5 Comments

Comment by Brady on May 11, 2008 at 6:05pm

Please enlighten me. In what way does the specialty coffee industry need gas stations?

Comment by Andrew Hetzel on May 11, 2008 at 6:40pm

Yes... unfortunately, an all too common position in our segment. I explain:

Contrary to the belief of many specialty coffee retailers, consumers do not purchase products solely on the basis of quality. I've done it now! I've attacked the Holy Grail of specialty coffee, for which I will surely roast to an Agtron 28 in hell.

Brand image, convenience and a favorable taste (not quality) are the primary buying motivators for nearly all consumers. We'll get back to the first two (brand image, convenience) in just a minute, but let's discuss the concept of favorable taste:

As anyone who has attempted a consumer blind cupping between high-end coffees and one gag sample (like a Yuban or Folgers) can tell you, average consumers favor the flavor of something familiar over something that may be qualitatively superior. I've seen it happen myself: put the 95 point Sidamo next to a cup of Maxwell House, and Joe consumer picks the Maxwell house about 6 out of every 10 times. Consumers have been conditioned by years of inferior coffee into thinking: that's what coffee is supposed to taste like. You and I both know that's not the case.

Back to convenience and brand image. By advancing the quality of coffee flavor present in their beverages -- switching to REAL coffee from powdered "Bubbaccino" mixes and extracts, convenience retailers have the opportunity to reach a segment of the population that will never venture into coffee shops. Every day, they move millions of American consumers through their retail locations, reaching demographics that consider the concept of a Starbucks... well, offensive. The sort of middle America Joe average that goes out of his way to consort with Mr. Ivy League and his grande latte can identify with the 7/11 or Circle K or Dunkin Donuts brand. To think that these locations are beginning to shift the generic profile of "coffee" flavored items to something of real substance is pretty exciting to me.

Remember that outside of our little world, most people still have no idea of what a “Barista” is or does (many think that Starbucks invented the word, like Frappuccino®).

Consider this: there are 22,000 specialty coffee shops currently in the USA (the largest group of which being Starbucks) and 146,000 convenience stores. C-Stores can do more to change the expectations of what coffee "is" than we can ever do by ourselves alone. Convenience is a part of their names; the live and die on finding locations that will be easy for people to reach, and thus reach far more than average coffee shops.

I believe that all of us, suppliers, roasters AND retailers in the specialty coffee industry should embrace the power and potential for our own advancement with coffee improvements in other industries – C-Stores and others. We can use all of the help that we can get to distribute our message about coffee’s complexity and true flavor.

Consider the real carrot out there waiting for us: there are over 1,000,000 restaurants in America. We’ve only started to scratch the surface.

Comment by Andrew Hetzel on May 11, 2008 at 6:44pm

Whoops. In the section where it says, "Joe average goes out of his way to consort with..." it should read, "Joe Average goes out of his way to avoid..." How do you edit comments on this thing?

Comment by Brady on May 12, 2008 at 9:49am

Thank you for explaining that statement. You've said some things that make sense, but I think this picture is incomplete. [And I don't think you can edit comments, you can only delete].

You left out a big buying motivator for most customers - price. My customers are having to cut back a bit (spending too much at the pump?), and I'm not real excited about the prospect of the gas station across the street suddenly starting to brew something decent at half my price. I don't sell gas, I don't sell lottery tickets, I don't sell beer. I don't really have the option of making my drip coffee a loss leader - its too big a part of our daily sales.

So yes, I'm skeptical of the thought that this movement will help the retail side - especially the mom&pop store. You said it yourself - the interest on the part of the c-stores is the bottom line. They're getting tired of losing coffee customers to Sbux, McD's, and the indies and want to start getting some of those customers back from us.

Don't get me wrong... we all know that we are going to have to compete in a market that will be seeing dramatically better coffee at bargain prices. We've worked hard at our store to do things to differentiate ourselves, to add more to the experience, to try and minimize the impact of the McBarista across the parking lot. This is no surprise. But I'm not going to walk over there and teach them how to make a decent latte, and am certainly not embracing this.

Comment by Andrew Hetzel on May 12, 2008 at 10:39am

Studies have not shown price to be a significant motivator, as it relates to coffee. The topic of price and the economy were front and center at the forum, but convenience retailers confirmed that there is little concern about the current recession as most of the products that they sell (cigarettes, sodas, etc., and coffee) are considered affordable luxuries. Consumers can treat themselves to a $3.00 beverage, for example, even when times are bad. How long as your shop been in business? Have you noticed this trend through prior recessions?

I suspect that the type of customer that will frequent your shop will not be impacted by availability of coffee at 7/11 and others... again, consider the key issue is branding. I just don't see the former premium coffee focused-shop customer jumping social class lines to purchase coffee at a gas station, regardless of price.

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