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Blue Bottle Coffee and the Next Wave of Artisanal Coffee Shops

Blue Bottle Coffee and the Next Wave of Artisanal Coffee Shops Businessweek

Blue Bottle Coffee and the Next Wave of Artisanal Coffee Shops Businessweek


It’s partly because Freeman is a control freak. It took him years just to find a way to sell a grocery store version of his iced coffee, which is finally available at CaliforniaWhole Foods (WFM) stores. (Instead of heating it, pressurizing it, and bottling it in glass like a normal person, he’s treating it like milk, putting it into a box with a four-day sell-by date.) New baristas have to pass a test in front of a jury, as if they’re applying to music school. And unlike his competitors, Freeman won’t build his business in the fastest, most logical way: selling his coffee to lots of other cafes or supermarkets. Only 20 percent of Blue Bottle’s revenue comes from wholesale, whereas his main competitors, he guesses, are closer to 75 percent. 

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And 1% of people can tell the difference.

Can even 1% of the people tell the difference? More like 0.1%!

That's funny about his story about Stanford.  I read Camus in high school.  The Stranger.  It's somehow applicable to the modern world and I understood it's meaning back then.  So...because he read a book that he thinks nobody else has, he thinks his coffee production method is unique?  Obviously someone likes it. 

Someone likes it because San Francisco has trained hipsters to defend the brand.

He does not seem like a happy man.

To explain why [he doesn't like wholesale], he quotes Camus: “Happiness and the absurd are two sons of the same earth. … The struggle itself toward the heights is enough to fill a man’s heart. One must imagine Sisyphus happy.”

But Freeman can’t really picture that kind of happiness. People in other cafes, he fears, will make the coffee wrong. Or make hot drinks with beans that are more than 10 days old. At a gelato store across the street from a huge Intelligentsia cafe in Los Angeles—one of Blue Bottle’s biggest rivals in the artisanal coffee movement — he saw the word “Intelligentsia” misspelled on the menu, even though the ice cream servers could nearly see the cafe’s giant sign through their window. That typo haunts him.

“With wholesale, the boulder will always roll down. If you’re upset that the boulder rolls down, you’re destined for a life of disappointment,” he explains. He told this to a class at the Stanford Graduate School of Business and then asked how many of them had ever read Camus. None, he said, raised their hand. Freeman, too, it seems, is destined for a life of disappointment.

At what point does the coffee market get saturated?

Blue Bottle’s main three competitors are Chicago’s Intelligentsia Coffee, Portland’s Stumptown Coffee Roasters, and North Carolina’s Counter Culture Coffee, but local minichains, such as Philz Coffee, are popping up almost monthly. “It looks like a growth opportunity,” says Bonnie Riggs, a restaurant analyst for NPD Group. While commodity coffee sales have been flat for decades, specialty coffee, which includes chains such as Starbucks, grew 5 percent in 2012 and 7 percent last year. Stumptown, like Blue Bottle, took a big investment from private equity group TSG Consumer Partners, Philz got eight figures from Summit Partners, and Sightglass took cash from Twitter co-founder Jack Dorsey. “You’re seeing this kind of funding apply to coffee, to which some people might say, ‘Whoa! What is this?’ But to people in it, we are like, ‘Damn right,’ ” says Matt Lounsbury, Stumptown’s vice president. “We’re seeing the greatest growth in Oregon outside of Portland, in the Sherwood, Oregons, of the world. Just because folks are in the burbs, doesn’t mean they don’t want good coffee.” To counter the third-wave cafes’ growth, Starbucks bought the company that makes the Clover, a high-tech, single-cup coffee maker, and uses it with single-origin beans at more than 750 of its stores globally.

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