When Every Coffee is “Specialty” Coffee

A shorter and slightly different version of this article, written by Mike Ferguson, originally appeared in the January 2013 issue of Roast Magazine. Used with permission.

I’m in a discount grocery store, a chain store I have never been in before, and like most coffee industry folk, I take a look at the coffee rack just to see what’s going on. I find a bag of the store’s own branded coffee, 12 ounces, whole bean. The price? $3.99. Wow.

I stand there for several minutes trying to imagine the entire supply chain for this coffee and what it could possibly look like in order to deliver 12 ounces of whole bean coffee in a nice-looking package for a retail price of $3.99. I close my eyes and step back into this coffee’s timeline: the distribution, the packaging, the roasting, and the sourcing. No matter how hard I try and imagine the very cheapest process at every point, I can’t do it. I can’t even fictionalize a $3.99 bag of coffee.

It’s not that the business model doesn’t exist and function profitably. I know that it does. It’s not even the cheapest coffee I have ever seen, in fact, far from it. The problem is I have zero experience with the practices that deliver this coffee to the shelf with a $3.99 price tag, and yet, it looks like a coffee I should understand.

From a distance the package looks like something you might see from a mid-sized to large specialty coffee roaster. Printed bag. Nice colors. Smart design. One-way valve. The first sign that something is amiss is the package touting the fact that the coffee is “100% Arabica.” Then the brewing instructions note only one tablespoon for every six ounces of water.

Up to this point, I consider everything I have seen and, admittedly, assumed, about this coffee to be legitimate. In the wisdom vernacular of our times, “It is what it is.” This is an extreme value-driven coffee targeting people who want to feel like they are purchasing a higher quality product without the necessary commitment, including the commitment to proper extraction. The sellers have effectively co-opted several aspects of specialty coffee packaging. I don’t really appreciate it, but hey, every coffee has a customer.

I turn over the package and read the back, where the roaster expounds on their obsession with coffee and commitment to quality. Okay, I still don’t like it but I am fairly well versed in the vagaries of subjective experience and nobody has lied to me yet, at least not in any way I could prove around lawyerly types.  But then I read the sentence that causes me to look around, because I want to ask someone, “Did you see what they wrote here? Can you believe it? What the…”

The brutally offensive sentence is this: “We use only the finest coffees available.”

Even the most ardent advocate of bare knuckle business tactics might allow the stretching of truth but must admit it is stretching the truth past recognition.  The math will not reconcile. Even if we assume they actually mean “among” the finest coffees, these still cannot be sold at $3.99 for 12 oz. retail, even if the coffee came in a brown paper lunch sack. Perhaps they mean they purchase the finest coffees available after all the specialty coffee buyers and premium grade coffee roasters have bought their coffee.

I put the bag back on the shelf. I’m a little sad. I know that most specialty coffee roasters don’t truly compete directly against this bag of coffee within their core markets. But I also know that, as an industry segment, specialty coffee is competing against some sizzle without steak. And even among the true believers, there are some white lies and maybe not-so-white-lies being told that tug at our cape, threatening to drag us all down into the very same commodity vortex that gave rebellious birth to the specialty coffee industry.

Back in the day, when the Third Wave was just a twinkle in the Second Wave’s eye, even before Erna Knutsen uttered the words “specialty coffee” in a 1974 interview, there was us and there was them. We believed coffee was a highly differentiated product worthy of connoisseurship, they believed coffee was a commodity and a loss leader. We believed consumers could taste the difference and would pay for the experience, they believed paying more than 25 cents a cup at retail left a bad taste in the consumer’s mouth. They were the empire and we were the rebel alliance.

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Today there is no such clarity as coffee quality rests solidly on a long continuum reflecting the diversity of the markets we serve and the expectations they hold. On the one end is eight ounces of ground, very low quality coffee selling for one dollar at retail. On the other end are very select coffees of limited availability selling for 30 dollars and up, sometimes way up, per pound at retail. At the extremes the coffees speak for themselves and consumers usually don’t make the same mistake—whether it be paying way too much or drinking unpalatable coffee—too many times before changing their behavior.

As willing as I am to call the copywriter for the package of $3.99 coffee a truth stretcher, false claims of quality are difficult to address among competitors. If a claim is too far-fetched and customers feel ripped off, sales will suffer, the consequences are inherent. All specialty coffee roasters that believe in their product have the same answer to questions of quality. Taste the coffee. Just taste the coffee. No need for hijinks.

Specialty coffee roasters go head to head on taste all the time with potential wholesale accounts. Sometimes taste wins, but often the choice is not about coffee alone. Equipment policies, sourcing practices, customer service and support, selection, training, geography, company culture, personalities, the colors on your packaging, all of these things can and do contribute to decision making when the level of quality is similar, and sometimes when it’s not.

It’s important to remember that there is nothing inherently wrong with running a value-driven coffee roasting business and the vast majority of those who do compete with integrity. Just because a roaster offers value engineered coffees and competes primarily on price does not mean they will be trash talking their competitors or making false claims about their coffee. And many roasters compete in several markets along the quality continuum, offering fine specialty coffee as well as coffees that will more easily find a home in the Quick Serve Restaurant or convenience segments. That said, competition is extremely tough among those whose core distribution channels seek decent coffee at a good price. When those roasters attempt to move into an up-market account, those who roast specialty coffee exclusively can feel a little roughed up.

Beyond the accuracy of quality claims, most complaints of about competitors are about behavior at the retail account level and usually behavior by sales people. Opinions vary significantly on how to approach new business. Many specialty roasters will not cold call a retailer that is already using a like-minded specialty roaster. Some roasters believe all is fair in love and war and business is war, so they call on anyone and everyone relentlessly. Reasonable people can come down on either side or somewhere in the middle.

“Smack” talk, if it happens at all, is not limited to talking about a competitor’s coffee. Medium to large specialty roasters complain about being labeled as “sell outs” by small roasters for the sin of growing, while small roasters complain that larger roasters actively question their ability to provide comprehensive customer service, training, discounts on equipment, or source more than a few coffees directly. Both are swappable generalizations and neither necessarily true in any case more than a portion of the time for roasters of any size.

The Punchline

I return to the chain grocery store and the $3.99 bag of coffee and I buy it. I put this coffee up against fresh roasted specialty coffee at a consumer tasting event. I tell people that I have made a mistake and that one of the coffees on the table doesn’t belong there. That’s all I say, but I ask them to help me identify the coffee that doesn’t belong. Without exception they all pick the $3.99 coffee that is, according to its roaster (or, more accurately, its "marketeer"), one of the “best coffee’s available.” To be clear, it doesn’t belong, according to the consumer tasters, because it doesn't taste as good as the other coffees.

This outcome restores my faith, not only in the idea that the business model of most specialty coffee roasters is driven by the correct belief that consumers can tell the difference, but in the belief that false claims are not sustainable.

Just taste the coffee.

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