Coffee business perks up for specialty roasters

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A few months ago, a contingent of Japanese coffee professionals looking for insights into the specialty coffee business ended up in the South Hills Industrial Park in West Mifflin, a gritty site near the Allegheny County Airport.

There, inside a renovated industrial building, burlap bags packed with green coffee beans from countries around the world are piled up, ready for roasting so they can be sold either in one of the region's Coffee Tree Roasters shops or to wholesale customers of Iron Star Roasting Co., both co-founded and co-owned by Bill Swoope Jr.

In Japan, it's been a challenge to convince customers that some coffees are worth more than others, with a slowing economy hitting the industry hard. "It's all price-based competition," said Mr. Swoope.

Meanwhile, in the U.S., specialty coffees rose from about 37 percent of coffee cups in 2011 to 46 percent in 2012, according to the National Coffee Association, based in New York. Many Americans cut back on their gourmet coffee fix during the economic downturn, but others aren't willing to give up the small luxury, according to a recent survey by BIGinsight for Stores magazine.

Proof that there's continuing demand for better coffee, fast-food operator Burger King last week announced it had overhauled its coffee offerings, with the new brews blended by Seattle's Best Coffee.

In general, customers in the U.S. know more about coffee than they did 20 years ago, Mr. Swoope said. "They're the most educated in coffee than they've ever been in their lives."

So is he, considering all he's learned since that first time a friend took him to a coffee shop in Portland, Maine. He says he called his father, also named Bill, and said, "This place is great. We can do this in Pittsburgh."

The family-run enterprise started with one coffee shop in Squirrel Hill in 1993 and has grown to include five shops with another set to open in Pleasant Hills next month. The shops plus the wholesale operation and a service company called Espresso Solutions now employ between 80 and 100 people, a mix of part-time and full-time.

The staff roasts about 500,000 pounds of coffee beans every year, or about 4,000 of those 132-pound burlap bags, rather more than the 10 bags ordered to supply that first store in 1993. Deliveries of the roasted beans are made as far away as State College, Erie and Washington, Pa.

Growth of specialty coffee in the U.S. hasn't just happened naturally. Mr. Swoope credits industry powerhouse Starbucks with helping show Americans the differences in coffee made from freshly roasted beans rather than from mass-packaged grounds sold in jars and cans. Pittsburgh also has an active community of homegrown specialty coffee shops -- some of which Mr. Swoope's business works with -- that are invested in educating customers.

Consumers who know about the differences in coffee from, say, Rwanda and Costa Rica, and think about how those beans should be roasted might be willing to walk a little further -- and pay a little more -- to get their daily fix.

"Coffee is a convenience product," said Mr. Swoope, who heard somewhere that the optimum distance for shops drawing customers is about 150 yards. It's why there are so many Starbucks so close together.

His hope is that at this point enough customers have become enamored of better quality coffees that they'll seek them out. His business was up 10 percent last year, an encouraging sign.

The Japanese visitors are looking to achieve solid results as well. Hidetaka Hayashi, president of Hayashi Coffee Institute in Tokyo, was quoted in the Specialty Coffee Association of America's news outlet in January as saying one of the goals of the trip was to "study why U.S. specialty coffee roasters can expand their sales and enjoy reasonable profit" in the recent economic climate.

Mr. Hayashi is a board member for the Cup of Excellence international competitive program run by the Alliance for Coffee Excellence in Missoula, Mont., and Mr. Swoope is on the alliance's advisory panel. Other stops on the recent tour of Japanese professionals included Green Mountain Coffee Roasters in Vermont and Counter Culture Coffee in North Carolina. The Specialty Coffee Association, in Long Beach, Calif., helped organize the trip.

Coffee has long been a commodity product. The base price is now in the $1.40-a-pound range. That can shift wildly, depending on crops in various parts of the world, demand from coffee-drinking countries and on how much speculators are willing to pay. At the moment, there's concern about a fungus that could threaten next year's crop in Central America.

These days, the demand for certain varieties has pushed up prices to levels that wouldn't have been seen years ago. Coffee Tree Roasters had Jamaican Blue Mountain coffee at $42.99 a pound in mid-February, a price supported by the fact that there's limited production, Mr. Swoope said. Hawaiian coffee, prized because it's the only coffee produced in the U.S., was going for $29.99 a pound.

Being able to offer something different helps separate specialty coffees from mass market versions. Mr. Swoope thinks a sun-dried variety from the Costa Rican estate La Minita that he carries is only sold by four roasters in the world. He buys half of the supply.

On a recent day, he was awaiting information on a coffee from El Salvador that another buyer had come across and hoped to split. "It's more volume than he can take," said Mr. Swoope.

Soil, weather and other factors all affect the flavors of beans. Mr. Swoope has traveled to countries such as Costa Rica, Indonesia and Rwanda to find good varieties. Next year he hopes to go to Papua New Guinea.

Every step along the line from the farm to the customer can affect the taste of the coffee. Beans can be "washed" or "semi-washed" or "dry processed," all of which has to do with how they are separated from their fruit and sorted. In the Coffee Tree Roasters warehouse, roasting machines raise the temperature of the beans, while workers check color and listen for the series of cracks that come as moisture escapes.

At different points, beans are put through cuppings, the name for an analysis process. The elaborate system, which resembles a wine tasting, involves checking the aromas of roasted beans that are ground. Hot water is added. After a set period of time, taste testings begin.

Probably the best place to drink a cup of coffee is on the farm where the beans were grown. "That coffee's never going to taste any better than what it is on the tree," said Mr. Swoope.

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Teresa F. Lindeman: or at 412-263-2018.


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