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THE COFFEE BUSINESS
A Little History — What's Different After 50 Years?
© 1999 Stuart Daw
(published in Canadian Vending Magazine, August 1999)
April Fool’s day, 1950, saw me begin a coffee career that
has spanned 50 years. I don’t honestly know how I got away with it all this
time! Running around all day drinking coffee with nice people, never doing a
lick o’ work, never having to draw a welfare check. WOW! Is this a great
business, or what?
Seriously, what was it really like back then, and what’s so different about
it now? In some respects we could quote the old cliché, "the more things
seem to change, the more they stay the same." And yet in saying that, one
might remember an aphorism coined by Greek philosopher Heraclitus in the
fourth century B.C., "everything flows; nothing abides," He was
right, change is inevitable.
The market is still divided essentially into two segments — home, and away from
home (foodservice, for short). The only slight difference is that the new
specialty retail stores serve both. If you have a cappo in the store it’s an
away from home sale. Buy a pound to take home it’s a home sale, so the
dividing line becomes a bit blurred.
And as it still is today, in 1950 around 70% of all coffee was consumed at
home, 30% away from home. And roughly 70% of the world’s coffee was grown in
Brazil, while 70% of consumption took place in the United States. Today those
numbers have dropped to about 30% and 30% respectively, thanks to the
proliferation of coffee growing countries, falling per capita drinking in the
U.S. and rising consumption in Western Europe and Japan.
The bad side
What about coffee quality over the past half
century? I remember H.T. Fairley, 70 years old when I went to work for him at
the old Club Coffee Company in Toronto in 1950, looking at a sample of green
Colombian coffee in the testing room, removing his horn rimmed glasses,
shaking his head and saying, "This isn’t what it used to be ten years
ago." Then, 10 years later in 1960, I too was saying "This isn’t
what it used to be 10 years ago." And by 1970 I was still saying,
"This isn’t what it used to be 10 years ago." WOW AGAIN! This
stuff must have been really wonderful during the Great Depression!
Where does the blame lie? At the production end, coffee growing countries,
mostly in the Third World, were averaging forty to fifty cents per pound
(green) for the fruits of their labor. I bought my first new car, a Pontiac,
in the fall of 1950 for $1834. Today, depending on the most recent Brazilian
frost, coffee countries get little more than double the 1950 price, while you
would be hard pressed to get the equivalent of my first car for less than ten
times the 1950 cost.
Producers of an agricultural product competing in an industrial world thus
have trouble keeping up. Agri-business in industrial nations as with wheat and
corn in the U.S. may achieve the economies of scale sufficient to keep pace,
but coffee growers in poorer nations producing a delicate product that has to
be largely hand picked can enjoy no such improvement. Is it so surprising that
in those circumstances quality production is found wanting?
Quality was not the only reason coffee consumption dropped. Before WWII in an
inflation free-America, coffee was "a nickel a cup." During the war
the government allowed restaurateurs to double the price to a dime, provided
they kept food prices level. It was around 1955 before coffee got to 15 cents,
and you usually got seven ounces of it with one full ounce of 18% cream.
Now you get around two ounces in a demitasse of coffee in a Starbuckian-type
store for around two dollars, 40 times the 1930’s price for one eighth the
coffee! As John Kenneth Galbraith might say, the demand curve for coffee is
surprisingly inflexible. With that increase in cost it’s a miracle we can
sell any at all. But of course the "miracle" is the intrinsic beauty
of the product itself. No matter how we try to flog it to death, it lives on.
Yet another reason for falling consumption was the licensing of restaurants to
sell liquor. A coffee shop in a good location circa 1950 might buy 50 pounds
of coffee weekly. But after getting a liquor license and putting a linen cloth
on the table, restaurant receipts might climb but coffee buying would drop to
perhaps ten or fifteen pounds per week. This had a double effect for, with
lower consumption, brewed coffee tended to stay on warming plates far too long
with a resulting diminution of quality.
Retail degradation
Before mid century the major national retail brands
tried to build and hold customers with high grade coffee, but then their
marketing departments, locked in a death struggle for market share, began the
gradual downward spiraling of quality which in turn lowered consumer taste
perception and expectancy.
This drop in consumer discrimination had another ironic effect. Two thirds of
all foodservice roasters disappeared from 1960 to 1975 through acquisition.
The method by which the large companies took over the smaller ones was simple:
buy on a long-term payout basis, make the payments through cost savings in
degrading the coffee, and get away with it through the public’s lack of
being able to taste the difference.
By 1950 spray dried instant coffee had really just arrived as a factor, with
freeze dry not far behind. Most of us in the business felt instant coffee in
its various forms would eventually improve and sweep the market. But after
reaching a high water mark which varied depending on the particular market
area, instants sagged and to this day are fighting just to hang on to whatever
share they had gained. In the meantime further degradation of the product is
their legacy.
A more recent phenomenon is the advent of dark roasts, okay for espresso and
espresso based drinks in which coffee may need a charred, charcoal-like taste
to hold its own against more powerful additives such as cocoa, milk, sugar and
artificial flavors. But it is technically over-roasted for the optimum flavor
development needed to satisfy coffee purists. One cynic has suggested that the
tremendously successful company leading in the specialty field, had they known
what they were doing when they started in business, would never have tried to
do it. But succeed they did and we have to face the reality that North
American tastes in regular coffee have been affected by this over-roast
phenomenon.
On the good side
First place goes to the unsung heroes of the coffee
business, the manufacturers of brewing and serving equipment. In 1950 most
homes were equipped with percolators, instruments that seemed almost designed
to single handedly destroy the business, for they violated all the principles
of good coffee brewing. And like a creeping virus they found their way into
business offices as the method of choice. The alternative? Instant coffee, or
takeout coffee from a local eatery.
Restaurants could either employ a stainless steel urn, really a simple double
boiler the insides of which rarely were observed by human eyes or, for lower
volume outlets, vacuum makers which became generically known as Silexes, named
for the company making them (later Bloomfield Industries).
I think almost nostalgically of a common scene— literally tens of thousands of
North American waitresses at mid morning, each taking a Silex bowl (upper and
lower) off its burner, setting it on the counter and applying "cold
compresses" in the form of wet dish towels in an effort to create the
vacuum necessary to pull the coffee down from the upper bowl containing the
grounds (it didn’t come down by gravity).
And the more impatient the customers became for their coffee, the quicker the
Silexes would come off the heat and, without the necessary vacuum being
created, the slower the coffee would come down. But made correctly the coffee
could be terrific, for all the principles of good brewing were there even
before we knew what all the correct principles were.
The automatics arrive
Comes the Cory Corporation around 1951 with its
ingenious C500 automatic that brewed coffee through a cloth filter; good
coffee as long as the filter cloth was kept damp in clean water when not in
use. But it was a finicky machine, very hard to service and thus it became
passé with the introduction of the Bunn RT5, which employed paper filters and
was very easy to look after. While in the early days of paper filter
technology the taste of Bunn-brewed coffee often left something to be desired,
these machines in various incarnations became the workhorse of restaurant
coffee preparation.
The cold water pour-over gave birth to a spanking new business, the
"Office Coffee Industry," which I have always called simply
"Coffee Service," to remove the connotation of merely being
suppliers to offices. While early, primitive attempts to create a business
selling coffee to offices took place, the pour-over made it a practical
possibility.
Equally crucial to the birth of coffee service was the concept of selling
coffee priced by the cup before it was even brewed. This to me is the defining
characteristic of that industry. Space here limits the ability to give it a
fuller treatment.
The mortal sin of holding the brew too long on a warming plate has been
overcome by the development of commercial thermal servers. This, especially in
coffee service, has made it possible to maintain a quality cup for a
reasonable period of time.
In the vending business the 1950’s and early 60’s saw either instant
machines or batch brew units requiring real cream, with the stupendous service
problems involved. The advent of single cup fresh brew vendors vastly improved
the coffee and today’s machines with built in grinders have brought the
technology to the level of excellence expected of any commercial coffee
brewing equipment, anywhere.
© 1999 Stuart Daw
