The coffee business changed overnight when the pandemic first hit, and Counter Culture Coffee has been rolling with the punches.
This week on the Modern Retail Podcast, Counter Culture founder and president Brett Smith spoke about where the industry is going and how his company has evolved over more than two decades.
Counter Culture, which first launched in 1995, was one of the first roasters to focus on direct trade, meaning it took great pride in working directly with coffee growers and suppliers. “What we felt was important was to go down that supply chain and really understand the source, the farmers,” Smith said. “Because we felt like there was an opportunity to, in essence, have a conversation with the suppliers.”
At the time, roasters directly sourcing from growers and including them in their consumer-facing marketing was unheard of. But it’s now become commonplace, and Counter Culture was one of the early businesses doing such practices.
According to Smith, the fact that coffee companies like Counter Culture have become known for their ethical sourcing is a nice after-effect. he didn’t intend for it to be such a big marketing hook. “The litmus test is are we going to do this if no one knows about it, will we still do it?” he said.
Now, the market has changed. It’s table stakes for most higher-end coffee roasters to tout their direct supply chain relations. What’s more, the way people buy coffee has changed. Counter Culture first grew by partnering with restaurants. Then, it expanded to coffee shops. And it evangelized its business via local training centers it opened around the country. Here, baristas can stop by to learn about the products, and even average customers can stop by to get a sense for what the business is about. Today, Counter Culture has over a dozen training centers in cities like New York, Los Angeles and Chicago.
When the pandemic hit, Counter Culture’s wholesale business cratered by 90%, but its direct-to-consumer revenue soared. Now, things are leveling off. But Smith said that he is focused on new areas of growth — including airports and grocery.
All of this means the company is still growing, but Smith is trying to figure out how to handle the growth sustainably. For example, he’s expanding his facilities to better handle grocery and DTC orders — which were straining the business due to their different packaging sizes.
“I think that the growth question is, ultimately, it comes down to working hard to grow sustainably. Would we all like to double every year? Yeah, in a certain way. But you got to understand what that means,” he said. “You got to understand where is that going to create pressure? Where’s that going to potentially compromise a long-term relationship?”
Here are a few highlights from the conversation, which have been lightly edited for clarity.
When business practices become marketing
“The litmus test is: are we going to do this if no one knows about it? Will we still do it? And the answer with developing long-term relationships with suppliers was: absolutely. We need to have a steady supply of coffee. We need to have coffee that can grow with us. We need to have a coffee source that we can push and pull. That’s part of a good relationship — having open, honest conversations; wow, this worked, wow, this didn’t. And we needed that so that we could continue bringing unique coffees, coffees of a certain quality, different coffees. Of course, as people are interested in it, we’re happy to share. And I’m delighted that people are interested in that. And I do think it’s important that we understand what goes on in a company behind the product. I think that’s exciting, and it can lead to many good things.”
On Counter Culture’s training center model
“Our model was what we call our training center model… We knew that whenever we brought someone into our home office, on a sales call — say it’s a chef, or maybe it was the owner of a coffee shop — and we sat down and we tasted coffees and we show them our facility and they got to meet our people and they got to taste the coffee and we got to have a conversation, that was really a meaningful experience. And it created a good relationship, a foundation for a great relationship. So we asked ourselves, how can we take that show on the road, so to speak? We can’t take the roasters everywhere, but we could take this opportunity to have someone sit down with us in our environment and have a conversation. So we opened up our first office in Charlotte. And the reaction was what we expected of, yeah, people can meet us, but also there’s an appreciation that we were in that community, local to a degree… Then we also really, as we started working with more and more coffee shops, appreciated the opportunity to share our knowledge about coffee — to educate, to train. And so these centers became training centers and over the years, we’ve developed a curriculum to support coffee shops to support baristas. And we have a whole service to help them be what we call better coffee people.”
On the rise and leveling off of Counter Culture’s DTC business
“Wholesale has come back from 2020 numbers. And a part of wholesale is what we call food service — so working with organizations that we would sell through them to larger customers. It might be offices, it might be different restaurant groups. Actually, in airports, [there’s a] great opportunity there — there’s really a step up in the offerings in airports; it might be in a sky lounge, we’re working in a couple of the AMEX Centurion lounges. So that part, and with coffee shops and restaurants, that’s coming back. That and grocery are about the same level, in terms of pounds. And, and we do see grocery growing. Grocery is the fastest growing area. And we saw a direct-to-consumer huge spike in 2020. And it kind of leveled off in 2021. And it’s continuing to stay level.”