Trevor Stauffer

The $70 Billion Bean


A $70 billion international industry began centuries ago with some hyper goats in the desert.

One afternoon, a dozing shepherd in Ethiopia was awakened by his mysteriously high-strung and jittery herd. When the shepherd, named Kaldi, discovered that his mischievous goats had been nibbling red berries from a nearby bush, he decided to try some for himself, and the human love affair with coffee began.

More than 12 centuries have passed since then (or so the legend goes). But no matter who first discovered coffee, it has become one of the most well-loved commodities on Earth. It has survived countless prohibitions, wars, and boycotts to make it to the 21st century. And over the past few decades, coffee has undergone some radical transformations.

Let’s take a look at a few examples of recent market inventions that have changed the way we think about coffee.

Starbucks

In many ways, Starbucks single-handedly reinvented coffee in America. Before them, a cup of joe meant a spoonful of Folgers plopped into boiling water. Cream and sugar, maybe, but nothing fancy.

Starbucks started the movement commonly called “second wave coffee” by putting an emphasis on quality, customer experience, and novel forms of coffee, like dark roast and espresso. But how did a small coffee shop in Seattle become internationally ubiquitous and reinvent an entire industry?

Coffee was already immensely popular in the US, but almost all coffee sellers had the same shortcomings. Low quality, undifferentiated beans, and bland roasting processes offered nothing to consumers but a cheap buzz. Coffee lacked originality; there was nothing artisanal or romantic about it.

But Starbucks stressed quality above all else. They educated consumers about the importance of coffee beans like a wine company would emphasize grapes and terroir. They told customers where their beans came from, how they were roasted, and why these distinctions made a difference in the taste. Not only did they offer a higher quality product, but they also taught consumers to appreciate that quality and seek it out.

Today, Starbucks continues to redefine coffee shops as “the third space.” Starbucks Reserve Roasteries pay hommage to those coffee drinkers looking for the most immersive coffee craft experiences possible. As described on the Starbucks Reserve website, “The Starbucks Reserve Roasteries are immersive, theatrical shrines to coffee passion, where Master Roasters ply their craft to coax perfectly flavorful expression from each of our small-lot coffees. Simply put, the Starbucks Reserve Roastery offers an experience found nowhere else in the world.”

Right now, only two Reserve locations are open in Seattle and Shanghai, but plans are in place to open Reserve Roasteries in Milan, New York City, Tokyo and Chicago.

Keurig

While Starbucks transformed the way we think about buying coffee, Keurig changed the way we think about having a mug at home. John Sylvan, who started Keurig with former roommate Peter Dragone, wanted to address the problem of stale, bitter coffee that plagued break rooms in businesses across the US. So in 1992, he started manufacturing the machines and coffee pods by hand to sell to local businesses.

Within a few years, his innovation was enormously successful, and workers wanted their own Keurig systems at home. And when Keurig partnered with Green Mountain Coffee, the mutual benefit was immediate. Keurig had a reliable source for coffee; Green Mountain had the primary share of all K-Cups sold.

Keurigs became popular for more than simply the freshness of the coffee. By brewing one cup at a time, in about a minute, everyone in a household or workspace can have exactly the beverage they want, right when they want it. And they don’t even have to choose coffee: Keurig machines happily serve hot tea or cocoa. The company has created a new market space that challenges not only the traditional coffee market, but just about any hot drink.

Because of the convenience and wide selection Keurig offers, they are now able to charge five times more than what consumers were willing to pay for traditional coffee. And because Keurig invented the market, coffee suppliers aren’t rushing to supply knock-off companies with coffee. Keurig dominates the North American market so heavily that there’s no real need to focus on imitators who return far less profit.

Looking forward, Keurig is finding new ways for consumers to brew (or carbonate) individual beverages. Keurig continues to develop new machines with more options available, customized to the tastes of those who love to home brew. The recently-released Keurig K-Elite boasts the most beverage customization available in a Keurig single serve coffee maker. Keurig is also working with appliance makers, like GE, to incorporate coffee brewers into your fridge.

Also to keep in mind that at the beginning of 2018, Keurig merged with Dr Pepper Snapple Group to create a $11 billion beverage company. We should expect big things to come from such a powerful partnership.

Bai

Starbucks and Keurig are bonafide revolutionaries in the coffee industry, but Bai is pushing the limits even further by throwing out the coffee bean entirely.  By using the outer flesh of the coffeeberry instead of the bean that grows inside, Bai crafts a coffee-based beverage that doesn’t look like coffee or taste like coffee, and packs an ice-cold helping of healthy antioxidants.

Bai’s founder, Ben Weiss, wanted to create a viable, healthy alternative to soft drinks that would taste delicious and still provide the mildly stimulating effect of caffeinated sodas. While Bai has used many standard marketing techniques like sponsoring events, handing out samples, and TV advertising (see their iconic Super Bowl ad), the popularity of the drink is rooted in their use of the “superfruit” coffeeberry, advertised prominently on their packaging.

The coffeeberry is an abundant source of antioxidants, and Bai claims these antioxidants are part of what makes their drink a better alternative to soda. While some are skeptical of this claim (at least one lawsuit has been filed), Bai has won fans by creating a low-calorie drink that uses natural sweeteners like stevia extract and erythritol, a sugar-alcohol found in fruit. Bai means “pure” in Mandarin, and Weiss calls the company’s focus on taste and health a “bevolution.”

Bai continues to develop new types of drinks, still packed with the antioxidants that consumers have come to recognize the brand by. In 2016, Bai launched its line of sparkling drinks. Bai has also found ways to go beyond beverages by partnering with the Tribeca Film Festival to premier its Unbelieve short film series  to “celebrate those who challenge the status quo.”

Coffee has come a long way since the days of Kaldi the shepherd, and these brands are just three of the commodity’s most recent market inventors. They serve as clear examples of how even the oldest industries have plenty of room for people willing to uncover market opportunity and put in the work to carve out new spaces for their ideas.

About Trevor Stauffer

Trevor unites a passion for clarity with a love of beauty in his approach to writing. His academic mastery of great writers gave him a strong foundation in classical writing skills, and his time teaching English in Spain taught him to strip language down to a basic, universal essence. For Trevor, writing isn’t just about communicating well – it’s about communicating beautifully.

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