Stumptown and the rise of
third-wave coffee culture
From Portland to New York City, Stumptown Coffee has set the bar high for third-wave brewers and helped change the way Americans think about coffee. But after corporate buyouts and business acquisitions, first by TSG and more recently by Peet's, what will the future hold for the nation's last alternative cup of java?
One of the most common stories I heard when working at a coffee roasters was the “holy shit” story. Anyone who cared enough to pay upwards of $7.00 for a cup of black coffee seemed to have one.
They all followed the same general arc; someone has an unthinking impression of what coffee is supposed to taste like until one day, at a specific café, drinking a specific coffee, that impression is completely blown up. Their coffee doesn’t taste like coffee; it tastes like some psychedelic combo of blueberries, lemons, or maybe tomatoes.
For a whole lot of people, that specific café or that specific coffee was Stumptown.
Stumptown Coffee Roasters has been a key player in the growth and taste for specialty coffee in America. Along with other roasters like Intelligentsia, Counter Culture and Blue Bottle, Stumptown set itself apart from big corporate chains because they allowed the coffee they sourced and roasted to “speak for itself” by roasting light and putting more of an emphasis on single origin coffees than blends.
So for some, it was a bit of a shock when earlier this October, the indie roaster announced its sale to the chain company Peet’s Coffee & Tea. On the heels of the announcement, its founder, Duane Sorensen, also sold his remaining share in the company.
1999 — Stumptown founded in Portland Oregon by Duane Sorenson. Sorenson bought a 5-kilo roaster
2005 — First sourcing trip to El Injerto farm in Guatemala
2006 — Duane Sorenson founds Bikes to Rwanda to provide cargo bikes co-op coffee farms in Rwanda
2007 — Stumptown opened 2 cafes in Seattle
2008 — Stumptown announced it would stop using Clover’s brewing machines ($11,000) after Starbucks bought the company
2009 — marked the arrival of Stumptown in New York City’s Ace Hotel
2011 — Beverage investment TSG invested in Stumptown
2011 — Stumptown begins rolling out its bottled cold brew.
2012 — Stumptown opens a new Portland headquarters
2013 — Stumptown first rolled out Nitro coffee
2013 — Stumptown opened second cafe in New York and one new one in L.A.
2015, April — Stumptown rolls out canned Nitro Cold Brew
↓ Quality control at Stumptown Coffee
in Portland, Oregon on November 2, 2015
The opposite of mass market
As Sorenson has told it, he’s been “hooked on coffee” since a young age. Sneaking cups from his dad’s sausage factory in Seattle led to working as a barista in high school and eventually as a roasting apprentice in college before he dropped out to work in coffee full-time. By that point, it kind of made sense for Sorenson to start his own coffee roasting business.
In 1999, a year after moving down to Portland and putting most all of his savings into buying a roaster, Sorenson opened Stumptown Coffee Roasters.
“It wasn’t like Duane was like ‘I want to pioneer the way that people source and roast coffee,’” Matt Lounsbury, Stumptown’s Vice President, told Hopes&Fears. Instead, he just wanted to roast and brew the best coffee, and when a local coffee broker got in the way of that, he took the initiative to get great coffee anyway. “Duane, for lack of a better word, said ‘fuck it, I’m going to go buy it myself.’”
At the time, if you were a small roaster you didn’t directly source coffee from a farmer or co-op at the country of origin. Buying directly from a farmer was usually a privilege reserved for big companies who had the resources to send coffee buyers all around the world. Smaller regional roasters would instead buy from a broker who did the work of finding and importing coffees into the U.S.
For Duane, it wasn’t just that he was going all the way to South America to get good coffee—it was that he was able to tell that coffee’s story to his wholesale clients and to the customers at his cafe. “The revolution of Stumptown, Intelligentsia, and Counter Culture,” food writer Oliver Strand explained to Hopes&Fears, “was that they wanted access like that for really, really small roasters and they wanted to be very transparent about what [they were] doing.”
While larger shops were focused on continuity in the flavor of their coffee by way of roasting dark and blending to maintain the same taste throughout their stores, Stumptown and other roasters were selling coffee they bought from farms individually, not exclusively as a blend.
Roasting coffees light brought out more flavor as opposed the dark roasted “burned” taste, and allowed each lot they offered to exhibit its distinct flavor, aroma, and feel. “The idea that you could have a coffee that tasted really amazing and distinct, and then you run out, and it’s sold out, and then you taste another that tastes just as distinct, and then you run out,” Strand said, “that’s an aesthetic approach to life.” It was one that resonated with people, too, especially those who were into seeing museum exhibitions or local shows. What Stumptown was offering was the opposite of mass market.
Peet’s really wants to see us do our thing.
I think they’re supportive of our plans that we already had, and partially that’s why we ended up in business.
— Matt Lounsbury
“To me, the greatest thing about [Stumptown] is that I realized that anyone could do [direct sourcing] if they wanted to”, Chuck Patton, owner of Bird Rock Coffee Roasters told Hopes&Fears over the phone. He wasn’t the only one either, as Chuck saw it, “[Stumptown] influenced a lot of roasters who started sourcing coffee because of their success, but not just because of their success, but because of how they went about it and how they presented the coffee and educated people about the farms they were buying from…”
During a period when people are increasingly interested in how their food got onto their table Stumptown “put a face on that relationship like no one else” with their meet the producer program, Nick Cho of Wrecking Ball Coffee Roasters told Hopes&Fears.
For Lounsbury, by 2006, “the concept of showing people what life was like at origin was nothing new. We had done a lot of work to show people video and film of origin, but we were kind of like ‘what if we brought them here?’ and actually expose our customers and the coffee industry? Even if they had broken English and poorly put together slides, we could all hang out and party together, and have a conversation.”
But at times, the way craft coffee shops were presenting direct trade could be misleading. Strand is careful to point out that when small direct-trade roasters make the claim that, “‘there is economic justice in what we do and there isn’t economic justice in what everybody else does,’ they’re very vague about the ‘everybody else.’”
If you measure economic justice by the amount of money that gets put into the hands of people who are doing the farming, Strand argued, “Starbucks has a well deserved reputation for paying good prices and doing good development around the world… One small purchase from Starbucks will put more money in the pockets of more farmers than everything Stumptown has ever bought. Ever.”
All the same, the clarity of Stumptown’s sourcing process, the quality of their coffees, and the rigorousness of their wholesale program all contributed to a sense that “They were just fucking cool.” As Strand put it, “Duane Sorenson has exquisite taste and he always has.” During a period when the type of sourcing and light-roasting coffee beans to bring out their flavor was still nascent, Sorenson “would build out a coffee bar that was super cool and played super cool music, but if you had an eye you would go and say ‘wait a second, that’s a Poulsen lamp. It’s an $8,000 Danish lamp from the 1960s that’s beautiful and should be in MoMA or in a nice hotel, or in a Hollywood mogul’s house. Instead, it’s here, right by a bunch of crusties hanging out having coffee.”
employees are working in Stumptown
metric tonnes of coffee was produed alone in Brazil in 2012
of coffee per year Arabica coffee plants produce
279mg/10.5 fl oz
amount of caffeine in Stumptown Cold Brew Stubbie
163mg/8 fl oz
amount of caffeine in brewed cup of coffee
These small details added up to something that was more than the sum of their parts, and that helped give the new way of sourcing and roasting coffee a kind of sex appeal and cool factor that it hadn’t yet achieved. The special thing about Stumptown, though, was that outside of the “custom glass jars, custom brown paper coffee bags, the mix of wood and iron in their cafes, the clever neon signs in their roasters…” that Cho cites as the brand’s hallmark, there was a real ability to present coffees that people got excited about and that tasted phenomenon. There was substance to what they were doing beyond the cool-factor, or in other words, they were a really great brand.
↓ Roasting beans at Stumptown Coffee in Portland, Oregon on November 2, 2015
By 2011 Stumptown had opened two cafes in Seattle, a cafe in New York City’s Ace Hotel, along with a roasters and a cafe in Red Hook, they were starting to bottle cold brew in the back of their original location in Portland, and they ended up taking a huge investment from the beverage group TSG. The exact details of the deal never were made public, but the general understanding was that the investment company ended up with a majority stake in Stumptown.
For some in the coffee community, the sale constituted a betrayal. Todd Charmicael, founder of La Colombe, called Duane Sorenson a sellout in a column for Esquire, and a lot of fans of the company echoed the sentiment. Ken Olson, publisher of Barista Magazine, told Hopes&Fears that he saw the response as “…a fairly natural human reaction. It’s like when you find a band that you really love. You have a connection to it, and for whatever reason they blow up and they’re everywhere. You feel like something that was really special and intimate to you is lost.” But beyond the emotional reaction to the sale of the company to TSG, there was a concern about whether or not the company could maintain quality and stay true to the principals they had operated under for the first decade of its existence.
When I asked Cho about the deal and its possible effect on the company, he referenced things he had heard from those in coffee companies who’d received big investments. According to him, their experience was “an immediate clash between the MBA-types and the culture of specialty coffee. From the way coffee sourcing contracts are made, to the retail systems, to the way folks are hired and fired… ” Though when it comes to Stumptown’s deal with TSG, and its recent acquisition by Peet’s, Cho and others are still waiting to see how it plays out before they go on the record passing any judgment.
In regards to the quality of their coffee, Chuck Patton mentioned he had noticed a drop-off in the number of “mind blowing coffees” since the deal: “They still obviously were presenting some good coffees on their offering sheet, but once you have an investment team—the whole goal of that team is to increase profits and sell the company… the easiest way to shore up the profits is to limit what you’re paying for green coffee and keep the retail the same price.”
Lounsburry has heard this critique before, and his response has been an open invitation for anyone to get in touch with their longtime wholesale clients to ask if their quality and service had changed at all since the TSG investment. Regardless of individual opinions on the quality of the coffee, talking with Lounsburry, it was clear that his energy and excitement still revolved around the coffee. At one point in our conversation Lounsburry went on a tangent about incoming Geisha lots that had been farmed from seed stock Duane had smuggled from a Panamanian farm, Esmeralda, and then grown at El Puente and El Injerto farms in Guatemala.
in 3 rounds of investment from 17 investors Blue Bottle has received
price Stumptown paid for 75 pound lot of Geisha from El Injerto
Amount Intelligentsia is valuing itself at
Amount of investment capital La Colombe has received
is aproximate Retail value of U.S. Coffee Market
Integrating with the big boys
While the TSG deal may have cost Stumptown some goodwill in the coffee community, it did give them the opportunity to grow their cold-brew bottling operation out of the back of their Southeast Division location. Stumptown now has its own facility for brewing and bottling their cold brew in southeast Portland. Cans, cartons, and bottles of it can be found on tap at grocery stores like Whole Foods. Cold brew is now nearly ubiquitous, showing up at coffee shops both big and small. Even Starbucks is serving it at their shops.
The sale of Stumptown to Peet’s, announced early this October, and more recently, Peet’s majority investment in Intelligentsia, is a corporate response to the influence both of these roasters have had on the way people drink coffee.
When Hopes&Fears reached out to Mark Greenfield, Partner in the Los Angeles offices of Blank Rome to get a better idea of some of the motivators behind big companies buying up smaller ones, he said, “When larger players with significant market share in an industry see market share eroding, or potentially eroding, to smaller niche players, they might seek to maintain market share by buying up the smaller niche competitors.” In the same ways that beer companies are acquiring smaller craft brewers to keep in lockstep with changes in American taste, Peet’s seems to be doing just that by buying up Stumptown and Intelligentsia.
More sales like this are likely. Blue Bottle Coffee, a coffee roasters based out of Oakland (who also has a big cold brew line), has received millions in investment and has no reservations about growing large. Even Charmicael has received $24 million from Chobani’s CEO Hamdi Ulukaya. As successful businesses look to expand, taking major investments or considering sales to larger companies starts to makes sense. Cho says that, “It looks like there’s a new coffee business circle of life: specialty shops have their heroes and role models in the war against the ‘big boys,’ then one of those heroes breaks away from the pack to become a big business, then that hero takes its seat among the ‘big boys,’ and a new role model emerges to replace them.”
Still, there are some basic questions that remain unanswered about this new cycle, such as whether a company like Stumptown will stay true to its focus on quality while partnered with a large chain, or more generally what scaling looks like for a company that earned its reputation roasting micro-lots?
Greenfield makes the point that in any acquisition or majority investment, “the cultures of any two combining entities are extremely important. It is always a challenge to make sure that the cultures can be, and are appropriately integrated. When an acquisition fails—as often as not—it is a result of the combining companies not being able to adequately combine the cultures.” The ability of Peet’s and Stumptown to understand one another, and their respective company cultures may very well play a large role in the shape that Stumptown takes as a company in the next five or ten years.
While these two companies are different in material ways, and have expressly said they want to keep it that way, they do have some interesting similarities in respect to the effect they’ve had on American coffee consumption.
Alfred Peet, the namesake founder of Peet’s, moved to the U.S. after working at coffee roasters in Europe, first under his father in the Netherlands, and later as an apprentice in London. When Peet came to Berkeley after the Second World War, he began working to provide higher quality coffee to people. At the time, most everyone drank coffee from a can, but Peet encouraged a connoisseurship of coffee that proved contagious by teaching craft roasting and an appreciation for specific varieties other than the cheap and all-too-abundant Robusta strain of coffee bean. Some of his protégés would go on to found Starbucks, and one in particular, Jerry Baldwin, would end up buying Peet’s after serving as Starbucks’ director.
Characteristics of different generations of coffee in the U.S.
1st Wave Coffee: Folgers, Instant coffee, robusta varietal primarily used.
2nd Wave Coffee: Medium and dark roast coffee, espresso drinks, coffee advertised as being from certain regions, Arabica varietal used more often.
3rd Wave Coffee: Light roasts, small specialty lots, emphasis on distinct flavors in coffee.
Peet’s was considered the quality alternative to Starbucks during Starbucks’ ascendency in the 1990s and early 2000s. They roasted darker, and while they were still a chain, they only have 236 locations. Unsurprisingly, a good deal of Stumptown’s own employees, including Sorenson, worked at Peet’s as baristas, managers, or roasters.
Now, the extent to which a company’s history, especially a company that has been bought and sold a few times over and is now owned by a German holding company, can influence its current business approach and philosophy is limited. Given the importance of being able to mesh company cultures in acquisitions, however, what little influence that history does have may prove helpful to both Peet’s and Stumptown.
Stumptown is a part of a corporate structure now, that much is undeniable, but they’re also part of one that has the imprint of some of the most influential coffee roasters and business owners in the industry’s history. Not bad company to find yourself in.
People have been calling us sellouts since we opened our second location a mile from our first location.
— Matt Lounsbury