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West Coast retailer update.

West Coast retailer update

West Coast retailers may have different philosophies about roasting, but they all agree that today's consumer is savvy, demanding and health-conscious.

Once a rather provincial group--coffee retailers on the West Coast must now be termed West Coast based, as they open stores as far east as Boston and Washington, D.C. chains throughout the country are expanding aggressively to stake out space as quickly as plans for malls and high rise office buildings are unveiled.

The West Coast, the San Francisco Bay Area primarily, is often referred to as the birthplace of the U.S. specialty market. True to that heritage, many of the retailers on the West Coast see the high quality of their coffees as the leading factor in what they perceive as their competitive edge. It does seem, in interviewing them, that the pursuit of a quality product does occupy a great deal of their time and consideration.

Following are some quick updates on a few of the most active West Coast chains:

According to Dave Terrell, vice president of marketing and franchising of Kelly Enterprises, a quickly expanding chain of specialty coffee retailers, "The typical specialty customer used to be affluent. We are pleased to see that all segments of the market are beginning to enjoy fine coffees." He cited an example of a customer in jeans and a construction hat who, after a discussion of the different countries of origin, asked for Swiss water process decaf, not the least expensive coffee Kelly's sells. Kelly's franchises offer customers a selection of seven or eight decaf varieties at any given time; both chemical and water process are sold. Health is an important concern among Kelly's customers and Swiss water process is the most often requested. Kelly's has 12 outlets in five states, with its home office in Laguna Niguel, CA. In addition to freshly-roasted coffee, stores may offer home-style pastries, fudge and/or cinnamon rolls, all of which are prepared on the premises.

Kelly's prefers regional shopping mall locations for its franchises. They believe that malls are becoming the place where America shops and that these centers generate a great deal of foot traffic. Five additional stores located in shopping centers are scheduled to open this year. Current promotional efforts include targeting college students and increasing consumer awareness of iced coffee beverages.

Starbuck's Coffee Company, with its 35 stores located in and around Seattle, Chicago and Vancouver (British Columbia), mail-order business and wholesale restaurant business is actively looking to expand into other major markets. A Portland store is scheduled to open in August 1989.

When asked about the evolution of the customer profile, Dave Olsen, vice president and director of commodities explains, "It is gratifying to see that the Chicago and Vancouver customer have the same degree of appreciation and loyalty that we find among our Seattle customers." Customers take advantage of Starbuck's policy of offering several brewed coffees simultaneously--often three varieties. Not only are they able to recognize the different names given to the coffees, customers are able to discern differences in the cup. Although many of today's customers are adventuresome in their selections (Ethiopian Harrars and Aged Sulawesi Kalossis have a following), there are those who continue to be content with a good house blend.

When asked about the latest innovations and trends in decaffeinating, Dave informed us that "The right decaf process is being paired with the right coffee and many choices are now available to the roaster in both direct contact and Swiss water processes." Decaf sales are increasing at Starbucks.

Teri Hope, president of Los Gatos Coffee Roasting Company, and Palo Alto Coffee Roasting Company recently opened her third espresso bar, Pacific Coffee Roasting Company in the Aptos Shopping Center near Santa Cruz. "Customers of all three locations are knowledgeable and understand that price is not necessarily the measure of quality." She indicated that although customers appreciate and are willing to pay top dollar for a good Jamaican, for example, they have sophisticated enough palates to recognize many less costly varieties that are equally desirable.

In addition to the interest in decaffeinated beverages, customers are asking for espresso beverages, iced coffees and cappuccinos. A full assortment of these coffee drinks are served from espresso carts, one of which can be seen at the Paul Masson Summer Series of outdoor concerts in the hills above the village of Saratoga.

Although her staff does not encourage sales of flavored coffees, she noted that novices looking for a dessert coffee often request Amaretto or other varieties. She indicated that West Coast customers prefer paper cups to styrofoam because of both health and environmental concerns.

With its one main roaster, and six retail stores, The Pannikin's specialty is clearly coffee. Customers also find an extensive selection of fine dining accessories, folk art and contemporary china. The San Diego-based company sells wholesale coffee and operates a mail-order business. According to president, Bob Sinclair, "Quality is our customer's main concern and it is the retailer's function to educate the consumer on how to recognize the finest beans. Our customers are very sophisticated and demanding. They are willing to pay a premium for quality and appreciate that when we do not have a particular variety, it is because we were unable to find coffee that is up to our standard. We do not sell flavored coffee and we never will." Roasting at the San Diego-based company is done "by eye" with careful attention to the different requirements of each variety. Despite the growth in demand for decaf which has leveled off in recent years, customers continue to be confused about the processes.

Fifteen years in business, The Kobos Company has five retail stores, with four having espresso bars serving a range of beverages including iced cappuccino, mocha beverages and cafe lattes. With the belief that espresso bars generate foot-traffic, the fifth store will soon feature counter service. According to president Dave Kobos, "No espresso service, no store." Plans for three new locations are underway. Selling a variety of gourmet cookware, the store has witnessed an increased demand for home espresso machines."

Kobos describes his average customer as "getting younger," noting that five years ago most of his customers were between the ages of 35 and 44. Now most of those who frequent his five locations are between 25-34. Consumption of decaffeinated coffee has reached a plateau and, unlike other retailers, his customers prefer methyline chloride processes because of the superior taste. To ensure that the more than 50 sales personnel are knowledgeable about the current inventory and coffee-related issues in general, monthly staff meetings are held.

Peet's Coffee & Tea now has a mail order business and 9 whole bean stores with coffee bars in the San Francisco Bay area. The newest store is in Los Altos, California, near Palo Alto. When asked about the direction of the company, general manager Jim Reynolds indicated that the company's objectives remain the same as the they were back in 1966: "To provide the best quality coffee, maintain the company's unique roasting style and ensure that Peet's coffee is consistently fresh." With one roaster in Emeryville, beans are shipped daily to the various outlets, all of which are within one hour's drive. The company refuses to sell flavored coffee. According to Reynolds, "We never have and we never will."

Based on Vashon Island, a 15-minute ferry ride from Seattle, SBC offers restaurant and office service, as well as appearing in many upscale grocery stores in the area.

To increase their name identification among consumers, they also operate five retail stores. The newest store is located at Westlake, and is a free-standing structure directly in the center of town.

When asked about trends in the business, president, Jim Stewart noted that consumers are looking for more than just convenience and brand identification. "They are looking for a friend, and a congenial atmosphere. The personality of the operator has become more important." As far as sales, an interesting fact in their retail outlets is the popularity of coffee by the cup, which now makes up 60 percent of the business, while pound sales make up only 20-30 percent. This is in direct opposition to figures from years past. Also evident is a rising interest in the Washington area towards darker roasted coffee. While the roasting philosophy at SBC is based on the Northern European German style, a lighter style of roasting, because of the increasing demand for darker coffees this style has become part of their repertoire. Jim Stewart's comment on darker roasting reflects a concern with maintaining the highest standard, regardless of roasting technique. "We use only top-quality beans when we do dark roast, generally Costa Ricans, because their consistent grading techniques assure that there is no danger of an uneven roast or a fire in the roaster." The conception that darker roasting will hide flaws in the bean is not given any credit.

In deeping with their concern for quality the only decaf SBC carries is KVW. Jim Stewart stressed that getting information to the customer is the key to sales in solvent decaffeinated coffee. "We have our coffee tested by an independent lab and certified as safe. We publish the results of these tests and make them directly available to our customers. For those who insist on water process we keep a list of stores who carry these coffees and refer customers there."
COPYRIGHT 1989 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Title Annotation:upscale coffees appeal to broader segments
Author:Castle, Tim
Publication:Tea & Coffee Trade Journal
Date:Aug 1, 1989
Previous Article:Battling the decline in hot beverages.
Next Article:Main coffee packaging concern: freshness.

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