2014

A Roaster’s Secret Weapon

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In the last decade, the Internet has fundamentally changed every single consumer-facing business. For most industries, innovation has been synonymous with obsolescence. But not coffee. You can’t email someone a delicious single origin cup.

One could make the argument that single origin coffee itself is a disruptive innovation to the wine industry. It’s a classic case of the innovator’s dilemma. Despite its rich complexity, coffee is considered to be inferior to wine. It’s assumed that coffee will always be inferior to wine. But vineyards have farming down to an absolute science. Wine isn’t getting significantly better every year. Coffee farming is a whole different story. The industry is benefitting from a positive feedback loop where better farming produces better beans, which sell for higher prices and improve farming. That’s a powerful tailwind that will eventually close the gap between coffee and wine.

Another tailwind is the consumer’s transition from a preference for tangible goods to a preference for experience. In the 60’s, if you wanted to be the cool guy, you needed a cool car in the garage. Now you need Facebook pictures of yourself running the Tough Mudder. When Howard Schultz first started telling people coffee is a 5-minute vacation, he probably sounded silly, or at least excessively romantic. Now that millennials share pictures of their coffee mugs as if they were coconuts on a beach, it’s clear Schultz was prescient.

Nonetheless, the landscape is always shifting as new technology emerges. Social media is a mixed blessing. The dreaded 2-star Yelp review is a constant worry. Some coffee shops and roasters rely heavily on Twitter, Facebook, Instagram, Pinterest, and company blogs to get word out. Others are a bit more mysterious. Both strategies have merit.

If you’re a roaster, social media presents particular challenges. Information travels extremely quickly, regardless of whether its good or bad, right or wrong. I come from the world of hedge funds, where you’re only as good as your last quarter’s performance. I see the same thing happening now in consumer industries like coffee. If you’re out there doing a great job every day, people will notice very quickly and open their wallets. If you relax and lean on your brand for support, it will erode. Angels’ Cup can help you proactively stay ahead of the curve.

Angels’ Cup is a consumer-facing coffee tasting app and subscription service. The app allows users to record tasting notes, share notes with friends, and where available, compare notes to the roastmaster. The subscription service delivers 1 oz samples of single origin beans from top roasting companies. Together, the service presents a solution to three key problems roasters face every day: customer education, gathering feedback, and reaching new customers.

Customer education is vital to the entire industry. If farmers grow better beans but nobody knows, the positive feedback loop breaks down. Angels’ Cup is making coffee education fun and accessible. It’s as easy as pulling out your phone and visiting a website. Most importantly, it incorporates social sharing features so that when people like a coffee they can tell their friends. But the key to educating consumers is still the roastmaster. People have never before been able to compare their tasting notes to the top people in the industry. Now they can. It’s a great way for roastmasters to open a dialogue with coffee drinkers, tell a story about the beans or the farmer who grew them, but most importantly help them learn to pick out the subtle characteristics that make each coffee unique.

Gathering feedback has traditionally been very difficult. As a roaster, you can get feedback from other roasters or people you trust. But how representative is that of the opinion your customers will have? Customers might not have sophisticated palates, but nonetheless, they make purchasing decisions based on what happens in their mouths. If not as individuals, then as a collective group. Customers always seek quality.

And finally, reaching new customers is extremely important. Angels’ Cup divides a pound of coffee sixteen ways. Customers then try the coffee and have the option to buy full bags. They also have the option to tell their friends about the ones they like most. Unlike Yelp, there are no bad reviews to worry about. Good tastings will be shared and bad tastings will be ignored. Sell-through directly contributes to a roaster’s bottom line. There’s no way to lose.

Angels’ Cup was designed to help consumers. It’s inadvertently beneficial to roasters. Angels’ Cup might not survive the year, but the changes to the industry are inevitable. The spoils will go to the roasters most able to adapt.

Jeffrey Borack is a former investment research analyst and now co-founder at Angel’s Cup and can be reached at jborack@angelstake.com

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