STiR coffee and tea magazine

STiR coffee and tea 39 Independent coffee shops focus on building a community for their customers and suppliers. They create unique spaces full of character and personality. Specialty coffee companies, like Blue Bottle, put more emphasis on higher quality products, slowing things down and establishing mutually beneficial relationships with suppliers. of Portland's Stumptown Coffee," wrote Sprudge in 2019. But it's not all bad. To generalize somewhat, specialty coffee is an industry of small businesses paying minimal staff minimum wage and without much in the way of HR or healthcare. Investment, in theory, could change that. For Sarah Kluth, who has worked in specialty coffee and finance, the impor- tant thing is the makeup of the company that's investing. "PE firms can be really large, or they can be really small, and so that does determine the approach as well," she says. "And not all of them are completely Machiavellian, right? There are certain VCs and PEs out there who are savvy enough to understand these boutique brands and understand that there's a culture there, and the smart ones will want to preserve that." So is VC and PE money the future of specialty coffee, or its death knell? The positive position: with increased investment comes increased scale, al- lowing companies to buy more coffee from farmers and pay them more. More employment means more money enter- ing the local economy: a rising tide (or trickle-down economics). Opening new cafes lets a company reach new custom- ers, bringing more acolytes into the spe- cialty fold. On the doomer side: more money equals more strings, more investors to keep happy, and more people asking questions like, "Do we really need to be spending so much on green coffee?" Which, eventually results in downward pressure on green prices. Expansion stratifies a business, disconnecting work- ers from the company's core ideals and watering down the brand. One thing is certain—investment and the associated supercharged growth are becoming normalized in specialty coffee. Nobody bats an eye when Origin Coffee receives a multi-million-pound invest- ment, or when a private equity firm buys Seattle Coffee Gear. It's just the cost of doing business if you want to grow to compete with Starbucks, Caffe Nero, or even Stumptown and Intelligentsia. But is that good? Does growing un- sustainably fast benefit anyone aside from the founder and shareholders? "When was the last time that some- thing ended up at the tail end of an ob- scene growth process, and [was] better than it's ever been?" asks Professor Rob- erts. "I'm not sure that at the end of the day, any singular experience with Blue Bottle will be made better because of the arrival of Nestlé." The dream of specialty coffee—of the third wave as a concept—was built on do- ing things differently to the big brands— higher quality, more care, better ethics. But today, the third-wave trailblazers are mostly owned by big brands themselves, so what now? Was it worth it? In an era of hypercapitalism, with big brands entering the specialty industry and the market becoming saturated with startup coffee companies, venture capi- tal, and private equity investment would be appealing. If everyone else is taking the money, how can you compete with- out accepting a few cheques—and the strings that come along with them? What happens to the concept of spe- cialty coffee when everyone is venture- backed, every cafe looks the same, and behemoths own many of the most fa- mous brands? What happens to coffee farmers when shareholders demand per- petually higher profit margins and larger dividends? There will doubtless always be small coffee companies looking to grow sustain- ably and approach coffee with nuance, hu- mility, and a focus on quality. But when the latest multi-million-dollar investment round, the smiling startup CEO waxing lyrical about growth, and near-constant mergers and acquisitions dominate the headlines, it seems a long way from the anti-establishment ideals upon which spe- cialty coffee was founded.

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