Of all the meetings, I have, my morning meeting with Mr. Cup Of Joe is the one I never miss. It’s a warm welcome to the morning and has always been a delicious and dopamine-inducing way to start the day.
I am talking about coffee – a staple of modern life, something we can’t live without.
The modern coffee industry has deep cultural and historical roots which have grown beyond its roots as simply espresso. The reasons are numerous and varied. Everything from the generational shift away from drinking at coffee at home to order from Starbucks to changing attitudes around dairy have changed the way we drink coffee. But the industry has always come out on top.
Born between 1980 and 2010, Gen Z and Millennials are the leading purchasers of specialty drinks from coffee shops. Gone are the days when coffee was simply a commodity, when the best part of waking up was Folgers in your cup. Coffee shops have become offices and second homes for some young people. This is hugely different from the days off brewing a pot of coffee in the morning at home.
But the coffee industry today is not just at-home coffee consumption plus restauraunts and specialty drinks. It’s also home to a lifestyle adopted by a community of “weird coffee people” (like myself). These are the people who treat drinking and making coffee like making a hobby. Like that relative of yours who loves to cook, weird coffee people are coffee alchemists armed with specialty equipment and beans from distant lands. All in pursuit of the best formula for glorious bean broth.
But how exactly did coffee transcend the grocery aisle?
The modern coffee industry is a blend of specialty beverages at restaurants, home brewing, and hardcore hobbyists
It may take only 2-8 minutes to make coffee, but money has been percolating into the coffee industry for much longer. To understand the coffee industry as it is today, it helps to think of it as three separate categories:
- Coffee for home. Buy it, brew it, drink it. Arguably, this is how the industry started in the 15th century when it was being grown in Arabia and distributed to Persia, Egypt, Syria, and Turkey.
- Coffee shops. Everything from Starbucks to Waffle House to the hipster coffee shop down the street. As modern as this feels, it has roots back in 17th century Europe.
- Coffee as a hobby. This involves all the gadgets and gizmos that enthusiasts use to turn their obscure beans into artisanal blends.
Coffee shops bent the arc of history
Knowing where to start with coffee is hard because its origins are mysterious, tracing all the way back to the ancient coffee forests of Ethiopia. It was a widely traded commodity for centuries before it wound up in the West. But when it did – that’s when things got really interesting!
It all dates back to the 17th Century when the first coffee house, Caffè Florian, opened in Venice, and this exquisite coffee shop is still open to this day. Many famous celebrities have walked through its doors, such as Casanova and Charles Dickens.
Do not be fooled into thinking that Caffè Florian is just a fancy coffee shop. It was in fact used as a meeting place for political debate and discussion before the French Revolution and later on for Venetian patriots during the Venetian Revolution of 1848.
And it’s not the only one of its type either. Many coffee shops over the years – and now – were open spaces for people to meet friends, talk about interesting subjects, and go on dates.
How many romances have started in coffee shops? How many business deals? How many revolutions?
Espresso gave birth to the modern coffee shop
You have to draw a line between history and modernity somewhere, so I’ll draw it here: the invention of espresso. Why? Because you needed industrial machinery to make it and because it is a critical ingredient in the oh-so-modern Venti Mocha Frap.
Historically, we have to thank the Italians for birthing the liquid gold that is espresso. They opened the door for the rest of the modern coffee industry. But, as we all know, espresso didn’t stay in Italy.
With espresso, modern coffee shops like Starbucks became possible. Starbucks is both a place to spend time with friends and a place to try specialty coffee like White Chocolate Frappuccinos. As a result, they are now valued at $29 billion dollars.
Watch your Starbucks barista closely next time you place an order. Practically everything starts with espresso, except for the drip coffee. And no one goes to Starbucks for drip coffee!
As many as 24.1% of 18-29-year-olds want to try different types of coffee. Bored with the limitations of the coffeemaker and the French press, the younger crowd wants a diverse range of tastes to choose from. They want to choose between vanilla and chocolate, peppermint and orange, not just Guatemalan or Honduran, Arabica or Robusta.
Quantifying our caffeine addiction
Coffee, coffee shops, and how we make coffee have come a long way since the 1950s. Today there are over 37,000 coffee shops are across America, with Starbucks making up close to half of them with over 15,000 stores in 2022.
In America, we drink 656 million cups of coffee per day, around 2 cups per day per person. There has been a 16% increase in people buying specialty coffee for consumption outside of the home, with younger coffee drinkers making up 49% of the sales of specialty coffee. Specialty coffee goes far beyond espresso – think lattes, fancy frappuccinos, and your 4-syrup pumpkin rainbow brew.
It makes sense that younger adults are drinking specialty coffee. It’s sweeter, which makes it more palatable to first-time drinkers and the addition of sugar syrups and creams makes them addictive, and unfortunately, poor for your teeth.
“British-based action group Action on Sugar analyzed 131 hot drinks at various cafés and found a third contained as much sugar as a can of soda (which contains 9 teaspoons). The top offender was Starbucks with its venti Hot Mulled Fruit beverage coming in at a whopping 25 teaspoons.”
Milk alternatives are changing the coffee landscape too
Alternative milk has become the norm in every coffee shop and supermarket, as you can now buy milk made from almonds, cashews, soy, coconuts, and oats. The shift has been so big that the number of units of milk shipped dropped from 4.1 billion in 2017 to 3.8 billion in 2022. A market change so dramatic has had some odd effects, including this 92-year-old business that changed from producing dairy to dairy alternatives because “it was time to embrace a new model and look toward the future”.
With dairy on the decline, the dairy alternatives market size has shot up massively and is currently valued at $13 million in 2020 and is estimated to reach $55 million by 2031. Dairy alternatives are rising for a variety of reasons, but one might be the 12-48% of Americans who cannot properly digest lactose.
If even the minimum estimate of 12% is accurate, that is roughly 40 million Americans who should not be drinking milk. That would push them toward milk alternatives. Even in Italy, the birthplace of espresso, lactose malabsorption is a growing problem.
There is also the sustainability angle too. Gen Z, who are currently aged 10-25 care about the environment a lot. With 77% saying that they care about sustainability, 10% have already changed their habits. For a number of reasons, dairy alternatives are likely more sustainable than dairy. Meanwhile, millennials, aged 26-41, have chosen to cut back on all dairy products since the pandemic. As many as 25% of British millennials have found plant-based dairy products more appealing.
Coffee and milk go hand-in-hand, and you can’t have a massive change like the growth of dairy alternatives happen separately from coffee. In Belgium, for example, the vast majority of people drink coffee with milk – with people aged 65 and older doing so 62% of the time, and people younger than 18 doing so 89% of the time. As dairy alternatives continue to rise, coffee shops will change their menus and specialty coffee recipes will adjust.
People who drink coffee at home are one thing, coffee hobbyists are another thing entirely
Seventy percent of people drink coffee at home. In America, the most common way to make coffee at home is with drip coffee machines. However, single-serving coffee machines such as Keurig and Nespresso are growing too. In the UK, for example, there are 4.8 million Nespresso machines.
But some people aren’t content with the standard ways to make coffee such as drip coffeemakers and Keurig machines. Some even go beyond the more artisanal French Presses and Chemexes. That’s where hobbyists, or as I like to call them, “weird coffee people” (of whom I am a member) deviate from the norm.
First, the pandemic caused a lot of weird things to happen to the world and how we operate within it. One of those things was that we started drinking 8% more coffee at home. Cheap coffee machines can cost as little as $40, but some people are willing to spend $1,000 or more on a nicer machine.
Enter “weird coffee people”
Weird coffee people can be any age or gender, but they all have one thing in common. They own a coffee grinder and have multiple ways to make a cup of coffee. They’re not content to take pre-ground coffee beans and put them in a drip coffee maker.
This cohort is growing. Case in point, Baratza saw a 70% increase in grinder sales during the pandemic. People were either forbidden from going out or simply chose not to during the time and got used to making coffee at home. Even the most entry-level burr grinder is essential to making great coffee, and it’s a huge step up over what the average coffee consumer has on hand since it involves buying a separate appliance (albeit an inexpensive one).
Don’t think that Baratza’s revenue figures are a fluke, though. The sales of whole bean coffee are going up as well, because as more people have grinders, more people want fresh beans that aren’t pre-ground. Sales are expected to increase by about 13% per year from now until 2026.
Meanwhile, we’re also seeing relatively new coffee devices performing well on the market too. I’m thinking of the Aeropress, designed by Alan Adler in 2005. It’s about $30, is easily transportable and easy-to-use, but – notably – requires some practice to do perfectly.
As cheap as it may be, the Aeropress is yet another coffee-making device that weird coffee people have been buying lately. This startup was able to make a multimillion-dollar company that helps people do something that is already possible with French Presses, Chemexes, drip coffeemakers, and Keurigs.
Why? Because it’s the act of making coffee in a novel way that sets it apart. Yes, the Aeropress does indeed make a great cup of coffee, but that’s not even the differentiating factor!
If you don’t believe me, look up “The World Aeropress Championship” which was mockingly named after the World Series. It has been running for 13 years with 2022 being its 14th, with competitors trying to make the best cup of coffee. It’s also great PR for Aeropress and has helped boost the company’s revenue by 38% internationally.
The Aeropress is just one example of a product made for coffee hobbyists. Kickstarter and Indiegogo are full of strange coffee-making devices. But perhaps my favorite coffee gadget is the truly bizarre coffee brew pipe – Bripe. It’s a portable coffee maker that “requires only ground coffee, water, and a portable butane-powered quad jet torch.” The end result allows people to wander around a forest drinking coffee out of a pipe, presumably pretending to be Gandalf.
Coffee is no longer just a commodity. It’s a juggernaut of an industry powered by massive at-home coffee sales and hundreds of thousands of coffee shops around the world. It has shifted from a plain but pleasant drink to an ingredient in many fancy beverages, and is today responsible for nearly half a trillion dollars in commerce every year.
But as tastes change, coffee must change too. A love for sweet beverages is changing coffee shop’s menus, as is the growth of dairy alternatives. Meanwhile, coffee snobbery has gone mainstream, with coffee grinders and whole bean brews becoming ever more common.
With all these factors in place, it’s really no surprise that we would see an outpouring of products like the Aeropress and the Bripe. That’s the beauty of coffee: its taste is as instantly recognizable as it is versatile, and there are as many ways to consume it as there are beans in the world.