THE COFFEE MILL

Coffee Trends and Statistics for 2005

THERE ARE SOME YEARS that everyone in the coffee industry will remember the same way. A perfect example is 2002, which is remembered as the year of the coffee crisis. Globally, coffee prices were at their lowest in 100 years—hovering around 30 to 40 cents per pound of green beans. Coffee growers lost their farms and their livelihoods. And the glut of coffee that was available—much of it from Vietnam—didn’t leave a good taste in anyone’s mouth.
     Other years are harder to peg. This year, for example—how will it be remembered in years to come? The big events capture our attention most easily, so it is likely that 2005 will be best remembered for the devastation and hope of New Orleans. Or perhaps it will be the recent financial crisis of the Specialty Coffee Association of America that remains in everyone’s mind.
     But beneath those big events, were all of the small advances that had big impacts. Combined, these events seem to equal one thing: growth. Maybe 2005 will be remembered as the year of growth of specialty coffee. Not only in a market and money sense, but also in the larger, less tangible sense. Yes, coffee prices and consumption are on the rise. But so is the passion and knowledge of consumers, the skill level of roasters, baristas and growers, and the potential of the industry as a whole. Everywhere, the gaps are closing—never before have consumers been able to walk into a “coffee bar” and order up their choice of origin, see a video of the producers, and watch while a barista grinds the beans and runs them through a paper cone into their cup.
     As 2005 draws to a close, Roast looks back at the trends and the advances of the year, the ones that helped give rise to all of that passion and knowledge and potential. And we look at the directions that specialty coffee might take in the future, as it continues to grow and evolve.

CONSUMER REPORT

AS THE COFFEE INDUSTRY GROWS, so it seems do the number of studies that look at who’s drinking what, when and how they’re drinking it and how much they know about what they’re drinking. Sorting through all the statistics from this year, one fact stands out as indisputable: more people are drinking coffee than ever before. Daily consumption jumped to 53 percent this year, up from 49 percent in 2004, according to 2005 National Coffee Drinking Trends, a report from the National Coffee Association of the U.S.A. (NCA). That may not sound like much, but it’s the first significant jump in a decade, and it means that 7.7 million more Americans are slurping java on a daily basis.
     While coffee drinking increased across the board, the majority of new drinkers are young: 26 percent of 18–24 year olds are drinking coffee daily, a record high. Weekly and annual consumption by this age group is also on the rise, increasing 13 and eight percentage points over the past three years. This age group isn’t just taking their coffee black—they’re also most likely to be drinking “gourmet coffee beverages,” according to the report. Gourmet coffee consumption among 18–24 year olds climbed from 13 to 16 percent this year, although it remained steady or fell in all other age groups.
     This year, more people of all ages are sipping and brewing their coffee at home: in-home consumption increased significantly among 25–29 year olds while out-of-home consumption decreased slightly among all age groups except seniors. That change might be partially due to new brewing technologies. Americans have latched onto single-cup brewing technologies, according to NCA’s report. When asked about single-cup brewing options, six in 10 Americans said they were aware of the technology, with 40–59 year olds leading the pack. At this point, just two percent of Americans reported owning a single-cup brewer, but 15 percent said they were likely to purchase one.

TRENDS OF THE TRADE

FOR ALL OF THE STATISTICS that are available regarding consumers and buying trends, there is an equal lack of statistics on what’s happening behind the scenes. What percentage of roasters are moving toward lighter roasts? How many roaster/retailers offer single-origin or single-farm coffees? In what ways is coffee being bought and sold?
     There’s very little hard data to answer those questions yet. Hopefully, in future years, those statistics will be tracked and will be readily available for roasters, retailers and consumers alike.
     For now, Roast asked some of the country’s most in-the-know roasters, roaster/retailers and coffee people what they’re seeing on the front lines this year. This is what they had to say.

Educated Consumers

Overall, roasters and roaster/retailers are seeing an increase in consumer knowledge. The days when consumers order and drink coffee blindly may not be totally gone, but they’re definitely on their way out. “Consumers are becoming more educated—I can tell by the questions they’re asking,” says Danny O’Neill, president of The Roasterie. “They want to know which decaf process has been used, they want to know which region of Costa Rica the coffee is coming from…these are questions we never got asked in the old days.”
     In some parts of the country, consumers are showing an increased interest in the roasting process. Whether they want to try roasting at home, or they just want to have a better understanding of what they’re drinking, they’re beginning to ask questions, O’Neill says. “We’re at the tip of the iceberg with roasting knowledge. Customers are starting to ask, ‘Oh, air roasting. What’s that? What does everyone else do?’”
     With so many roasters and roaster/retailers offering cupping classes and open cupping sessions, consumers are also learning the language of coffee tasting. And they don’t just want to know the basics. “Phrases like light, zesty and fruity aren’t enough anymore,” O’Neill says. “Customers want to know the professional descriptions that we use.”

Changes at Origin

Consumers aren’t the only ones who have gained a better understanding of coffee roasting and cupping. Producers, roasters and cuppers at origin are also increasing—both in numbers and in knowledge.
     The influx of money, time and information into origin countries, whether in the form of USAID-funded cupping labs or roasting companies creating training relationships with producers, means more than a better livelihood and better coffee. It is also changing the industry by giving producers more options, such as the option to roast and sell at origin.
     “Many countries are focusing on internal consumption right now,” says Peter Giuliano, roaster and coffee buyer for Counter Culture Coffee. “For the first time, I’ve been seeing baristas pulling shots and pouring rosettes in Kenya and Guatemala. And for every barista, there’s a roaster.”
      Small roasters are appearing in the most unlikely places, agrees Ric Rhinehart, CEO of Groundwork Coffee Co. “We’re seeing a lot more sample roasting and tasting than we used to at origin,” he says. “Were also seeing a lot more roasters and roaster/retailers. You wouldn’t think there would be little specialty roasters in Tanzania and in Uganda…but they’re there.”

New Varietals, New Origins

This year saw the rise of interest in new plant varietals and new origins, both large and small. The geisha varietal kicked off the interest in unusual and heirloom plants by creating a stir at the 2004 Best of Panama coffee auction. Small-lot coffees and single-farm coffees, while not new, continue to gain popularity among both roasters and consumers.
     “There is a desire to push more single-origin and get away from blending, which I think is a great trend,” says Mark Inman, president and green buyer of Taylor Maid Farms. “We’re going back to being bean merchants again.”
     In many ways, small-lot coffees allow small roasters to differentiate themselves from larger roasters. “This is one area that the small independent roaster has a clear advantage,” Inman says. “Large companies can’t, by their nature and girth, offer small-lot single-origin, but someone smaller can. It’s a great way to differentiate ourselves, and I think a lot of people are starting to see that.”
     Another way that small companies are rising out of the pack is by sourcing and selling great coffees from new or overlooked origins, such as Rwanda and Bolivia. “People are having a broader sense and are more enthusiastic about a wider variety of coffee origins,” says Giuliano.

New Technologies

The roasting industry isn’t a big one for change when it comes to technology. Roasters are proud of their early-1900 roasters and their use of their five senses to roast the perfect cup. But a few pieces of roasting technology snuck in this year: More roasters are choosing automated profiling systems, they’re looking at new ways of afterburning, and they’re showing interest in new quality controls, such as high-performance liquid chromography (HPLC), a tool used to measure the caffeine content of coffee.
     New technologies are also on the rise at origin, including global positioning systems (GPS) and geographical information systems (GIS). These remote sensing technologies are used to measure and audit agricultural activities. USAID is funding projects in countries such as Peru and Costa Rica to determine the best growing areas for specific varietals and to study ways in which altitude, soils, vegetation slope, rainfall and environment affect the harvest and flavor of the bean. These technologies also have the potential to help prevent misrepresentation by providing authoritative information about where and how the coffee was grown.
     Smart Tags—tiny computerized tags that are attached to coffee bags or containers—have also seen more play this year. These tags contain a variety of information that validates that coffee comes from a specific origin country and region.

New Ways to Buy

Collaborative purchasing among roasters has been around a long time, but this seems to be the year it’s officially taken off. “I’ve heard more about the idea of collaborative purchasing this year than I have before, even though some of us have been practicing it for a long time,” Giuliano says.
     By grouping together to purchase coffee—either through auctions, brokers or the producers themselves—roasters gain more purchasing power, as well as the camaraderie that comes from finding and sharing great coffees. This style of buying also continues to close the gap between producer and roaster and, ultimately, between producer and consumer.
     Not surprisingly, technology has played a role in this. “Because of e-mails and cheaper phones and all of this stuff, it allows us to collaborate with roasters that are geographically far away,” says Giuliano. “We don’t compete in the same market, but we’re close enough through media that we can collaborate.”
     Technology has played other roles in purchasing. Internet auctions, such as those created by the Cup of Excellence program, have continued to increase in popularity, among both roasters and producers. “There are an increasing number of auctions out there, and so there are fewer reasons for any roaster not to buy via that mechanism,” says Scott Merle, vice president and green coffee buyer for Batdorf & Bronson Coffee Roasters. “You can literally find just about anything you want at some point during the year at an auction.”
     Moving the opposite way of technology, producers groups are forming to meet with roasters in person. Groups of importers, exporters and producers are getting together as organizations and offering to meet with roasters to present their coffees. “Roasters are being contacted by groups of importers or organizations that are saying, ‘We’d like to come out and do a presentation on our coffees,’” says Paul Thornton of Coffee Bean International. “For someone like me, who’s so involved in roasting, I don’t have an opportunity to go and see what’s out there, so this is great.”

TOMORROW'S TASTE

Trends of the Future

FOR EVERY GREAT STRIDE that the specialty coffee industry made this year, there were changes that didn’t happen or ideas that didn’t reach fruition. Here are some trends roasters hope to see in the near future.
     More focus on producers. Farmers are still in need of financial and educational assistance, as well as market access and information, according to Oxfam America. Roasters, too, would like to see more being done at origin. “Help on the supply side is just as important as the quality on the consumer side,” says Rhinehart. “Of course, we can’t continue to help unless we have the quality in place here. But the appropriate perspective is that these are human beings versus this is a cup of coffee. Ultimately, the human equation is the most important part.”

More focus on processing. Processing—from picking to fermentation to drying—is still a gray area. And for something that has such an important impact on coffee quality, it shouldn’t be left in the dark. “I would like to see more attention paid to the coffee processing at the origin level,” says Giuliano. “So far, I don’t think anyone’s paying enough attention to post-picking, pre-shipping processes. These are things that are almost an afterthought to every coffee buyer I know.”

An increased sense of local collaboration. Many roasters voice a desire for more collaboration with other roasters on a local level, whether that’s through conversation and communication or something larger like mergers. “Businesses are aggressively trying to convert people who are already buying good coffee,” Giuliano says. “They spend their energy taking business away from each other rather than joining together and working to make the market bigger.”

Better packaging. Roasters want to see significant advances of coffee packaging. The ideal? Something that preserves the quality of the coffee, while still being sustainable and marketable.

Less brewing technology. As consumers learn more and embrace the do-it-yourself coffee trend, many roasters hope for a return to quality ways of making coffee. “A trend I would love to see is for people to take a moment in the morning to grind their coffee and brew it in a French press or through a Melitta,” says O’Neill. “But I’m afraid the market is going the other way.”

New roasting technology. Roasters love their “classic” machines, but there’s a push for something more environmentally friendly that still provides quality. “I’ve been quite surprised that with the explosion and interest in roasting, there have still been very little advances done in the tech end,” says Inman. “I think there’s tons of room for innovation that no one is tackling. If you compare roasting with the barista world, where people have an almost uber-obsessiveness on gear, that trend is not reflected in the roasting world.”

Sources: The Coffee Guide website, www.thecoffeeguide.org; ICO, www.ico.org; The National Coffee Association of USA, Inc., www.ncausa.org; Oxfam America, www.oxfam.org; Specialty Coffee Association of America, www.scaa.org.