What Peet’s acquisition of Stumptown and Intelligentsia says about the state of coffee
Peet’s Coffee & Tea went on a buying spree this past fall, gulping down both Stumptown and Intelligentsia — two pioneers of the booming third-wave coffee movement.
So, why talk about it months later? I was recently asked why I thought Crema.co’s unique coffee subscription model was well placed to succeed. In particular, why letting customers choose coffees from independent specialty roasters was better than, say, just sending them a rotating coffee every month.
The question got me thinking about the reporting around Peet’s acquisitions, the reaction to it, and it’s significance for specialty coffee.
Why, for Peet’s sake?
Here’s the rationale that Peet’s CEO, Dave Burwick, gave for the two buyouts:
“As the super premium coffee category further explodes and fragments due to more consumers (18–34-year-olds) demanding variety and highly specialized coffee experiences, it’s important that we offer differentiated craft coffee brands with unique propositions and appeal.”
Exploding and fragmenting — wow. Translation: demand for top-quality coffee from unique, independent roasters is growing rapidly, and they want to be in on it.
And whatever you might think of Peet’s Coffee itself, the company is actually owned by a German private equity fund called JAB Holdings, which boasts the world’s largest coffee portfolio. In other words: they know the coffee business.
How did people take it?
Predictably, there was significant backlash to the acquisitions from fans who feared that Stumptown and Intelligentsia were selling out. Reactionary tweets included:
“Dear @Intelligentsia, please don’t lose your soul.”
“This is the worst news of today”
And simply:
“Noooooooooo”
Why all the doom and gloom? Slate’s Will Oremus commented that “coffee makers like Stumptown and Intelligentsia have traded on perceptions that their products are authentic and artisanal.” Clearly, fans wanted them to stay that way.
What it says about specialty coffee
The statement from Peet’s CEO and the customer reaction to it both tell the same story: young specialty coffee drinkers in particular are seeking out authentic, artisanal, “super premium” coffee, and they want to experience it from small, independent outfits, not big corporations.
In fact, even before the acquisition, many third-wave coffee types already felt that Stumptown had outgrown it’s edge. In their hometown of Portland, for example, numerous artisanal roasters and cafes have supplanted Stumptown as local favorites. Eater’s list of the 20 Best Coffee Shops in Portland (curated by my Crema.co cofounder Emily McIntyre, I might add), doesn’t include Stumptown on the list.
In short: its a great time to be an indy roaster or cafe that’s keeping it real.
Implications for Crema.co
How does this relate back to Crema.co, and the question I was asked about our model?
When I was contemplating starting a new company early last year, I knew I wanted to build a marketplace that would help coffee drinkers like me discover new roasters around the country and easily buy coffee from them.
My team and I then went on to develop a model that works like a Netflix queue for coffee: customers add coffees to their “Brewlist” queue, set a shipment frequency, and get the next coffee on their Brewlist each delivery. Every coffee is then roasted to order and shipped directly from the roaster to the customer. There are currently 40 coffees from a dozen roasters participating in the marketplace, and we’re adding more each month.
We love helping coffee drinkers get their hands on exceptional coffee from artisan roasters — and not just by having a random coffee show up in their mailbox, but by giving them a platform to discover new roasters and choose the coffees they want to receive for themselves. We love supporting independent roasters by helping them get their story — and their coffee — into more mugs.
And as the rationale driving Peet’s acquisitions and the corresponding backlash have shown, we’re not the only ones who appreciate a tasty small-batch coffee from a craft roaster. A beverage analyst recently said it well:
“In coffee, (like beer), small is beautiful.”
