Coffee is a beverage of Titans because it has fueled workforces for centuries, so much that the United States workforce is now incredibly dependent upon this dark brew today. Beginning in 1773 when John Adams led the revolt against the Boston Tea Party’s Tea act, the United States declared independence shortly after on July 4th, 1776 which set forth the rebellion against tea and sparked the adoption of coffee as our beverage of titans. Coffee then became the stapled beverage of the United States which began fueling our workforce and allowed us to progressively become the superpower country we are today. The Great Depression of the 1930s was precedent in demonstrating the importance of coffee to our workforce when the global overproduction from the prior coffee valorization era had increased the damages upon the crash of our US economy. The biggest improvement of the coffee market following our economy’s crash was credited to the importance of marketing, which gradually increased the consumption of coffee worldwide. The many themes attributing to marketing coffee’s increase of consumption was educating consumers where coffee beans are cultivated, progressively improving coffee’s quality by producing premium blends, conveniently brewing coffee within the common workplace, providing excellent and speedy customer service, and refining the distribution of high quality coffee production worldwide.
Ever since coffee’s globalization began, its rapidly growing market highly affected every economy it had touched dramatically; especially Brazil who in the late 19th century induced coffee’s mass overproduction and almost crippled the coffee market during the early 1900s. The country to take a major hit from the coffee market’s low prices however was the United States, who began to “reach the thirteen pound per capita level of 1902. Consumers were not very price conscious because they were long buffered from recognizing the price. If they drink in cafés, they were unaware of the type of coffee they were drinking. As the price of one sort rose, café owners often blended in cheaper substitute grades rather than raise their price… Moreover, as coffee sipping became customary and even habit-forming, it was transformed into a necessity for many. As a result, coffee in the 20th century became price and income inelastic. Thus we are presented with the irony that the international coffee market at the turn of the 20th century, one of the world’s largest commodity markets, was relatively price inelastic (within in a reasonably large range) at both the production and the consumption end, though profit-driven commercial and industrial intermediaries were extremely conscious of price” (Topik). When the coffee market had price and income inelasticity, it meant that when the price went up, consumers’ buying habits stayed about the same, and when the price went down, consumers’ buying habits also remained for the most part unchanged. In the context of coffee, price and income inelasticity is detrimental on the coffee market since café owners weren’t able to charge a premium for their superior coffee, which in turn meant that the quality of coffee was limited in terms of improvement.
The proper remedy for this pricing income inelasticity was to entice the consumer into preferring a higher quality cup of coffee and in order to increase the demand of higher quality coffee, consumers needed to be educated; the ones to do this was Catalina Crane and her team at Promotora de Café Columbia (Procafecol) who became the stewards of the famous Juan Valdez brand and backed by Gabriel Silva, the CEO of the Colombian Coffee Growers Federation often abbreviated as FNC. Their plan was to “boost the demand levels for Colombian coffee while positioning it as a superior product worthy of a premium price in key markets. They created marketing programs that attempted to deepen relations with coffee roasters that would emphasize “100% Colombian” brands, products with coffee beans solely from Columbia. As part of its promotional campaign, the FNC sought to develop a character to represent Columbia’s coffee producers. The American advertising firm Doyle Dane Dernbach (DDB), created a fictional Colombian farmer to serve this purpose. Adorned with an aguadeño hat and a satchel known as a carriel – accessories commonly worn by farmers in the country’s coffee growing regions – the new character was meant to convey a sense of pride, humility and hard work. Thus was born Juan Valdez… In 1959, only one minor American coffee brand was tagged with a Columbian origin. By 1963, 26 brands boasted a label of “100% Columbian” and by 1970 that number had jumped to 53. Within just a few years of the launch of the Juan Valdez TV and print campaign, 21% of Americans viewed Columbian coffee as the best in the world” (Norton). In lieu of the price and income inelasticity of the prior decades, the coffee market started thriving more than ever with a large boost of demand to meet the supply of premium coffee which earlier threatened the coffee market. Consumers understood where their coffee originated from and because of this they began to demand a higher quality cup of coffee, which sparked vigorous competition from all around the world.
The impending competition of this beverage of titans began to ripen and the company which prides itself on quality is Illycaffè. Illy believed in producing a single, unique, perfect blend of coffee for both brewed and espresso preparations; illy claimed their “single blend meant that illy can always be counted upon to have the same consistent taste, cup after cup, year after year. Illycaffè was the only company in the world that produced only one blend of coffee. Illy’s single blend of 100 percent Arabica beans came from nine growing regions around the world: a Brazilian base made up over 50 percent to give the blend body and aroma, enriched with the sweetness and aromatic notes of wet-processed African and Central African coffees. Thus, in order for illy to achieve the same consistent taste in its product it needed to blend different types of coffee together based on their individual characteristics, all the while adjusting the amounts of each type to achieve the desired balance and signature taste of the illy blend. Ricardo Illy made the decision to focus on one blend when he first joined the company in 1977. At that time, the company had 20 different blends of coffee and was producing, according to Riccardo, “high quality within a high quantity of blends, not solely high quality.” Over a few years, he eliminated all but one blend, totaling 50 percent of the company’s sales in order to concentrate only on the best. After that, the company grew much faster and went from selling 1,000 tons of roasted coffee a year to 15,000 tons by 2009. Greg Fea, CEO and president of illycaffè North America, said of the one-blended strategy: “I think this was one of the most important company decisions. Many other coffee companies have a vertical tier of different products of varying quality. But illy just makes one brand, which is the best in the world. It’s like making a Ferrari, but not making any cheaper versions of the same car. The difference between us and Ferrari is that a Ferrari is only for a privileged few, whereas Illy is an accessible luxury for millions.” Illycaffè sold its coffee to the hotel, restaurant, and café sector; to general consumers; and to corporations and companies” (Glenn). Illy’s approach to marketing their brand of the ultimate coffee blend became rather successful. Their marketing approach mimicked many coffee producers before their time like Arbuckle’s Yuban blend, although the distinct difference with Illy’s coffee is their prestige of utilizing a single premium blend company wide.
While Illy gained popularity among the corporate world, the next step in marketing coffee’s consumption was to offer more conveniently brewed coffee for consuming workforces; “In 1996, coffee was consumed primarily at home, in the office, or in a food service establishment such as a restaurant or coffee house. Keurig planned to initially target the U.S. office and food service channels, forgoing the $5.7 billion household marketplace until the company could develop a home system at an acceptable price point—which Lazaris [the current CEO] thought would take three more years. Keurig hired Chris Stevens as vice president for sales and marketing in early 1996. Stevens and his team conducted customer trials in offices around Boston. A prototype packaging line at GMCR (Green Mountain Coffee Roasters) manufactured the K-Cups for the trials, which contained GMCR coffee and displayed the Green Mountain logo. Office managers viewed the Keurig system as a benefit they could provide to employees. Stevens believed that Keurig’s high quality, wide flavor assortment, low waste, and easy maintenance would offset the premium that offices would be asked to pay. Interviews with office managers supported Keurig’s assertion that if premium coffees were offered, even the most discriminating employees would use the workplace brewer rather than running out to Starbucks” (Marshall). In the US workforce, convenience became the main concessionary standard and with Keurig’s massive success of engineering the K-cup, companies like Starbucks had to adapt to hold market share.
Starbucks, Seattle’s based coffee house had already began growing a large share of the coffee market for well over a decade; yet they apparently weren’t content with consistent growth because in 2002 Christine Day, Starbuck’s senior vice president of administration in North America, “reflected on the company’s recent performance. While other retailers were still reeling from the post-9/11 recession, Starbucks was enjoying its 11th consecutive year of 5% or higher comparable store sales growth, prompting its founder and chairman, Howard Schultz, to declare: “I think we’ve demonstrated that we are close to a recession-proof product.” Day, however, was not feeling as nearly as sanguine, in part because Starbucks’ most recent market research had revealed some unexpected findings. [Day stated,] “We’ve always taken great pride in our retail service, but according to the data we’re not always meeting our customers’ expectations in the area of customer satisfaction.” As a result of these concerns, Day and her associates had come up with a plan to invest an additional $40 million annually in the company’s 4,500 stores, which would allow each store to add the equivalent of 20 hours of labor a week to improve speed-of-service and thereby increase customer satisfaction… [And in addition to the improvement of customer service, Starbucks began operating upon] three components [of the “life coffee”] experiential branding strategy. The first brand component was the coffee itself. The second brand component was service. The third brand component was atmosphere” (Moon). Starbuck’s success had been primarily credited to the branding of their establishment, focused not only on the coffee but their excellent customer service which was dedicated to producing the customers’ coffee as fast as possible while providing a comforting environment as they wait for their order.
Pete’s coffee however also focused to deliver customers the best cup of coffee similar to that of Illy’s premium blend (but mainly in the form of single origin coffee) and in a great manner of service similar to that of Starbucks, but their main claim of success was due to their advanced distribution system; “their business has four main channels of distribution: they operate almost 200 retail stores, have grocery direct store delivery business that delivers fresh coffee to almost 9,000 stores nationwide, a food service and office coffee program and have a home delivery business that delivers coffee fresh every day to customers all throughout the world. Pete’s has a very unique business model that’s based on the concept of roast to order. They take orders that come in every day, aggregate them at night and start the next day at 3 in the morning roasting, packaging coffee and shipping it out the same day. Over the last five years, the company has grown almost 80 percent; for them one of the largest challenges was the integration across the different systems of the company” (Junction Solutions). Pete’s coffee is by far the most advanced coffee supplier in the world and their distribution system acts as its structure. Illy has proved they have a very premium coffee supply and Starbucks has proved they have excellent customer service; whereas Pete’s coffee not only offers high quality coffee and great customer service, but they also hone a superior distribution system which allows consumers to get their great coffee at the most direct method of distribution. Great coffee is utterly worthless if its coffee supply stales in transit, and great customer service is also worthless without great coffee; but utilizing those traits and strengthening them with a great distribution structure is necessary to encapsulate the success of coffee into becoming the true choice beverage of Titans.
Coffee plays an enormous role in our US workforce, as it is “the US’s largest food import and second most valuable commodity only after oil. According to the International Coffee Organization, the US imported 2.72 billion pounds of coffee from September 2001 to September 2002. In recent years, new cafés have been opening at an explosive rate, making specialty coffee mainstream and increasing profit margins for specialty coffee roasters and retailers. The Specialty Coffee Association of America estimated that there are 10,000 coffee cafes and 2,500 specialty stores selling coffee” (Global exchange). In retrospect to all the marketing campaigns mentioned, this is only the beginning for coffee’s economic expansion and majority of the growth today is in favor of specialty coffee. Single origin coffee is the future of the beverage of titans; paired with the progression of our consumer experience and advanced distribution methods, great coffee is more available than it ever has been before and creative marketing campaigns will only continue to expand the coffee market alongside its aggregate consumption. Overall, coffee is the beverage of titans because the beverage now evolves alongside our own human advancement. We learn more effective ways to grow, harvest, roast, brew and market our beverage of choice at a similar rate to that of our technology. Coffee has been the forefront of beverage innovation for centuries, whether it’s been developing the most efficient method of brewing or inventing a whole new way to ingest coffee entirely. Coffee already holds great importance in the US workforce today, but it will be exciting to see how the market of coffee evolves next.
Works Cited
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Global Exchange. “Coffee in the Global Economy.” Global Exchange. N.p., n.d. Web. 25 Jan. 2014. <http://www.globalexchange.org/fairtrade/coffee/faq>.
Marshall, Paul W., et al. “Keurig and Green Mountain Coffee Roasters.” Harvard Business Faculty Research. Harvard Business School, 9 Dec. 2011. Web. 25 Jan. 2014. <http://hbr.org/product/keurig-and-green-mountain-coffee-roasters/an/812101-PDF-ENG>.
Moon, Youngme, and John Quelch. “Starbucks: Delivering Customer Service.” Harvard Business Faculty Research. Harvard Business School, 10 July 2006. Web. 25 Jan. 2014. <http://hbr.org/product/starbucks-delivering-customer-service/an/504016-PDF-ENG>.
Norton, Michael I., and Jeremy Dann. “Juan Valdez: Innovation in Caffeination.” Harvard Business Faculty Research. Harvard Business School, 1 May 2013. Web. 25 Jan. 2014. <http://hbr.org/product/juan-valdez-innovation-in-caffeination/an/513090-PDF-ENG>.
Peet’s Coffee & Tea Case Study. Prod. Junction Solutions. Junction Solutions. N.p., n.d. Web. 25 Jan. 2014. <http://oldsite.junctionsolutions.com/peets-vid/>.
Topik, Steven. “The world coffee market in the eighteenth and nineteenth centuries, from colonial to national regimes.” The London School of Economics and Political Science. The London School Library, 4 Feb. 2009. Web. 25 Jan. 2014. <http://eprints.lse.ac.uk/22489/>.
Image:http://upload.wikimedia.org/wikipedia/commons/c/c5/Roasted_coffee_beans.jpg
