Specialty Coffee Market Still Growing

Top gourmet coffee retailer Starbucks Corp. said the coffee shop revolution in the United States had halted a downtrend in coffee consumption and raised quality standards in the industry.

"It really has been a revolution and we have created an industry which didn't exist. It has arrested the [consumption] decline in North America," Starbucks President and CEO Orin Smith said.

Speaking to delegates at a world coffee conference in London, Smith said Starbucks and other coffeehouses had educated the American public to enjoy coffee of a higher standard. "And they are willing to pay for it, which means we are able to pay more at origin," he said.

Robert Nelson, president of the National Coffee Association of America (NCA) said gourmet coffee houses in the United States numbered around 8,500 in 2001, against fewer than 500 five years ago. Approximately 14 percent of American adults now drink gourmet coffee beverages on a daily basis, up nine percent on 2000, he noted.

"Specialty coffee...has reversed the downward trend in consumption experienced during the 1980's, when price consciousness succeeded in decreasing both quality and price," Nelson said.

Smith said current price levels were a serious problem for convenience store operators, Starbucks and the gourmet coffee sector in general. "From our stand point, at our end of the quality spectrum, there is a serious threat that farmers will not produce quality coffee," he said.

To keep costs down, Starbucks has begun implementing longer-term price contracts with farmers in order to assure quality standards for its products at stable prices, Smith said.
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