and Duane Sorenson-as the Bill Gates, Paul Allen, and Steve Jobs of specialty coffee. “Twenty years from now we’re going to look back and say, ‘Isn’t it amazing; we knew these giants when their companies were small.'”

(Continues…)

Excerpted from God in a Cupby Michaele Weissman Copyright © 2008 by Michaele Weissman. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.