Chances are you have a co-worker or friend who’s a coffee addict—the kind who can’t function until they’ve had that first cup and don’t start getting twitchy until about the fourth or fifth. While coffee addiction is growing, so is the connoisseur element of the coffee culture. Specialty, gourmet and local coffees are increasingly providing the caffeinated beverage of choice.
Between 2010 and 2014, the market share of specialty coffee nationally grew from 40 percent to 51 percent, and the number of adults drinking specialty coffee daily grew from 24 percent to 34 percent, according to the Specialty Coffee Association of America. The National Coffee Association reports that in 2014, coffee consumption remained steady at 61 percent of American consumers.
Within the growth of specialty coffee, gourmet coffee consumption increased 3 percent while non-gourmet coffee fell 4 percent.
Among the businesses whose sales are percolating is A&E Coffee Roastery and Tea in Amherst, which expanded last spring by purchasing J Dubs on Elm Street in Manchester to introduce its coffee to a growing audience. Prime Roast Coffee in downtown Keene just finished renovating a 1,300-square-foot building to meet wholesale demand, which the business could no longer do at its downtown Keene cafe. Prime Roast Coffee has seen sales grow 15 to 20 percent annually—a growth rate typical among other NH roasters.
Some coffee roasters see the current growth spurt as an opportunity to diversify. King David Coffee Roasters in Nashua recently added a commercial popcorn machine and is launching a maple flavored kettle corn to sell with its coffee, which includes its best seller, a maple-flavored coffee. For these independents, coffee isn’t just a business.
When Emeran Langmaid, owner of A&E Coffee Roastery and Tea, holds a handful of coffee beans, she doesn’t see a caffeinated fruit (which they are), but a sustainable model for economic prosperity for indigenous people. For Judy Rogers, owner of Prime Roast Coffee, coffee is about community, such as when the former Keene mayor stops in the cafe for a coffee and talks with other regulars. For Christian Ganem, owner of Good Vibes Coffee Roasters, coffee allows him to be part of something bigger—the local food movement—which has many North Country shops clamoring to buy his beans.
The growth of that movement has caught the attention of larger retailers like Hannaford, which has seen a shift in the coffee tastes of its customers akin to the rise of local craft beers, says spokesman Eric Blom. In response, Hannaford features local coffee roasters on its shelves.
New Hampshire’s love affair with coffee is so strong it inspired a NH Coffee Festival in 2013 that filled the main street of Laconia and will be held again in September.
Magic Beans
According to legend, coffee originated in the Ethiopian highlands where coffee trees grow today as they have for centuries. Kaldi, a goat herder, is said to have discovered coffee after noticing that his goats, upon eating berries from a certain tree, became so spirited that they did not want to sleep at night.
Kaldi dutifully reported his findings to the abbot of the local monastery, who made a drink with the berries and discovered it kept him alert for the long hours of evening prayer.
Little did Kaldi suspect his discovery would lead to a multi-billion dollar industry worldwide. Starbucks rules that coffee kingdom, posting $16.4 billion in sales in 2014, up from $14.9 billion in 2013. However, NH “Runs on Dunkin’.” Dunkin’ Donuts, which generated revenue of $539.5 million in 2013 and has 217 locations in NH while Starbucks only has 22. Small guys are getting their piece of the action as well. According to the Small Business Development Center, there were about 20,000 coffee shops in the United States with combined revenues of $10 billion in 2011.
When coffee drinkers find what works for them, they become loyal customers, even if it makes for extra work. That is how Prime Roast in Keene has grown a steady wholesale and mail order business with no marketing efforts or e-commerce capabilities—from people who visited Keene and tried the coffee. The company now roasts 1,000 pounds of coffee weekly and is renovating an 1840s mill in Keene to grow its wholesale business. Prime Roast Coffee now has eight employees with plans to add more in the new location.
“I got a call from Whole Foods in Cambridge [last year] and had to say no,” says Rogers, explaining her operations at the time could not accommodate that volume of business. “That’s the sort of business that has been coming our way. What’s happened is over the last two years without really wanting to get any bigger it’s been evident we need to.” Her current wholesale accounts include Keene State College and the Monadnock Food Coop, both in Keene.
And the independents say they can more than hold their own against industry behemoths. Prime Roast has been around 20 years, and when Starbucks moved into town more than a decade ago Rogers actually saw an uptick in business. As she is downtown and Starbucks is further out on West Street, people pick what they want, and she says more than enough pick her. Langmaid’s first Amherst location was right next to a Dunkin Donuts and her current one is but a few doors down, but neither location has posed a challenge.
Langmaid says her top sellers are all organic coffees. They are certified to be grown without any chemicals and transported and stored according to industry standards, which she says helps to set her apart. Any visitor to her cafe can see her love for coffee. Coffee beans are stored in transparent containers with labels listing their origin, elevation they are grown at, the drying process and tasting notes. And while darker coffees from Brazil and Sumatra are customer favorites, her staff loves Norma’s Coffee, a microlot (coffee grown in small quantities and allowed to mature slowly for a more complex flavor) from Honduras that has a citrus flavor and a bit of spice.
“The way the industry will ultimately grow is by grabbing more customers who associate a level of quality with a price point,” says Langmaid of the microlots. She entices retail customers by sending them home with free beans to brew. Wholesale, though, is where she sees the most potential. Langmaid has 18 employees, three of whom are solely focused on wholesale accounts, which the company has developed nationwide. Wholesale is 40 percent of her business, though she says her goal is to increase that by 35 percent in the next 12 months. She now roasts 700 to 900 pounds a week, but hopes her new Manchester location will introduce her specialty coffee to downtown office workers, who will then share it with coworkers and lead to more office wholesale accounts.
King David Coffee Roasters has 150 wholesale accounts in 20 states, and is focused on tourist areas. Owner Sam Brest has wholesale clients stretching from northern NH to Ohio and Virginia, and has retail customers throughout the country. Brest founded King David Coffee Roasters in 2003 and in 2010 acquired Cohas Coffee, which came with many of the wholesale customers he has today. Brest says business was off a little in 2014, which he says is because his wholesale clients reported less store traffic.
Localvores Unite
A good cup of coffee is a partnership between a farmer, picker, roaster, barista (in some cases) and customer. It all plays into the growing “Buy Local” movement. Among the coffee businesses capitalizing on that movement is Good Vibes Coffee Roasters, operating out of an 800-square-foot warehouse in North Conway. Owner Christian Ganem roasts 2,000 to 3,000 pounds a month and sells his coffee to local coffee shops and retailers. Business has steadily increased during the past six years, with a 30 percent jump in 2014 that he attributes to the buy local movement. Ganem bought out his partner at the beginning of this year and is now the sole owner and employee, a situation he plans on changing this summer.
“People are opening new businesses, or existing businesses are continually falling into sync with the local food movement,” Ganem says of his competitive advantage. “Organic is kind of the thing now. It goes with the local food movement and interest in fair trade.” Ganem sells 20 varieties, about half of them organic. The retail business is harder to build as the North Conway area is dependent on tourists, and winter is slower as skiers tend to come only for weekends, whereas summer tourists come for a week at a time or for the entire summer. However, his business is 85 to 90 percent wholesale driven by 30 plus customers that extend south into northern Massachusetts and north into Maine, along with online sales. Customers include The MET Coffee House and White Birch Books, both in Conway, the Littleton Food Coop, and soon Hannaford in NH through the Close to Home program, which features products made in the state they are sold. Despite growth, he says the coffee business is a challenge. With no storefront, he works closely with his customers, who he calls partners, to ensure their success. This means everything from offering private label coffee to helping them purchase brewers and grinders at a discount that he negotiates for them, and training them to brew the coffee.
That last point, says Langmaid, is key and something she also does for her clients to ensure the raw product turns into the best cup of coffee possible. “Roasting is kind of a lot like cooking. You can throw something on the grill and it will cook, or you can delve into the chemical changes happening and create an amazing flavorful product. Coffee is the same way,” she says, noting that storage location is also important as beans absorb smells around them. Teaching wholesale customers about coffee is also critical to convincing them to spend the extra $15 to $20 on a bulk order to jump to specialty coffee.
Building Community
One advantage of coffee is that it has a built-in social element. People are always meeting for coffee. When Laconia Main Street, a volunteer group dedicated to making downtown Laconia economically vibrant, was brainstorming ways to bring the community together, the first idea was a wine festival. But not everyone drinks wine and the group wanted to be inclusive, so it decided on coffee, says John Moriarty, chair of Laconia Main Street. Thus was born the NH Coffee Festival.
The group held the first NH Coffee Festival in September 2013 for an afternoon in downtown Laconia, which was blocked to traffic and packed with 40 vendors selling coffee and related items. One end of the main street had live jazz and the other a tent where people were providing educational talks about coffee. So many people showed up, they opened a half hour early and within an hour festival organizers had given out 1,000 sample cups. Three hours in, many vendors were sold out. The second festival will be held this fall, though unlike the first time, vendors will pay for booths.
Moriarty says the festival was specifically named the NH Coffee Festival so it could move around the state as he believes it could also benefit other communities. Of the 40 vendors, all but one was from NH. They decided not to hold it in 2014 to avoid saturating the market and to keep it fresh.
A sense of community is the main reason many roasters and cafe owners report good business. While there are certainly many people loyal to Dunkin’ Donuts and Starbucks, many are also devoted to their local independent cafe, and that loyalty stands up when tested. About five years ago Starbucks opened in Market Square in downtown Portsmouth, within walking distance of several independent coffee shops. Economic Development Director Nancy Carmer says the independents remain competitive, drawing plenty of followers.
“Anecdotally, people tell me it’s working. There is a certain demographic that likes Starbucks and they go there. Other people choose other places they like,” Carmer says, adding she can set her clock to certain people who go to the same coffee shop every day at the same time.
There is also a movement afoot in the Seacoast and Southern NH of standalone drive-up specialty coffee shops called Aroma Joe’s. During the past 14 years, Aroma Joe’s has steadily built its business to 15 locations in NH and Maine, chiefly in the Seacoast, including a new franchise location that opened in Windham last year. Carmer says they too have devotees, including her adult children.
“When people get together, they say let’s get a cup of coffee, but what they are really saying is let’s have a conversation. That’s what coffee is,” says Moriarty. And it’s a conversation that’s getting a lot of buzz in the specialty coffee arena.