CoE, ACE and the NCA

coffee competitions, auctions, best of panama, etc

Postby geoff watts on Thu Jul 27, 2006 2:11 pm

Sarah, that is a very excellent question. Why is SCAA not more supportive of ACE/CoE?
I am not the right one to answer this question, but I do believe there are some personality conflicts that lie at the root of it, which is unfortunate. There is also an issue of competing interests (ie, 'dueling auctions' and auction platforms, proprietary cupping forms, etc...this kind of thing)
More than anything else it seems to be communication problems and ego issues that have led to this situation of mutual distrust and unwillingness to cooperate.
Is that silly? Yes, very silly. Maybe you should publish an article--why SCAA should support the Cup of Excellence and Vice-Versa! Anyway, I'm sure there will be reconciliation in the future, it might just take some time and some new blood in the leadership positions.
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Postby Aleco on Thu Jul 27, 2006 2:37 pm

Actually, that CQI - ACE joint venture for "left-over" coffees make a lot sense, sustainably speaking. It cures the lot participation woes for CQI and the "what do we do with the farmers who didn't make the grade" question for ACE. I think you're on to something..
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Postby Mark Inman on Thu Jul 27, 2006 2:52 pm

As of this writing, nobody from COE/ACE has approached the SCAA board about forming an alliance. As far as I am also aware, nobody had approached anyone from the SCAA staff about forming an alliance. This is news to me and many of us on the SCAA board. Missed opportunity? Well, not if it was not made available to us or we were unaware.

I am not sure how I feel about this alliance or the impact it will have on COE, the NCA, SCAA, or coffee growers- but I am sure that the SCAA's lack of involvement had nothing to do with personalities, ego, scandal or anything else that sounds salacious and sexy.

I am sure the board will discuss this next week and I would be happy to let you know what comes of the discussion, or if there is even a back story that we are not aware of.

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Postby geoff watts on Thu Jul 27, 2006 2:53 pm

Yeah, Aleco, makes perfect sense to me too.

one last thing:

http://www.cupofexcellence.com/WhatisCO ... fault.aspx

This is a link to the current rules re: CoE logo usage.

g
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Postby Mark Prince on Thu Jul 27, 2006 3:16 pm

Mark Inman wrote:I am not sure how I feel about this alliance or the impact it will have on COE, the NCA, SCAA, or coffee growers- but I am sure that the SCAA's lack of involvement had nothing to do with personalities, ego, scandal or anything else that sounds salacious and sexy.


I know that Spindler has had direct talks with the SCAA in the past, on her own initiative (to people involved with the org) because that's what she's told me; but perhaps a nice, casual call from a current board member to CoE to just see where the state of things are vis a vis the SCAA and CoE would be, well, a nice thing to do.

IMO, it should not always be the onus of other groups having the responsibility of approaching the SCAA; I hope this is not a current board policy? Sometimes the SCAA needs to be proactive on their own. It would show progression and a willing to evolve, learn and grow, especially for members who are looking to the SCAA signs of improvements.

Just my $0.02 on this issue.

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Postby Mark Prince on Thu Jul 27, 2006 4:37 pm

Geoff - great comments. But I am still concerned about the "diluting of the brand" if the big companies, which spend WAY more on marketing than they do on coffee itself, get involved. History has shown where their priorities are, and it's never been with the farmer.

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Postby Peter G on Thu Jul 27, 2006 6:43 pm

Interesting comments all.

I have always been inspired by the Cup of Excellence, and some of my most valuable experiences as a cupper have been directly or indirectly related to the COE.

The leadership of ACE includes some of the most passionate and intelligent coffee people I know, and so I've got to believe that there is a positive synergy here. I don't have enough information yet to understand it perfectly, but I am hopeful that this path makes the COE even more influential and spectacular.

I must say my heart sank when I heard the news, because I was looking forward to trying to help deepen the relationship between SCAA and COE. I'm sure this is still possible and will benefit all parties, but as an SCAA guy I had hoped we would achieve this sort of thing first.

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Postby geoff watts on Thu Jul 27, 2006 7:38 pm

yo P,

Don't let that beautiful heart of yours sink. Doesn't matter who is the first, right? What matters is who is there in the end. I think the potential for SCAA/CoE synergy is as high as it has ever been. Mark mentioned that there has not been any real discussion about an alliance, and wow, why not? I was talking about personality conflicts earlier and do indeed believe that one of the reasons there has not been proactive cooperation between SCAA and CoE is has a lot to do with stubborn behavior and conflict between personalities involved in the two organizations. But another (and surely more important) reason is most likely a lack of real communication. The most positive thing that could happen tomorrow is a discussion between the ACE board and the BOD from the SCAA to figure out how to get aligned. It's in everyone's interest, and there is substantial overlap between both parties. Let me know if there is anything at all I can do to help.

Mark P, I've got a question--what sort of scenario do you envision in which the participation of the Big Boys (especially those who are decidely and indisputably non-specialty players, beholden to shareholders and lacking even the slightest interest in escalating the value of green coffee) would hurt the CoE program? Certainly from the farmer's perspective it stands to reason that the more bidders there are at the table the more they stand to benefit. If Sara Lee wants to go head to head with the specialty guys and drive prices up, the farmer will sit back, smile, and light a cigar. It is important that the CoE 'brand' continues to develop market recognition---but my personal opinion is is that getting CoE caliber coffees into the hands of the big boys is nice--it's added exposure. They may well fuck it up, and perhaps that coffee doesn't reach the coffee drinkers who would really appreciate it, but how does that hurt the program? I can't see these types of companies getting involved with CoE with the intention of disrupting the business of specialty roasters--how would that work? What sort of marketing strategy could P&G employ that would parlay a 30 bag CoE purchase into increased sales? This is interesting fodder for discussion, I would love to hear opinions.
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Postby Tim Dominick on Thu Jul 27, 2006 8:30 pm

A major supporter of specialty coffee projects over the past dozen years has been USAID. CoE, CQI, SCAA, FT, all have benefitted, as have thousands of non-coffee projects all over the world, including GMO and other Bio-tech research. Funding for non-profits makes for some strange bedfellows and cohorts. I haven't heard anyone complain about CoE working with USAID project money, however lets ask specialty coffee farmers in Bolivia how their USAID funding is going now that there leader isn't US-friendly...

The present administration in D.C. has diverted a great deal of aid money from latin and south america to projects in the middle east. Funding that was once abundant for ag. projects is quickly being sucked up by the reconstruction efforts from our ongoing crusade. There are many projects that are being cut, underfunded or simply tabled.

Is it a suprise that an organization that relies on grants and private funding would strike an alliance with an organization who can provide resources? The member-companies of the NCA might read like a who's who of mega roasters, but USAID's purse strings have controlled by the republican empire for 6 years. I figure if they didn't sully CoE a confederation of mega roasters don't stand a chance.

I also agree with Geoff, CoE has strong bylaws in place to prevent some of the labeling issues that have been raised. Reading the names of the directors, I have a very hard time believing that we will see the day when a single purchase will give you carte blanche to plaster the CoE name on every bag of coffee produced.
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Postby Mark Prince on Thu Jul 27, 2006 9:12 pm

geoff watts wrote:Mark P, I've got a question--what sort of scenario do you envision in which the participation of the Big Boys (especially those who are decidely and indisputably non-specialty players, beholden to shareholders and lacking even the slightest interest in escalating the value of green coffee) would hurt the CoE program? Certainly from the farmer's perspective it stands to reason that the more bidders there are at the table the more they stand to benefit. If Sara Lee wants to go head to head with the specialty guys and drive prices up, the farmer will sit back, smile, and light a cigar. It is important that the CoE 'brand' continues to develop market recognition---but my personal opinion is is that getting CoE caliber coffees into the hands of the big boys is nice--it's added exposure. They may well fuck it up, and perhaps that coffee doesn't reach the coffee drinkers who would really appreciate it, but how does that hurt the program? I can't see these types of companies getting involved with CoE with the intention of disrupting the business of specialty roasters--how would that work? What sort of marketing strategy could P&G employ that would parlay a 30 bag CoE purchase into increased sales? This is interesting fodder for discussion, I would love to hear opinions.


I kinda look at the Millstone / Fair Trade thing a short while ago. It's miniscule in the scope of Procter Gamble's coffee buying numbers - probably 1/50th of one percent - but I only guess at this number based on what P&G does buy in coffee per year vs. their FT purchases.

Yet P&G milked the news as much as they could; for eg, more than a few press releases about it has been coming through my coffee-related PR distribution thing, and they got a lot of mainstream press out of it. (ref link: http://www.globalexchange.org/campaigns ... ctory.html)

They aren't labelling their cans of Folgers "FT Supporting Company" yet, but in their PR spin, they sure made it sound like they were becoming this big supporter of FT.

(sidenote - Folgers made P&G grosses over 1 billion in sales each year - the typical farmer who supplies them makes less than $300 ref link: http://www.globalexchange.org/campaigns ... lgers.html)

I worry the same kind of spin will be applied to CoE coffee, but even in greater spin. I worry as I said before because it will dilute the brand. I can envision a situation where Sara Lee may donate miniscule funds to CoE (miniscule to Sara Lee), bid on say, 4 lots of El Salv, end up with 60 bags of coffee, and then do what Barry suggested - supporter of CoE on everything they do.

Consumers would see this, and taste that can of Maxwell House (or whatever), and go ,bleh, tastes like the same old same old. And maybe associate CoE with that taste.

Then walking by Stumptown, see that the top two CoE El Salvs are up for tastings, and go "yeah, like I'm going to pay $50 a lb for a coffee that tastes the same as the $4 can of MXH I just bought..."

Danger... danger... :)

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Postby Robert Goble on Thu Jul 27, 2006 9:18 pm

geoff watts wrote:...If Sara Lee wants to go head to head with the specialty guys and drive prices up, the farmer will sit back, smile, and light a cigar....

...I can't see these types of companies getting involved with CoE with the intention of disrupting the business of specialty roasters--how would that work? What sort of marketing strategy could P&G employ that would parlay a 30 bag CoE purchase into increased sales? This is interesting fodder for discussion, I would love to hear opinions....


What happens to P&G's market share if specialty coffee continues to grow as the market matures and demands better coffee? Sure they can always sell their goods in the developing world (like cigarettes) but at some point it might be thought that "hey we can slow the growth of specialty coffee by strangling the supply of quality beans". The industry I left for coffee operates on just such a model.

We are dealing with a finite supply of quality beans right? (Geoff I would defer to your experience on this question - how healthy is the supply of premium grade specialty coffee?)It would take very little effort or organization on the part of the big monopolies (functioning as oligopolies) to essentially buy-up that supply.

I don't predict it, but I do caution against it (because of past experience). That was my first impression anyway.
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Postby aaronblanco on Thu Jul 27, 2006 10:26 pm

Aleco wrote:I have no problem with sbux buying COE coffees but I certainly don't see them being able to buy 10 bag lots either. I don't see them being able to get involved unless lot sizes are much larger which, in mind, may flatten the level of quality.


well, not necessarily. they already do so with their 'black apron exclusives' program. they put out one a quarter.

not every store gets these. those that do generally get around 3-6 lbs. even if you multiply that by all the north american stores that's still about the magnitude of a larger c.o.e. lot.

a scenario for them that might make sense is to find c.o.e.'s (after the auction?) and then contact the farmer directly to set up exclusive contracts for all the coffee from their farm. they already have a couple three coffees in their lineup like that.

Starbucks Black Apron
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Postby James Hoffmann on Fri Jul 28, 2006 1:57 am

Interstingly the bigger boys in the UK are already starting to get involved. In the last few auctions Gala have been buying lots that they will roast for one major supermarkets own brand - that supermarket is Waitrose, and is considered the premium supermarket in the UK. They have better policies for sourcing their ingredients and aren't quite as mean and nasty as all the others - especially the WalMart owned ASDA.

Anyway - Waitrose have been offering CoE coffee for some time now and what amazes me is how hard it is to find the CoE logo on the packet. It is on the back, next to the contact details etc, and is pretty small.

To me this doesn't make sense - surely increasing consumer awareness increases the potential market and power of CoE which they are clearly interested in and investing in by buying one or two lots per auction. Whether they are aiming to reach a point where all their own brand coffee is CoE and they can start to spend some marketing cash on this I don't know.

The real shame of it is that the job that Gala do roasting it means that all that is great and wonderful about the lot is not unlocked, instead being trapped in an bean roasted too fast, too dark.
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Postby nick on Fri Jul 28, 2006 6:16 am

I'm not as familiar with the Big Four's premium brands (except for one... more on that later), but I do think that companies like Starbucks, Caribou, Peets, Tullys, etc., very well could (should?) start showing up in these auctions. Their respective brands are marketed to be the best that coffee has to offer, and even having CoE coffees as loss-leader coffees that are promoted to bring their brand-image up-scale could have significant resonance throughout the top-tier specialty auctions. The aforementioned Starbucks Black Apron is a likely stage for such an occurrence.

(Side note: Caribou has a La Minita coffee right now. Curiously, it's marketed as "La Minita," but I couldn't find the words "Costa Rica" anywhere on the package or the display. It mentions that it's from an amazing farm though. Interesting.)

That being said, I do know that the grocery/big-Four guys have their sights on the upscale market. However, I think that the national-chain specialty guys are much more of an immediate threat (if there is to be a "threat" at all) than the big commercial guys. I mean, you don't see McDonalds and Burger King ruining it for the "little guys" by snapping up all of the Kobe beef out there, even though Kobe is much better-known than CoE is.

Nonetheless, if we DO see a CoE auction-acquisition by a big-Four coffee conglomerate, my money is on Nestle. Peter Lynagh (Sl28ave) pointed out their "Yellow Bourbon" that they were promoting before for their Nespresso brand. Those Nespresso shops that I saw in Europe this spring are pretty effing nice... and definitely "upscale." CoE is most certainly in their sights.
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Postby Aleco on Fri Jul 28, 2006 8:17 am

aaronblanco wrote:
Aleco wrote:I have no problem with sbux buying COE coffees but I certainly don't see them being able to buy 10 bag lots either. I don't see them being able to get involved unless lot sizes are much larger which, in mind, may flatten the level of quality.


well, not necessarily. they already do so with their 'black apron exclusives' program. they put out one a quarter.

not every store gets these. those that do generally get around 3-6 lbs. even if you multiply that by all the north american stores that's still about the magnitude of a larger c.o.e. lot.

a scenario for them that might make sense is to find c.o.e.'s (after the auction?) and then contact the farmer directly to set up exclusive contracts for all the coffee from their farm. they already have a couple three coffees in their lineup like that.

Starbucks Black Apron


Aaron,

Those SBUX black apron purchases are 1-3 containers worth of coffee, not 10 bags.

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Postby trish on Fri Jul 28, 2006 8:59 am

Just seems like the niche for small-scale specialty roasters will be lost. It will be good for the farmer, but many may chose to blend lots to sell 4 or 5 containers of coffee for $3 or some sort of price. Already, we see that the demand for {real} specialty is increasing dramatically....how swift is the increase in production? One expert says it increases by just 3% each year.

...what are we gonna do...how are we to differentiate???
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Postby trish on Fri Jul 28, 2006 9:08 am

nick wrote: I mean, you don't see McDonalds and Burger King ruining it for the "little guys" by snapping up all of the Kobe beef out there, even though Kobe is much better-known than CoE is.


Okay the trouble with analogies, (as I've said always) is that they are just analogies and can miss. In the case of "Kobe" beef, there are papers in place to authenticate. But you have a ton of copy caters. There is "kobe style"...one brew pub in Seattle has on its menu, "Giant Kobe Beef Burger"...it's probably a giant burger with a bunch of fat ground into it. Who knows, but Reid always orders it when we go there...the beer is good, tho.

In Japan, I had Kobe dinner in Kobe. Our host showed everyone the papers with a nose print, complete history of breeding and all. [/img]
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Postby aaronblanco on Fri Jul 28, 2006 9:39 am

Aleco wrote:Aaron,

Those SBUX black apron purchases are 1-3 containers worth of coffee, not 10 bags.

Aleco


no, you're right. still, i don't believe it's a stretch to see them buying all the coffee from a particular c.o.e. (both at auction and whatever remains) farm and offer it as a b.a.e.
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Postby geoff watts on Fri Jul 28, 2006 1:08 pm

my own opinion is that it is just not valuable time spent worrying about what SBUX, Kraft, or Joe Blow roaster may or may not choose to do with auctions or with coffee promotions at some point in the future.

I would venture that it is highly unlikely Starbucks will never be able to compete with the balls-out fanatical small-scale coffee roasters/retailers when it comes to servicing the top end of specialty coffee. I would be very surprised if that was even part of their business plan. They have thousands of stores and sell SO much coffee that micro-detail is not a feasible option, whether you're talking about the roasting, preparation, or purchasing. It's just too unwieldy. One thing about publicly run companies is that the shareholders generally do not care one lick about micro-detail and the driving ambition is to maximize return to shareholders. Going out and buying up all the coffees in a CoE auction to assemble a container or two of coffee for a million dollars and hoping to recapture that value is not something I think is very realistic. They make more money by continuing to proliferate and putting out more stores, slinging more lattes, and continuing their drive to break open the specialty market in Asia.

The idea that the multinationals are going to swoop in and buy up all the specialty coffees out there is similarly unlikely. They are not equipped for it. And you know what happens if they decide to start paying more for coffee? They raise their prices, slimming the gap between them and the real specialty roasters and making it just that much more attractive to the consumer to make the leap to true quality.

As to the idea of specialty production rising 3% /year--well, there are a lot of things in play with that. The coffee crisis between 99-2004 had one ironic benefit--it pushed growers to make a choice. After the rude awakening that followed the price slump it was a lot more enticing for the grower to try to pursue quality as an alternative and get into the specialty game. The waves of development aid money that poured into Latin America in response to the crisis have gone a long way towards improving infrastructure. There will come a tipping point, I think, when enough roasters are paying real premiums for quality and the reverberation bounces through the rest of the country, quenching farmer skepticism and demonstrating that--quality/specialty is a legitimate option, not just an elusive niche.

I would also throw it out there that there is a vast amount of coffee currently out there in production with sky's-the-limit potential for quality. Nearly any coffee growing at 1300+ in the tropics is eligible for improvement. Right now quality is undermined at every step--poor farm husbandry, lack of investment, poor harvesting technique, poor wet processing, insufficient transport options in-country resulting in long delays pre-pulping and a severe quality loss, poor storage conditions, sloppy sorting, dirty equipment, etc...the list is long and harrowing.
My argument would be that as a roaster one need only to make the committment to a particular farm or group of farm to support them and help them develop, and you can take what was a plain old 75-79 scoring coffee and watch it blossom into a nut-ripping, award winning 90 pointer. The ugly duckling phenomenon....if you've got the altitude, the latitude, and the attitude (look at that, didn't mean it but I like it)...then you can produce great coffee. But someone's got to pay for that. It costs $$$ to produce better coffees, and it sure ain't gonna be the farmer footing that bill.
One of the biggest reasons most coffee sucks (exclusive of Robusta, which is incurable) is that farmers are not paid to be farmers--they are paid to be reapers/harvesters. Mills are not paid to separate qualities, they are paid to sling containers. That's the way the industry has worked up to now. The amount of untapped potential is staggering...so I am not worried about diminishing supply or the intrusion of the Big Boys.

In any case, as a roaster your best option is to dig in hard, work at origin to develop great coffees and personal relationships with farms, provide kick-ass service to your wholesale customers, invest a lot in barista training so you are blowing the minds of your retail customers...these are things that cannot be faked. No clever marketing can cover up mediocre execution/service. No 5000 chain store can reproduce what can be done on a small scale by passionate and committed baristas. The big guys are clunky, it's like an 18 wheeler rolling down the block. We can run circles around them in Jeeps, or drive underneath them in our low-profile lamborghinis. Zig when they Zag.

My advice to anyone living in fear of a Multinational coffee 'takeover' is to just put your head down and go to work on doing the most exceptional quality you can muster (on all fronts), and you will be so easily differentiated that your business will thrive. The bike racer who keeps looking over his shoulder every 30 seconds to see what the other guy is doing will eventually fall behind or crash, but the one that works his butt off and keeps his eye on the road in front stands a great chance.
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Postby trish on Fri Jul 28, 2006 1:42 pm

Yep Geoff,
I totally get that whole thing and agree wholeheartedly....I mean, that's what most of us try to do all the time. We have a bit of an edge with the auction lots because they are so small right now...
but specifically with CoE, how will we differentiate? Like with another label that says, "CoE boutique auction lot" not to be confused with the other programs geared toward larger buyers?
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Postby trish on Fri Jul 28, 2006 1:54 pm

Dare I say it?
Is this the nail in the coffin for the Q?
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Postby Tim Dominick on Fri Jul 28, 2006 2:14 pm

trish wrote:Dare I say it?
Is this the nail in the coffin for the Q?


anymore nails in that coffin and you'll run out of wood. Sad indeed.

If the big guys want the 83.9 and lower lots, wouldn't they be "Cup of Slightly Above Average" coffees?

Geoff, I'm with you except for the ball ripping part, wouldn't a 90+ coffee be ball stroking or something more, well, enjoyable.

Last summer we cupped the ECAFE lots with Jim Renyolds from Peets. He enjoyed the coffee alot but explained that it was useless for Peets to buy a 10-25 bag lots because it would be long gone before they could benefit from the PR and any longtime customer that missed out would feel slighted anyway.

**I'm glad I am not playing the coffeed drinking game with this thread.
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Postby geoff watts on Fri Jul 28, 2006 3:02 pm

well, there will always be a difference between CoE and other programs--even if they are programs run by ACE.
I am pretty sure the ACE board intends to protect the value of the CoE name, and it should not be in any case permissible to use the name/logo to describe or identify a coffee that did not go through the auction system. If there does emerge a program to deal with CoE fallout (ie, sub 84 or sub 86) it will almost certainly have a different reference, different name.
The CoE mark is meant to guarantee only one thing--the quality of a very particular set of coffees that went through this elaborate vetting system and were given a thumbs up by a qualified panel of roasters.

So, the short answer is just that I think use of the CoE name will be restricted to coffees that come through the original system, and other coffees will bear some other sort of name.

For the Q, yeah, to me it would make sense for the Q to get behind CoE and be the outlet to move the sub 84 grades--which in most cases would likely represent an upgrade in the quality coming through the Q system. And for the big guys, man, I don't know that 'slightly above average is' the right way to put it...even an 80 score would be a glorious wet dream compared to what moves through their machines now. That's super-premium in the commercial model.

we will see. I agree the Q needs an IV, or a defib or something of the sort.

cheers,

g
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Postby deCadmus on Fri Jul 28, 2006 3:16 pm

Tim Dominick wrote:Last summer we cupped the ECAFE lots with Jim Renyolds from Peets. He enjoyed the coffee alot but explained that it was useless for Peets to buy a 10-25 bag lots because it would be long gone before they could benefit from the PR and any longtime customer that missed out would feel slighted anyway.


I wonder if Jim and company have changed their tune. I think they've made a couple of offerings in the last few months that have been "really, really limited supply, available through this email offer only" kind of things.

Meanwhile, we've enjoyed a really welcome reception from our customers to the eCafe and COE coffees we've purchased for our Special Reserve program. It's less about PR (he's right on that point, sure enough) and more about introducing more folks to the next rung on the quality ladder.
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Postby Marshall on Fri Jul 28, 2006 4:06 pm

The most plausible way for the majors to enter the high-end specialty market is to buy out some of the people on this board and let them start serious, semi-autonomous specialty divisions. It happened in wine, and it happened in the independent movie business. Don't be surprised if representatives start approaching you with large bags of money in the non-too-distant future. Your shiftless great-grandchildren will thank you. :D
Marshall
 
Posts: 505
Joined: Thu Oct 06, 2005 10:21 pm
Location: Pasadena, CA
full name: Marshall Fuss
company: Marshall R. Fuss, Attorney at Law
: http://www.linkedin.com/in/fusslaw

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