The market for super-premium coffee is rapidly expanding, and over the past two years, Stumptown Coffee Roasters has been laying the foundation to be a primary player in the category often referred to as “third wave coffee.”
Following its sale of a majority stake in the company to private equity firm TSG Consumer Partners in June 2011, Stumptown has looked to extend its model of wholesale coffee distribution toward greater reach on a national level, and brought on Joth Ricci, formerly a managing partner with investment/consulting group First Beverage Group, as president of the company.
Keeping pace with evolving demand for high-end coffee, Stumptown has developed a sophisticated sales strategy that hits several different channels of trade, including wholesale coffee supply to independent coffee shops and restaurants, a consumer retail program for gourmet and specialty stores, and an online business. Additionally, Stumptown operates a handful of cafés in Portland, Ore., Seattle, New York City, and will open a new location in Los Angeles later this year in conjunction with the construction of a new roasting facility in the area.
“That’s really allowing us to take the model that was started in Portland, and allow us to have a better reach around the country as the demand continues to grow,” said Ricci.
In an interview at Stumptown’s newly constructed headquarters in Portland, Ore., BevNET CEO John Craven spoke with Ricci and director of operations Matt Lounsbury about the reasons why — as Lounsbury put it — “the time is now for third-wave coffee.”
“I think what we’re seeing is there’s a lot of momentum that’s very closely aligned with what you see with local, seasonal, specialty food,” Lounsbury said. “A lot of that trend that you see in major metropolitan cities where people are starting to adjust their tastes and demands that follows… coffee comes right on the heels of that. We’re starting to see these cities where they didn’t have independent coffee shops or local choices or independent roasters, now they’re starting to, and it’s happening really fast.”
Armed with expertise, investment and — with Ricci, a former CEO of Jones Soda and general manager at Columbia Distributing, in place — know-how in ready-to-drink beverages, Stumptown is aiming for its line of cold-brew bottled coffee to be a significant part of its business, particularly amid a rise in consumer awareness and thirst for premium iced coffee. The company sells a 10.5 oz. “stubby bottle” in a variety of natural grocers as well as a 64 oz. growler package in its cafés. Yet while interest in cold-brew coffee is growing, there remains a vague understanding of just how large the category can get.
“It’s something that we’re trying to figure out as well,” Ricci said. “I think it’s a great entry into that ready to drink coffee space, because for the pure coffee drinker or for the quality drinker, it adds a premium level to that space. [And] as you’ve see in other beverage categories, as a premium angle has come in and really added a new entry into a pretty big space there seems to an opportunity for those products and the consumer is willing to step up and try them.”
Watch this video as Ricci and Lounsbury go into further detail about Stumptown’s rapid expansion over the last two years as well as their thoughts on growth potential for the cold-brew coffee category. Ricci and Lounsbury also explain why supply chain and production – as opposed to sales and distribution — will present the most pressing challenges for companies in the space.