World Coffee Producers Forum: US Coffee Consumption: Campinas Brazil July 2019

World Coffee Producers Forum: US Coffee Consumption: Campinas Brazil July 2019

June 15, 2020

Good morning. I’d like to thank the organizers of WCPF, sponsors, attendees, fellow panelist, and all those who have made it possible for us to be here today, especially the millions of individuals who work in the coffee fields around the world

At 8  years of age, I spent my summers working full-time in cotton fields in the southern part of the US, in Arkansas   As farm workers, my family and I felt the effects of never-ending changes, I share my humble beginnings this morning so that you understand that I wasn’t born with a silver cupping spoon in my mouth. As much as I disliked working in the fields, working in cotton is what prepared me most to work in coffee.   In some ways I understand the challenges associated with working in agriculture. I have compassion for farmers and workers. They are the most severely impacted during difficult times. Let’s talk about coffee consumption in the US 

 Where might the US find further growth opportunities in a saturated market and what it takes to sustain our growth

 Provide insight on how two specialty coffee companies in the US are going that extra mile to bring new consumers to the market and align with customers.

 What I believe as industry professionals from both consuming and producing countries can do to sustain the industry.

Coffee consumption in the US has remained consistent over the past 8 years.  It is one of the most preferred beverages in the US.  According to the National Coffee Associations research,   

  • 63% of Americans chose to drink coffee routinely.
  • We have the largest value market
  • US consumers are demanding higher quality with a willingness to pay more according to market researcher, Euromonitor International

 Although overall consumption remains consistent, researchers have looked more closely into the data and determined

  • Consumers are shifting towards better quality coffee beverages and moving away from the lower quality coffees or more traditional coffees.

 2019 research shows an increase in consumption among young minority groups in the US is what’s sustaining the growth that we see.

  • Minority groups make of 35% of the US population, 130 million individuals, it’s important that the US industry start to place more focus on minority groups and consumption
  • The US is projected to become more diverse over the next few decades, according to the US Census Caucasian American’s are expected to be considered a minority by 2045.
  • It’s important that our industry start to embrace diversity and find ways to engage more people in the industry, beyond consumers, but also employees, and entrepreneurs, and leaders. We stand to gain new ideas, technologies new solutions to challenges with greater diversity and inclusion.

  What are we doing to maintain and grow the US market?  US coffee companies and organizations spend millions of dollars each year to sustain the industry. We invest heavily in health research.  You probably know that our industry is routinely challenged with lawsuits regarding health claims that take time and a tremendous amount of resources to resolve.  These claims can have a significant negative impact on the global industry.  While serving on the NCA Board of directors I gained a first-hand look at what’s necessary in sustaining the coffee industry and overall consumption.

 I’d like to take you inside two US coffee companies that represent what is happening in one of the fastest-growing segments of our market.  We often think of larger companies and their volume of people and purchases, but in the US there are over 30 million small businesses and according to 2018 US Small Business Administration research.  Small businesses employ 48% of US workforce.   The first company I’d like to introduce you to is Coffee By Design

Coffee By Design Building Diversity

Coffee By Design is located in Portland, Maine, a city that is 84% Caucasian (white) Americans with a growing population of immigrants.  In 1994 soon after the company opened its doors a few months later a refugee from Bosnia walked into the café.  He and his family had been relocated to the city escaping war back in his country.  Since the beginning, the owners, Mary Allen and Alan, owners of the company had the vision to engage with the local immigrant community.  They were certain there was value in building a diverse and inclusive business that reached out to local immigrants.

 One crucial moment was when the company owners decided to invite a coffee supplier, a  woman in coffee from Burundi for a visit.   Mary Allen was connected to the IWCA and purchased coffees from several women around the world, it was through these connections that she was able to excite her local community, which included the immigrant community.  She discovered that the city had a large population of Burundi immigrants, so many that they had their own drummers.   Through many small steps and building trust, Coffee by Design has successfully established a strong bond with their community with a focus on immigrants

 The company gives back to the community in numerous ways

  • special coffee blends that offer a premium to organizations that support immigrants
  • employing services and purchasing products made by immigrants,
  • serving on local boards that support immigrants,
  • collaborating with immigrant-owned businesses and offering the community unique experiences.

 Having traveled to coffee-producing countries for many years in search of specialty coffees today they see the faces of those communities they’ve visited, in their hometown of Maine.

 Colombia, the company supports a wellness facility for families

  • India, the company supports scholarships to educate girls who live on the farms offering hope for a brighter future.
  • Burundi their coffee buying pays a bonus and ownership to women in coffee;

Earlier this summer I had the pleasure to attend the company’s 25th anniversary.  It was like visiting 20 different countries in one day.  A beautiful day of festivities, all coming from the local community.       There was an Ethiopia coffee ceremony, Congo dancers, Burundi drummers, local artists, and a community there to experience and embrace all of it.    

The retail store enjoys double-digit sales growth year after year, as much at 35% growth year over year.   When I asked why such great success at the café, the owner explain that in many ways the café feels like home for so many.  

Coffee Emporium  

Coffee Emporium located in Cincinnati, Ohio, is a family-owned specialty coffee company that consists of, cafes, a bakery, and a roastery.  Tony and Eileen, owners are highly involved in daily operations.  Eileen grew up on a farm and went on to study science, she uses her knowledge of milk to offer a competitive advantage for the business.  Considering how much milk specialty coffee beverages require they decided to invest more in the quality of their milk by purchasing higher quality milk from local farmers. 

Their customers are choosing to drink higher quality, rich, and more satisfying coffee beverages over volume. 

Recently when expanding one of their cafés, they brought in more locally made items for decorating, including tiles along with the front counter made from Kentucky bourbon barrels,

Their product offerings include their famous Bourbon Cold Brew. 

The green coffee that’s aged inside a bourbon barrel that takes on the flavors of bourbon and whiskey.  Many other specialty beverages

They are selling up to 100 times more cold brew beverages than when they took over the company 23 years ago. 

Many small to medium-size specialty coffee companies not only support their local communities and other small entrepreneurs.  Routinely, Coffee Emporium visits, long-time coffee supplier, Los Andes Coffee & Tea estate in Guatemala.  They’ve purchased coffee and supported this farm for many years.  They take along staff members to gain an appreciation for all the work that goes into coffee and build the next generation of coffee professionals. When possible, they host the farm owner at their café to meet with customers.  Their purchases of green coffee from Los Andes help in operating a school, providing housing, job training, and a health clinic for coffee farmers. 

There are thousands of coffee companies throughout the US, each trying to survive in a competitive environment.  Some are finding new ways to grow and engage with customers like Coffee Emporium and Coffee By Design.  

What are we doing to maintain and grow the US market?  US coffee companies and organizations spend millions of dollars each year to sustain the industry. We invest heavily in health research.  You probably know that our industry is routinely challenged with lawsuits regarding health claims that take time and a tremendous amount of resources to resolve.  These claims can have a significant negative impact on the global industry.  While serving on the NCA Board of directors I gained a first-hand look at what’s necessary for sustaining the coffee industry.  

 It is in our best interest, those of us here today.  We must see ourselves as collaborating to find solutions to these threats.  We can’t assign certain threats to different parts of the supply chain because we believe that we are less impacted by the threat, ultimately these threats and others will impact all of us.   I like to leave with a story of someone that I believe can inspire us. 

I’d like to end with a story of someone that I believe can inspire us. 

Dr. George Washington Carver was an American scientist and inventor who cared deeply about people and plants.      

Dr. Carver used his knowledge to help poor farmers living in the rural South. He began by introducing the idea of crop rotation to poor farmers who were sharecroppers and had recently transitioned from slavery.  Increased cotton production in the south production was on the decline due to depleting soil nutrients, Dr. Carver taught farmers crop rotation to help improve the soil, he also taught the farmers how to grow peanuts a good source for nitrogen fixating improve soil depleted by growing cotton. Being born a slave in Missouri George Washington Carver had empathy for former slaves who had turned sharecroppers.  He invented the Jessup Wagon, a horse-drawn classroom and laboratory for teaching farmers soil chemistry.

Farmers were happy with the large cotton crops resulting from the cotton/peanut rotation but were less happy about the huge surplus of peanuts that built up and began to rot in local storehouses.

Dr. Carver heard the complaints on the surplus of peanuts and went to his laboratory for a solid week when he came out, he’d developed over 300 usages for peanuts.  As he introduced these new products he developed to the public in a series of simple brochures, the market for peanuts skyrocketed. Today, Carver is credited with saving the agricultural economy of the rural South in America.

Here are the lessons we can learn from Dr. Carver’s story,

  • He worked on increasing production and quality of cotton which results in a surplus of peanuts. He then worked on building greater consumption peanuts
  • When there was surplus production, he found solutions, he did not blame the producers or buyers he found solutions by developing more uses for the peanuts.
  • Carver was an unlikely person who would have the solutions for the cotton industry. He was black, he was born a slave.  His pathway for education was more difficult, but he achieved all that was necessary in order to contribute significantly to the US economy for cotton and peanuts which continues today.

So I ask, Where is our George Washington Carver?  As we meet here in beautiful Campinas Brazil, the home of the world’s oldest coffee research institution, Agronomic Institute of Campinas (IAC) an organization where scientist is responsible for the development of varieties of coffee plants that are planted throughout  90% of Brazil coffee fields, over 4 billion plants can be traced by to the research and development of IAC

As we’ve come together here during WCPF let us commit ourselves to build collaborations that solve problems.  I can assure you there’s a little girl out there, a family that is more greatly impacted than any of us sitting in this room this morning.  We must ask ourselves does the answers we seek exists in someone we are overlooking.  Does it exist in our collective efforts and minds and the belief that all risks are our risk?   I believe so.   

Each threat that we face in our industry from:

The threat of imposed tariffs on coffee coming into the US

False health claims

Low Market prices

Climate change

Poverty

I leave you with a simple George Washington Carver Quote:  “Do what you can with what you have, do it now.”