s
s
Sections
We don't just cover the North Bay. We live here.
Did You Know? In the first 10 days of the North Bay fire, nearly 1.5 million people used their mobile devices to visit our sites.
Already a subscriber?
iPhone
Wow! You read a lot!
Reading enhances confidence, empathy, decision-making, and overall life satisfaction. Keep it up! Subscribe.
Already a subscriber?
iPhone
Oops, you're out of free articles.
Until next month, you can always look over someone's shoulder at the coffee shop.
Already a subscriber?
iPhone
We don't just cover the North Bay. We live here.
Did You Know? In the first 10 days of the North Bay fire, we posted 390 stories about the fire. And they were shared nearly 137,000 times.
Already a subscriber?
iPhone
Supporting the community that supports us.
Obviously you value quality local journalism. Thank you.
Already a subscriber?
iPhone
Oops, you're out of free articles.
We miss you already! (Subscriptions start at just 99 cents.)
Already a subscriber?
iPhone

Seattle-based Starbucks is the 800-pound gorilla of the coffee world, with a 36 percent market share in the $37 billion U.S. retail coffee industry and the green mermaid logo ubiquitous in all corners — including close to 40 locations in Sonoma County alone. Dunkin’ Brands, according to research firm IBISWorld, follows next with 13 percent.

But the tide is turning as consumers increasingly move to the world of specialty coffee — made from a variety of high-quality arabica and robusta beans, planted purposefully and roasted to perfection by craftsmen.

The Specialty Coffee Association of America says that artisan coffee is now about 55 percent of the overall sales value and its popularity is growing. The trade group noted that 31 percent of consumers drank a daily cup of specialty coffee in December 2015, compared to 24 percent in 2010.

Locally, the data is reflected by Petaluma-based Acre Coffee, which is opening its fifth location this summer in downtown Santa Rosa, where Starbucks has two nearby stores and Peet’s Coffee & Tea has one.

“I’ve always wanted to go downtown and compete against Starbucks and Peet’s. They dominate … I think we offer a local alternative,” said Steve Decosse, who owns Acre with his wife, Sharon Fitzgerald, and Britt Galler.

Acre’s new store will be a welcome addition and help bring more visitors downtown with the reunification of the Old Courthouse Square, said Raissa de la Rosa, the economic development and marketing coordinator for the city of Santa Rosa, especially as it is a beloved local business that has a loyal following.

“It’s really nice to see people from the community who started a business continue to do well,” de la Rosa said. “We love to see them grow.”

Decosse said he believes he can offer a better product to downtown workers and visitors by sourcing his beans from smaller operations, along with being one of the few North Bay operations that does not roast on the “overly dark side.” He credits the expertise of his coffee roasting manager, Sean White, whom he called one of the best roasters in the country. The lighter flavor plays a role in attracting 2,500 daily customers to Acre’s various locations.

“People are still seeking out the locally owned brands. It’s really strong here,” said Decosse, who lived in Portland, Oregon, for awhile doing research before opening his first store in 2011 in Petaluma.

But Acre is not the only local coffee company growing. Taylor Maid Coffee in Sebastopol plans to open up its second store in Petaluma in late spring near the Whole Foods Market, the natural-food store chain that already sells its product. Taylor Maid has made its name in the local marketplace for its organically grown beans, and its store in The Barlow center has become a popular attraction in the upscale shopping area.

“We really believe that Taylor Maid has such a long story in the organic market,” said Ted Robb, chairman of InHouse Ventures of Healdsburg, which bought Taylor Maid last year.

“Leading Taylor Maid in terms of selling beans to a broader market is exciting,” added Robb, who also wants to expand into Napa and Marin counties. “We feel there is a bigger market out there.”

The growth in the local business mimics that of the beer industry, where the behemoths Anheuser-Busch and MillerCoors have lost market share to upstart craft brewers in recent years as younger customers flock to their more creative and hoppy products, said Peter Giuliano, the chief research officer for the Specialty Coffee Association, a national, nonprofit trade organization.

“The younger you are, the more likely you are to think of coffee as a special thing, as a personal (daily) thing,” said Giuliano. “Because they see it as special thing, they also want diversity of experiences.”

The trend is so noticeable that Howard Schultz, the longtime chief executive officer for Starbucks, last year left that position to take charge of a new Starbucks Reserve premium brand, which will sell for up to $12 a cup and can be brewed for customers in a variety of ways: from a pour-over to a vacuum device that uses vapor pressure.

“It’s not surprising that all these (smaller) companies are likely to grow,” said Giuliano. “We don’t sense they are reaching a saturation point.”

Coffee is the world’s second largest traded commodity after oil, a global market that stretches from Africa to Asia to South America. It’s traded on global exchanges with suppliers in mostly developing countries to customers who are increasingly asking for premium beans. The result? Robusta coffee futures traded at a more than five-year high last month.

It is also a market that faces significant challenges, from the drive to promote “fair trade” coffee so growers are paid an equitable wage for their harvest to the worrisome effects that climate change will have on prime growing regions around the world.

“It (climate change) is something we are more worried about than consumption going down,” said Giuliano. His group has started the World Coffee Research nonprofit to use advances in genetics and breeding to develop new varieties of coffee able to withstand rising temperatures and new diseases.

The issue is personal for Phil Anacker, co-owner of Flying Goat Coffee, which has two locations in Healdsburg and one in Santa Rosa.

Anacker typically negotiates directly with his suppliers, which results in a large amount of international travel. He contends that coffee is underpriced and that many farmers are struggling to make a living. He believes that customers will pay more for coffee that is grown sustainably.

For example, a Flying Goat coffee grown by Guatemalan farmer Dario Hernandez — along his land’s high volcanic slopes — is priced at $17 for a 12-ounce bag on its website.

“We are trying to pay at prices that in exchange we get sustainability and quality,” said Anacker, whose first shop opened in 1994 and focuses on single-origin coffee from small producers. “It’s about the way they grow coffee in responsibility to the environment and to the workers.”

Such attention to detail also applies to servers, as each barista gets about four months of training to ensure they can deliver a perfect cup to the customer, he said.

Flying Goat intends to open another Santa Rosa-area store this year, but Anacker said he wants to grow at his own pace, not be dictated by a certain growth metric that he must meet. He noted that he has been approached by investors for Flying Goat as coffee “is a hot thing.” But Anacker has rebuffed them because the move would likely stray from his mission. He pointed to the changes that Peet’s has undergone since it was sold to a German conglomerate in 2012 for nearly $1 billion, like the acquisition spree that included buying Intelligentsia Coffee & Tea of Chicago and Stumptown Coffee of Portland, Oregon.

“We work on a different metric than Peet’s and Starbucks,” Anacker said. “For us, we focus on the quality. If you do it really well, people will come.”

One advantage to operating out of the North Bay is that savvy customers will take extra steps to purchase from local producers, especially given the popularity of the farm-to-table food movement in the area.

“You don’t have to do a lot of hard selling on this issue,” Anacker said. “They get it already.”

Given the focus on premium coffee, each local provider is trying to create its own niche in the marketplace. Taylor Maid, for example, has seen growth in its cold, nitrogenated draft coffee, and it has a lab for trying out new items.

The iced coffee sector now comprises almost 10 percent of overall coffee revenue, according to IBISWorld, as it has gone from a seasonal drink during the summer to one consumed during the whole year.

“In particular, younger generations are more likely to prefer iced coffee, spurring this segment’s growth,” according to IBISWorld report on the industry.

At Acre, the focus is on pairing its premium coffee with food items as it tries new recipes in its kitchen run by culinary director Gillian Tyrnauer, who previously worked at Healdsburg’s SHED cafe.

It already has unveiled donuts — such as key lime and coconut chocolate — at its east Petaluma location and is working on hand pies.

“To grow the model, you have to offer food,” said Decosse, who noted North Bay shops must find other revenue sources as they do not get the foot traffic of urban areas like San Francisco and Oakland. Acre’s overall revenue is about $3 million annually and the company employs slightly more than 50 workers.

Still, Decosse prides himself on the affordability of his dishes, where a grilled cheese and soup combo for lunch totals about $7.

“We’re constantly innovating to stay competitive,” said Decosse, who added that he is exploring a subscription coffee delivery service as well. “The big thing for us now is trying to think about savory (items).”

Acre has funded its expansion through its profits and has not relied on loans or investors, he said, preferring to grow at its own pace — though Decosse would like to get to 20 stores. He notes, however, the market is getting more competitive for entrants who want to have more than one location.

“The clock is ticking and in 10 years there won’t be the opportunity there is today,” he said.

But for the short-term, it’s a bull market for those looking for their caffeine fix.

“There is so much room for coffee shops everywhere,” he said. “There is so much to go around.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com.

Show Comment