It’s among the most traded commodities in the world.
And it’s gaining steam in the metro.
Espresso Tech owner Steve Latham believes local coffee has unlimited potential for growth. Latham and his wife, Teresa Bianchi, founded Espresso Tech 16 years ago and now service hundreds of clients from large corporations to small shops.
“There’s still so much more room for growth because what we do has grown every year since we’ve been in business, with the exception of maybe one or two years,” Latham said.
Latham said his company is regularly adding independent specialty coffee shop clients in one-traffic-light towns across the state. By all indications, third-wave coffee, powered by small specialty shops, is only gaining momentum.
And though the pandemic strained many local coffee shops, causing some to close, it also gave the market a new tilt and forced innovations. Now, many in the local scene, especially roasters, see growth on the horizon.
There were painful blows before the growth came. Lucy’s Coffee & Tea closed in 2020. It had been open since 1993. Urban Standard closed last December. It had been open since 2007. Crestwood Coffee Co. closed this May, citing “pandemic losses.” It had been open since 2004.
There were more around the metro. Some shops remained open and cut back on locations. E-commerce and wholesaling pushed others through.
Seeds Coffee Co. had two locations and 20 to 25 employees before the pandemic. It closed a cafe, and at one point, lost over half its employees during the last two years, but is now back up to roughly 20 employees, per co-owner Jeff Huey. He said Seeds wouldn’t have made it through without stimulus money provided by the federal government during the last two years.
But because Seeds is a coffee roaster and wholesaler, the outfit was able to shift to e-commerce.
“It was something that we could pivot to during the hard times. We ended up even delivering coffee door-to-door,” Huey said.
Seeds began offering a subscription service, Huey said, and subscribers peaked at around 60 monthly customers during the pandemic and have since dipped slightly. But that came strictly from word of mouth, and Seeds’ next goal is to get to 100 monthly subscribers within about a year once it begins heavier marketing.
Though e-commerce was flat for Red Bike Coffee Co., Operating Partner Jon Robles said wholesaling increased nearly 15% to 17% for Red Bike during the first half of the pandemic.
“We have a theory — it’s not proven, but it’s a theory — that people were staying home, and when they would shop, they would treat themselves to good coffee,” Robles said. “Because they weren’t going to the office and drinking the corporate coffee. And they had a little more money.”
Seeds also renovated its remaining cafe before fully reopening in August 2021. Since then, Huey estimated cafe sales went up about 25% to 30% compared to pre-pandemic numbers, leading to what he called the most lucrative period ever for the company.
He suspects recent coffee shop closures have funneled customers to remaining shops by default.
But Huey also started a small, independent coffee importing business known as Co Trade in 2020 with a handful of partners. And though three of Seeds’ largest wholesale clients closed during the pandemic, he said that line of business has since recovered.
“That’s a big goal of ours, to push our wholesale,” he said. “We have a lot more capacity when it comes to roasting.”
Domestique Coffee Co. started a founders program during the pandemic, soliciting $100 donations from customers and offering lifetime discounts and other perks in exchange.
Despite losing employees and being unable to obtain adequate PPP funding, Domestique Coffee had 12 employees pre-pandemic and now has 22.
Over the next five years, co-owner Michael Pocus said the company expects to bring total headcount to 50, including administrative staff for marketing and personnel, and more production and cafe staff.
Since 2020, Pocus said revenue from online sales is up 20%. He estimated wholesale revenue is also likely up 10% to 15%, aided by new stores its client, Hero Donuts, is opening, and growth for other wholesale clients.
Pocus said Domestique made some e-commerce shipments before the pandemic. But the pandemic acted as a catalyst for online sales.
“We had some wholesale clients close, we had some wholesale clients not close. And so we had to really refocus our attention to the e-commerce,” he said.
The company sponsors several cyclists and has seen jumps in e-commerce where those athletes are based, such as in Colorado. Its other largest sources of e-commerce are South Carolina, Georgia and New York.
Domestique plans to buy a new roaster and is building partnerships to begin offering canned cold-brew coffee through its retail locations.
Pocus said Domestique could also likely use a larger warehouse in the future and may move into such a space within the next two years.
But there have been some bumps in the road. Due to rising packaging costs, Domestique had to switch to cheaper, vacuum-sealed bags to lower shipping costs and allowed local customers to bring their own containers. June Coffee Co. had to use smaller boxes and less wrapping paper to ship online orders.
Jon Robles, operating partner of Red Bike Coffee Co., used to pay $780 for 1,500 coffee bags. He said the same amount now costs close to $1,300.
Red Bike is also considering selling larger portions of coffee in single containers through e-commerce to save on packaging and shipping costs.
Robles said Red Bike had to raise prices three times during the pandemic, and though it was selling more, higher costs canceled out would-be gains.
“If I buy 10 bags of coffee, which is what will fit on a pallet, pre-Covid it would cost me $120, $130 to get that here from Florida,” Robles said. “Now it’s costing me close to $400 for that same pallet of coffee. So even though coffee is now just on a slight rise, now, underneath it, you’ve got freight.”
Despite new challenges, growth continues. Red Bike Coffee Co. plans to open its first retail location in the former home of Crestwood Coffee next year. June Coffee Co. added its first cafe this year and plans to move its roasting and wholesaling operations into a new, larger warehouse next year. Scooter’s Coffee plans to open a local store this winter and may expand further. Santos Coffee Co. has added three new stores in the metro this year alone. Starbucks and O’Henry’s are also gaining momentum locally.
“I think that in the next five years we’ll probably have another 20 stores, God willing,” Santos CEO Wendy Padilla-Madden said.
After founding Santos in 2018 with her sister, Katie Ellis, Madden has controlled virtually every step of the process of growing, preparing and shipping coffee from her family farm in Guatemala to her local cafes. She doesn’t source from anywhere else.
Santos sells strictly hard bean, Arabica single-origin, micro-lot coffee. It sells single-origin, micro-lot coffee. Santos has three plantations and offers single varietals or blends. Santos also owns its own wet mill and dry mill, further expediting operations.
Because Santos doesn’t buy from importers, Madden said the company can take extra steps to detect potential defects in its coffee. The company ships in smaller-than-standard bags, better preserving freshness.
Madden is also a certified coffee roaster and learned the principles of cupping, roughly equivalent in the coffee world to being a sommelier, from elder family members who also ran her farm.
Santos and Domestique both use fluidized-bed roasters where beans are roasted in hot air as opposed to sitting on the sides of a traditional roaster. And Santos is using hard tank, a new Polish technology that helps make cold brew and can also brew tea.
Santos also has wholesale and e-commerce. The company offers subscriptions for regular online customers and is an established exporter.
“Because we process the coffee ourselves, we can do things differently,” Madden said.
But there’s something to be said for sourcing coffee from multiple farmers, too. Pocus, Jimmy Truong of June Coffee, Robles and other roasters constantly test samples from around the world. Pocus has direct trade partners in Guatemala and the Dominican Republic. Through Co Trade, Huey has imported directly from Guatemala, Colombia, Laos and Indonesia.
Per Robles, a restaurant industry veteran, among Red Bike’s coffees are the five consistently best-rated coffees in the world; Sumatra Mandheling, Brazil Cerrado, Costa Rica Tarrazu, Ethiopia Yirgacheffe and Tanzanian Peaberry.
June, like Domestique and other local roasters, works only with importers who ensure farmers are paid fair wages. Truong works with Mighty Peace Coffee, a social impact importer that provided a Congolese coffee he was especially happy with. It is now sold out. He also works with Red Fox Coffee Merchants and Balzac Brothers and Co.
In Congo, Truong imported from farmers working to change the country’s reputation for lower-quality coffee. He has also seen Sumatran coffees make a comeback lately.
“You have these New Age farmers who are really trying to push the boundary of coffee farming over there and really change people’s perspective on what coffee should be from that region. And I think that’s really exciting,” Truong said.
June currently processes roughly 200 pounds of coffee per week (300 during the holidays) with its existing 600-square-foot warehouse. Once the company moves into its new, 2,000-square-foot warehouse with a larger roaster, Truong said he wants to handle 600 pounds per week.
Truong currently has five employees for his cafe including himself. Once he moves into the new warehouse, he would like to make about three hires for production and plans to re-launch online sales for the company, this time with a revamped website and more employees. He previously tried e-commerce but couldn’t keep up with orders.
Still, others bring a mission-driven approach. Though not a roaster, Modern House Coffee Shop, which opened in Titusville last month, is also a nonprofit that will offer employees financial literacy and nutrition classes, life coaching and a livable wage.
And it was recently revealed Bitty & Beau’s, a chain that employs people with disabilities, is coming to the metro.
There’s also Domestique’s long-term plans to add EV-charging stations to coffee shops and Santos’ efforts to purchase water filters for those who lack access to clean water.
Latham said large, national roasters pulling out of smaller accounts over the last couple of years have likely opened up opportunities for small roasters.
Along with their own growth aspirations, multiple local coffee roasters said they’d like to see more cooperation in the local scene.
Robles would like to start a specialty coffee festival, offer more resources for local fledgling roasters and eventually create a local coffee co-op so roasters could band together to store beans.
“Innovation and learning and cooperation, to me, it helps everyone,” Robles said. “There’s room for 200 more coffee shops in Birmingham.”
Seeds recently hosted a latte art throwdown contest, and Domestique plans to host one soon. They were commonplace gatherings in the local coffee scene years ago — just another sign of the growing buzz.
“Going back a year to date, there’s been a lot of people who have had aspirations to come to Birmingham. You have Frothy Monkey who came here. You have Prevail who just came here from Montgomery. You have June opening downtown. You have Modern House that just opened,” Huey said. “Santos just opened like three stores. You have people in Atlanta eyeing places here.”
Huey said he isn’t sure exactly what has caused the new interest, and that to him the “saturation” seems “premature.” But Latham’s explanation is simple.
“Birmingham is just a great, up-and-coming coffee market,” he said.
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