Uncommon Grounds: The History of Coffee and How It Transformed Our World, page 37
Grinding Out the Decade
As prices declined in 1978, Procter & Gamble finally rolled Folgers into New York City and the rest of the East Coast to complete its national expansion. By the end of the year, Folgers had grabbed 26.5 percent of the national market for regular coffee, surpassing Maxwell House, which held 22.3 percent. Because of its other regular brands—Sanka, Yuban, Max-Pax, Brim, and Mellow Roast—General Foods still edged out Procter & Gamble with 31.6 percent of the total roast and ground market, and it held a whopping 48.3 percent share of instant coffee. Even in that category, however, Nestlé’s Taster’s Choice was trouncing Maxim, the General Foods freeze-dried entry. The Folgers battle for supremacy hiked advertising expenditures for 1978, with the top ten coffee companies spending a total of $85.8 million, of which Procter & Gamble spent $25 million.
Abandoning Aunt Cora, General Foods switched to quick vignettes in which a cross-section of Americans—including young people—drink Maxwell House all day long. The ads attempted to rise above the fray to promote all coffee as an uplifting experience. Fighting back against Taster’s Choice, General Foods brought out a new Maxwell House Freeze-dried Coffee, backed by a $20 million ad budget, though the company insisted it had no plans to phase out Maxim.
With high coffee prices no longer in the news, the new economy blends such as High Yield, Master Blend, and Folgers Flaked faltered, since they tasted even worse than the regular brands. Sanka provided the only real bright spot for General Foods, where it long had dominated the U.S. decaffeinated field—so much so that many restaurants listed “Sanka” on the menu instead of “decaf.” Folgers launched High Point decaf in 1980 but barely dented the market. General Foods bought Kaffee HAG from Ludwig Roselius Jr. in Germany, where the longtime decaf leader (the sister brand of Sanka, both invented by the senior Roselius) had fallen to 25 percent of its segment, behind Tchibo’s Sana brand, which held 40 percent of the decaf market. One German competitor scoffed at the new merger, calling General Foods and HAG “two drunks holding each other up.”
If General Foods was a drunk, however, Hills Brothers and Chase & Sanborn were suffering from delirium tremens. Caught in the crossfire between Folgers and Maxwell House in the price wars, the second-string brands watched their market shares dwindle. Standard Brands’ Chase & Sanborn had dropped to 0.6 percent of the market. Hills Brothers fared better, at 6.3 percent, but it too trended downward, despite a $6 million ad budget for its High Yield economy brand. Its Brazilian owners did not help much. During the price rise, Jorge Wolney Atalla ordered Hills Brothers to stockpile his Brazilian beans, leaving the firm with high-cost inventory that produced a $40 million loss. When Atalla sold his share in Copersucar (the firm that owned Hills Brothers), the Brazilians backed off and allowed the American managers to go their own way.
Regional roaster Chock full o’ Nuts held its ground relatively well in New York City, its home turf. To compete, Chock threw robusta into its blends too. Founder William Black, now in his seventies, was turning paranoid and reclusive. In 1962 Black had divorced his second wife and married singer Page Morton, putting her on television to pitch the “heavenly coffee” for years to come. At a stockholders’ meeting, someone asked why they didn’t “get rid of that ugly broad.” Black never attended another meeting. Communicating by memo, he insisted on approving every communication that left the company.111 Not surprisingly, Black ran through a string of presidents, none of whom he found satisfactory.
As the 1970s ended and a new decade began, the traditional roasters remained engaged in a myopic pursuit of market share through cheap, inferior products. They had no clue that specialty coffee represented coffee’s hope for the future. In a January 1, 1980, meeting, NCA president George Boecklin reviewed the dismal seventies, with its frosts, record high prices, congressional hearings, civil wars, earthquakes, boycotts, health scares, and cutthroat competition. “Did I leave anything out?” he inquired.
Yes, he did. The little guys selling whole beans.
17
The Specialty Revolution
Our industry has the opportunity to stem the downward drift by paying attention to an industry phenomenon which has been labeled alternately “specialty” or “gourmet” bean coffees: the preparation and sale of whole beans blended, ground, and bagged right in front of the customer. It is an effort to bring the coffee business back to its roots.
—Donald Schoenholt, 1981
Specialty coffee was the perfect drink for the go-go 1980s, which witnessed the triumph of yuppies—young urban professionals—willing to pay top dollar for life’s luxuries. At the end of 1982, Money Magazine recognized its readers’ interest with an article titled “Coffee to Your Taste: Rare Beans at $5 to $10 a Pound Resemble Wines in Their Richness,” quoting specialty pioneers. Flavored coffees, such as Swiss chocolate almond, introduced neophytes to gourmet beans. Specialty purists were horrified, but others argued that such customers would “graduate” to straight varietal beans. Besides, flavored coffee sold, and few coffee men were too idealistic to make money when they could.
It was almost inevitable that the specialty roasters would form their own organization. Primarily through the efforts of California’s Ted Lingle and New York’s Donald Schoenholt, coffee idealists from both coasts met in San Francisco in October 1982, sitting cross-legged on the floor in the parlor of the little Hotel Louisa, and hammered out a national charter. The new Specialty Coffee Association of America (SCAA) was born, with forty-two members signing on.
“I call upon each of you, my heroes!” wrote Schoenholt in a January 1983 invitation to join the fledgling SCAA. “Rise up, my fine buckos, and assert your will.” He likened the task before them to climbing Mt. Everest in sneakers, but urged them on. “We must throw ourselves into our task united, or we shall be hurled down into the massed elephantine corporations waiting to trample us alive.”
Specialty coffee did not fit neatly into the corporate coffee statisticians’ world of retail share, since usually it was sold in bulk or through direct mail. Yet by the end of 1983 even the stodgy Tea & Coffee Trade Journal took note. “Last year we said there was a general belief that specialties comprised about one percent or less of the coffee business in the U.S. market,” wrote publisher James Quinn. “Today we have strong reason to believe that the gourmet market represents about three percent of the total market.” The next year, three or four new specialty roasters entered the trade every month. By 1985 one expert estimated that specialty coffee accounted for 5 percent of all U.S. coffee retail sales, and now a new roaster set up shop every week. There were 125 wholesalers in the United States and Canada, with their numbers growing at a 25 percent annual clip.
To reach the upscale market through mail orders, specialty roasters advertised in the New Yorker, Gourmet, and the Wall Street Journal. They now were able to package and ship their beans across the country because of the one-way valve, the most revolutionary packaging innovation since the Hills Brothers’ vacuum can of 1900. Built into an airproof, laminated plastic bag, the valve allowed fresh-roasted beans to “de-gas,” letting out carbon dioxide, but it did not allow oxygen back into the bag. Invented by Italian Luigi Goglio in 1970, the one-way valve had been in use in Europe for over a decade by the time the U.S. specialty industry discovered it in 1982.
Good Till the Last Drop Dead
Throughout the late 1970s, Michael Jacobson of the Center for Science in the Public Interest (CSPI) had hammered away at the U.S. Food and Drug Administration to remove caffeine from the list of drugs “Generally Recognized as Safe” (GRAS). The FDA hesitated to take such a step, which would have disastrous economic consequences for the coffee, tea, and cola industries.
In November 1979 Jacobson filed a petition with the FDA asking for warning labels on coffee and tea packages reading: “Caffeine May Cause Birth Defects.” At the same time, he issued a press release and wrote letters to 14,000 obstetricians and midwives.
In an emergency meeting, the NCA funded a $250,000 program to counter the CSPI, hired public relations consultants, and lobbied the FDA to keep caffeine on the GRAS list. The NCA pointed out that the rats were being forced to ingest the equivalent of thirty-five cups of coffee all at once. The International Life Sciences Institute (ILSI), founded in 1978 with soft-drink money, joined the NCA to conduct epidemiological studies on caffeine. Caught in the political riptide, the FDA waffled. “We’re not saying caffeine is unsafe,” Sanford Miller of the FDA said. “We’re just not saying it’s safe.” The agency warned against caffeine consumption by pregnant women but did not demand a warning label.
The next year, an epidemiological study appeared to link coffee to pancreatic cancer, triggering widespread media attention and sick jokes about coffee being “good till the last drop dead.” Then a new study purported to link caffeine with the formation of benign breast lumps. Yet another claimed that coffee produced heart arrhythmia, while a Norwegian survey found higher cholesterol levels in heavy coffee drinkers.
The 1980 edition of the Diagnostic and Statistical Manual of Mental Disorders, bible of the American Psychiatric Association, included “caffeinism” as a diagnosis, making the consumption of too much coffee a bona fide psychiatric disorder.
The National Coffee Association moved vigorously to counter the calumnies against its drink, funding more studies and assembling a file of thousands of articles from the medical and scientific literature. Many other independent scientists and doctors pointed out flaws in the anti-coffee findings, and a 1982 study of 12,000 pregnant women revealed no detectable ill effects from coffee consumption. Nonetheless, the damage was done. During the 1980s, coffee was associated with over one hundred diseases and disorders and, though subsequent studies threw every negative finding into question, the implanted fears led more consumers to decaffeinated alternatives or away from coffee completely. The number of Americans who drank coffee fell from 58 percent in 1977 to 50 percent in 1988.
Learning to Love Uncoffee
In 1979 a large Swiss manufacturing firm, Coffex, perfected a decaf process using only water. Although the methylene chloride method left virtually no chemical on the roasted beans, the new “Swiss Water Process” appealed to the health conscious, and many specialty roasters began to supply the beans. The decaffeinated variety would never taste as good as regular coffee, since essential flavor oils were removed with the caffeine, but 1980s decaf offered a much better flavor than its predecessors. The processing had improved, and specialty roasters used higher quality beans to begin with. They also began to offer flavored decafs to spice the denatured beans.
By the mid-1980s nearly a quarter of all American coffee was decaffeinated, with some experts predicting that the segment would grow to 50 percent within the next decade. In the early 1980s, companies rushed to take advantage of the decaf craze. General Foods introduced decaffeinated versions of Maxwell House and Yuban to go along with Brim and Sanka. Nestlé added a new line of Nescafé decafs to go along with its Taster’s Choice variety. Procter & Gamble sponsored a decaf Folgers instant to augment its High Point.
Ad budgets for decaf coffee increased. In 1982 General Foods replaced Robert Young with “real people” in active occupations—wildlife photographer, logger, white-water kayak instructor, tugboat captain, mountain climber—promoting Sanka. In a typical spot, a rugged underwater welder explains that “too much caffeine makes me tense. And down here, I can’t afford that.” After Sanka stopped using methylene chloride in favor of a carbon-dioxide process, its ads also touted its use of “pure mountain water.” General Foods tried to stir Brim sales with an ad showing a young couple drinking coffee by a fireplace. The copy read: “The thunder was loud. The music was soft. The coffee was Brim.” Nestlé and Procter & Gamble also switched to emotional lifestyle appeals, such as “Times Like These Were Made for Taster’s Choice.”
The Coffee Nonachievers
Aside from the decaffeinated and specialty segments, overall coffee consumption continued to dwindle throughout the early 1980s, down 39 percent from twenty years before. In 1982 beverage analyst John Maxwell blamed the drink’s temperature and its inconvenience, observing, “People today are in a hurry. They want to slug something down and move on, particularly the younger ones.”
At Maxwell House, young marketers such as Mary Seggerman tried to change coffee’s image. Seggerman pushed for bluesman Ray Charles to sing in lifestyle ads. The commercials tugged at the heartstrings, with swelling music, touching family scenes, and a tagline about “that good to the last drop feeling,” appealing to emotions rather than taste. Although the ads obviously imitated upbeat soft-drink efforts, Seggerman complained that “General Foods never really understood that Maxwell House competed against Coke and Pepsi.” She had to battle for the only 1983 ad to feature two teenagers, who worked on a beach boardwalk and met over a cup of coffee.
That year, Seggerman and a few colleagues found relatively unknown stand-up comics at little clubs and made innovative, edgy Maxwell House spots in which they did their routine, including a reference to Maxwell House at the end. “What is the saucer for, what?” asked Jerry Seinfeld. “My mother says, ‘That’s what you put the cup on.’ I thought that’s what the table was for. I guess it’s in case someone pulls the table out from under the coffee, you just go, ‘Nice try, pal.’” Then he walked offstage to drink a cup. The ads aired only once, killed by conservative Maxwell House managers. Seggerman had to settle for a hunky freelance photographer who roamed America with his dog and drank coffee soulfully.
The generic “Coffee Achievers” campaign was launched by the National Coffee Association in 1983. Because of the small ad budget, they settled for third-string celebrities who supposedly represented the “new coffee generation.” The announcer explained, “Coffee lets you calm yourself down. Coffee gives you the time to dream it. Then you’re ready to do it. No other drink does it like coffee.” Critics questioned how the drink could be simultaneously calming and invigorating. “Not a bad hype,” observed The Nation, “for a product with no nutritional value, whose most important ingredient is an addictive drug that tends to make users nervous and irritable.” The NCA modified the wording slightly to “Coffee is the calm moment.” The short-lived ads did not increase coffee consumption.
No amount of advertising could move the shoddy products the major roasters offered. They introduced the “brick pack”—ground coffee vacuum packed in skintight, laminated packages. The product had to be pre-staled, since otherwise “de-gassing”—the carbon dioxide released from freshly roasted coffee—would ruin the brick. Cheaper than cans, the bricks could be stacked on shelves more compactly. For institutional use, fractional packages—“frac-paks”—containing enough for one brewed pot became popular. They contained less and less coffee, however, and were often pinpricked to allow degassing and subsequent staling.
Every year Maxwell House cut back a little more on its coffee’s roast color, since there is less weight shrinkage with a lighter roast, and it saved on fuel to heat the beans. Unfortunately, under-roasted coffee tastes bitter. The company lowered the quality of the beans, using only cheap Brazilian and robusta. It introduced the “Fresh Lock,” which allowed more weight-adding moisture before the ground coffee clumped together. It also pelletized and returned the chaff (silver skin blown off during the roasting process) to the blend.
The Little Big Guys Struggle
Smaller conventional roasters struggled for survival, often becoming booty for investors who batted them about like shuttlecocks. In 1982 tea company Tetley bought Schonbrunn, with its Savarin, Brown Gold, and Medaglia D’Oro brands, and Tenco, manufacturer of instant coffee, from Coca-Cola. Tetley already owned Martinson’s and two Hispanic blends, Bustelo and Oquendo, which made it a player in the dark-roasted segment of the market. Tetley downgraded the once-great blends of Martinson and Savarin, rendering them no better than Maxwell House or Folgers. It also cheapened Medaglia D’Oro, the only national espresso blend.
Chock full o’ Nuts’ fortunes declined as the aging William Black refused to relinquish power. After Black died in 1983, his physician, Leon Pordy, took over the company. Chock could still claim first place in the New York coffee market, but only by cheapening its blend and selling 20 percent below the average price.
Nestlé decided it should expand its North American coffee business beyond its lackluster instant brands. In 1984 it bought Goodhost, a major Canadian roaster, and announced that it would exercise an option to buy Hills Brothers. The Brazilians at Copersucar had sold the old family firm only four months earlier to a group of five investors, who then resold to Nestlé. In quick succession, Nestlé also bought Chase & Sanborn and MJB.112
Alfred Peet, a Dutch immigrant, fathered the U.S. specialty coffee movement at his Berkeley coffee shop, which opened in 1966. He is shown here cupping coffee in Kenya with Jim Reynolds, another coffee pioneer, at left.
Despite this 1970 effort to attract the baby boom hippies, the coffee industry lost out to the Pepsi Generation.
In 1971, partners Jerry Baldwin, Gordon Bowker, and Zev Siegl (left to right) founded Starbucks in Seattle, selling fresh-roasted whole beans to local customers.
