The Coffee Summit
After more than a decade of writing anything and everything about coffee, each month, it becomes harder to create content that is informative, interesting and relevant to lovers of coffee.
It's why we branch into other topics like retail or situations related to our daily lives.
Coincidentally, I've realised that the rest of our coffee industry, whether here in Australia or around the world, has also reached some peak or summit.
Has coffee arrived at a stage of maturity and stability?
I see a space where nothing only a little new or innovative happens, and the only newsworthy items making the industry press are mundane and boring barista and latte art competitions or the opening of yet another shiny new cafe (see our Cafe Culture underbelly story).
It's all a bit #lookatme.
However, one fundamental shift or trend is shaping the coffee industry, particularly in Australia's crowded and competitive environment.
Traditional wholesale coffee providers - sellers to cafes - build elaborate cafes within their operations to showcase their wares.
It's not a new concept by any stretch of the imagination, with coffee brands doing this ages ago, and the craft beer industry has been using this model almost since its inception.
More and more warehouses are gaining special approvals to trade as hospitality outlets against inflexible planning laws, particularly in Victoria.
We also tried a few years ago but gave up because of a need for clear guidelines from the regulating body.
Starbucks and many other leading brands have always been about establishing halos to connect to their customers.
It's an essential and even fundamental step towards creating long-term brand loyalty.
In Melbourne, the small handful of roastery cafes has now ballooned into dozens and dozens, with even more in the planning and building phase.
These days, the more established, older brands with large industrial facilities are adding full-service food and beverage facilities complete with viewing out into the space where coffee is stored, roasted and packed.
We wondered why so many brands have headed down this path.
Sure, there are some real financial benefits of not having to pay rent in a separate shop, but it's also changed their business from wholesale by adding the complexity of retail.
Vertical integration allows these brands to put serious $$ behind high-end coffees to serve in their facility and impress the consumers.
Still, it also sets an expectation that those same coffees are what is being made available in their wholesale channels.
Often, there are rumours that more than a few brands deliberately run higher grades of coffees in their outlets and then flog an entirely different (lower) grade to their wholesale customers but with the same labels - affectionately known as the "bait and switch" routine.
It also raises an important point about boundaries.
Suppose you compete in the same segment as your customers.
How is that helpful to your wholesale accounts when consumers inevitably realise that a realistic experience is only available in the brand's outlet?
This move directly reacts to the difficulties of trading in the Australian coffee wholesale segment.
Too many competitors and suppliers mean cafes enjoy the privilege of being spoilt for choice, and brand loyalty has completely evaporated.
It's become almost impossible for coffee salespeople to break into cafe accounts without offering eye-watering incentives to the cafe owner to change suppliers.
Hence, the economics of supply are borderline or unsustainable in the short term.
The showcase model provides a key brand benefit by creating a critical pull force. It turns the traditional push model of coffee sales and marketing upside down.
Instead of reps hitting up owners, kissing and hustling with incentives, the buyers of wholesale coffees are instead attracted to the curiosity of a showcase as it provides a simple, non-pressured environment they can sample at their own pace to evaluate their chances of future success with a prospective wholesale partner.
