Insight
Editor's Note Specialty Co ee Retailer (ISSN 1077-3460) is published monthly by M2MEDIA360, a Bev-Al Communications company, 1233 Howard Street, Suite. 2-i, San Francisco, CA 94103. Copyright 2009 by M2MEDIA360, and may not be reproduced without wri en permission. Postmaster please send address corrections to: Specialty Co ee Retailer, P.O. Box 2121, Skokie, IL 60076-7821. Periodicals postage paid at San Francisco, CA and additional mailing o ces. I n 1883 Karl Marx wrote that Business always appears excessively sound right on the eve of a crash. * And so it was in January 2008. In 2002 there were 9,470 co ee shops operating in the United States, according to the Economic Census. Estimates in 2008 placed the number of co ee shops at 27,715 with 13,000 chain shops operating with an aura of invincibility. e remaining 12,000 independents were riding a ve-year crest as weekly consumption rose to a record 17 percent of the overall adult population. Employment was nearly triple the 102,024 working in 2002. Consumption of specialty co ee surged to new heights with 19 percent of adults, ages 25 to 59, drinking gourmet co ee daily. Two-thirds of American adults drank co ee at least once a week. In the past 18 months daily co ee consumption has remained steady while one in 10 co ee shops closed. Specialty Co ee Association of America Executive Director Ric Rhinehart bases this estimate on his own thinning ranks. e much publicized retreat by Starbucks led to 900 closings. Chains and independents are su ering equally, says Rhinehart who estimates 3,000 shops have gone bust in the past 18 months. e recovery will be a crawl for a long time to come, says Bob Phibbs, e Retail Doctor. Retail was overbuilt by roughly 20 percent above demand. Until that decreases to match demand, expect more stores, co eehouses to go under and a time of consolidation. Americans do not easily surrender their co ee but they are certainly spending much less to enjoy it. e trend of brewing co ee at home is picking up steam, observes SCAA General Counsel Marshall Fuss. e National Co ee Association's 2009 Co ee Drinking Trends market-research survey indicates at-home preparation is up 5 percentage points with 83 percent of past-day co ee drinkers reporting they made co ee at home the day before. Sales at grocery stores bear this out with specialty brands reaching $1.4 billion of $6.3 billion in sales with growth at 12 percent compared to 3 percent for traditional co ee. Out-of-home co ee preparation is down 6 percentage points, according to the NCA study. is inevitably led to the store closings. is issue identi es TEN TRENDS in 2010 that will re-shape the industry and takes a closer look at what happened to cause these businesses to fail. Co eehouse R.I.P. is a compilation of rst-person accounts of those who poured everything into a venture that spilled. e candor in these cautionary tales can only bene t others. ere has been a ruthless weeding out of retailers who serve brews of indi erent quality or who fail to make their customers feel welcome, observes Fuss. To survive and even thrive in this environment, shop owners will re-learn the lessons of specialty co ee pioneers Alfred Peet and the early Starbucks and put serious e ort into their bean sales. All the old advice still applies, but now the consequences of missteps are more severe, he says. August 2009  www.specialty-coffee.com Specialty Co ee Retailer (ISSN 1077-3460) is published monthly by M2MEDIA360, a Bev-Al Communications company, 1030 W. Higgins Road, Suite 230, Park Ridge, IL 60068. Copyright 2009 by M2MEDIA360, and may not be reproduced without wri en permission. Postmaster please send address corrections to: Specialty Co ee Retailer, P.O. Box 2121, Skokie, IL 60076-7821. Periodicals postage paid at Park Ridge, IL and additional mailing o ces. EDITORIAL OFFICE 1030 W. Higgins Road, Suite 230 Park Ridge, IL 60068  (847) 720-5600 : www.specialty-co ee.com specialtycoffee@m2media360.com EDITORIAL STAFF Dan Bolton dbolton@m2media360.com (415) 839-5063 Patricia McCartney pmccartney@m2media360.com (847) 720-5617 Sue Gillerlain sgillerlain@m2media360.com PRODUCTION STAFF Britt Menendez Robin Walton CIRCULATION STAFF Vice President of Circulation & Collateral Services Joanne Juda-Prainito SALES STAFF Brian Grau (314) 487-6568 Cheryl Naughton (678) 292-6054 EXECUTIVE STAFF Charlie Forman cforman@m2media360.com EDITORIAL ADVISORY BOARD PRESIDENT/CEO Marion Minor VP FINANCE & OPERATIONS Gerald Winkel VP OF CIRCULATION & COLLATERAL SERVICES Joanne Juda-Prainito PRODUCTION & OPERATIONS DIRECTOR Mary Jo Tomei SUBSCRIPTION INFORMATION AND REQUESTS Phone (847) 763-9565 Fax (847) 763-9569 Subscriptions: $39 for one year, $61 for two years, U.S.; $48 for one year, $72 for two years, Canada; $110 for one year, all other countries (includes airmail postage). Single copies $10 each; Annual Buyers Guide $25. Payable in U.S. funds only. Customer Service: (847) 763-9565 PRESS RELEASES: Press releases on supplies, services and new products are welcomed and encouraged. Direct them to Patricia McCartney, managing editor. Color print photography is preferred, slides and transparencies are accepted. Specialty Co ee Retailer reserves the right to edit all submissions. Corporate O ce: 1030 W. Higgins Road, Suite 230 Park Ridge, IL 60068 Terry Davis, Ambex Inc. Desiree Farden, Big Train, Inc. Jack Groot, JP's Co ee And Espresso Bar Kate LaPoint, Sound Provisions, Inc. Ian McMillan, Equal Exchange Joe Monaghan, La Marzocco Maryann Oletic, Innovated Products Mfg. Tom Palm, Design & Layout Services Steve Schnitzler, Port City Java Jennifer Stone, Stone Cup Roasting Co. Andi C. Trindle, Atlantic Specialty Co ee Bill Waddington, TeaSource In August Specialty Coffee Retailer takes a closer look at what happened to cause approximately 10 percent of coffee businesses to fail in the past 18 months and offers TEN 2010 TRENDS that will re-shape the industry. State of the INDUSTRY 2009